Innovating Healthcare System Strategy: Creating the Commercial ACO

Tick tock goes the clock….October 2012 will soon arrive and value-based payment will commence.  In order to prepare for this change, hospitals and healthcare systems are simultaneously improving quality and patient experience, reducing expense and crafting new strategies for growth.  While strategic planning efforts have traditionally focused on modifying or developing new service lines or delivery sites, one healthcare system has forged a different path, forming a commercial accountable care organization via a new payer partnership.

Tick tock goes the clock….October 2012 will soon arrive and value-based payment will commence.  In order to prepare for this change, hospitals and healthcare systems are simultaneously improving quality and patient experience, reducing expense and crafting new strategies for growth.  While strategic planning efforts have traditionally focused on modifying or developing new service lines or delivery sites, one healthcare system has forged a different path, forming a commercial accountable care organization via a new payer partnership.

Though the concept of commercial ACOs is not new, the novel approach being taken by Aurora Healthcare, Aetna and Wellpoint subsidiary, Anthem Blue Cross and Blue Shield Wisconsin, is to offer a price guarantee – defined as a potential 10% reduction in cost – to small and mid-size businesses, which typically, are not target markets for insurers seeking large, self-insured groups.  Through the Accountable Care Network, Aurora Healthcare’s 1400+ providers will be poised to deliver care through its 15 hospitals and more than 160 clinics.  Not for the faint at heart, Aurora Healthcare’s new business model is supported by its 15+ years experience as one of the largest employers, with 48,000 covered lives, in the Wisconsin and surrounding area.

With extensive use of care managers for appointment scheduling, assistance connecting with physicians and follow-up for patients who have chronic or complex conditions, this group succeeded in reducing their per-member-per-month cost by 2.4% in 2010, while the national average rose more than 10%.  Coupling personalized care with its use of electronic medical records, claims reviews and advanced analytics, the Accountable Care Network is now confident that they can lower future members cost of care per diagnosis.  Bold statement, indeed.

Bold enough, in fact, to make me wonder…could this price guarantee be replicated for the Medicaid population?  With skyrocketing cost and rampant chronic illness, there exists no better petri dish for testing this hypothesis.  And, as Dr. Nick Turkal, Aurora Healthcare’s President & CEO mentions below, as a national quality and healthcare reform leader, they (and others) are beholden to share their knowledge regarding tools and processes developed to address these critical issues along the way.