Dean CoddingtonIn my last two blog posts, I have written about the potential to significantly reduce healthcare costs and identified 20 factors driving the growth of healthcare spending.

In our recent work with HFMA on its Value Project, we had the opportunity to visit 10 organizations ranging in size from Partners in Boston to Franklin Memorial in Farmington, Maine. For the American Hospital Association, we recently prepared four case studies of organizations moving toward accountable care.

With one exception, all the hospitals and health systems we studied for HFMA and AHA were giving a high priority to developing their primary care network. Many were acquiring primary care practices or employing primary care physicians. Most also were moving aggressively to get their primary care physicians on an electronic health record and accredited for patient-centered medical homes. Several had developed chronic disease registries and were working to improve the quality and reduce the costs of care for patients with chronic disease.

In our view, these strategies make sense. However, in only one case—New West Physicians in the Denver Area —did we see what a physician-led, tightly managed primary care group with proper incentives can accomplish. New West has 84 providers in 16 locations; it has a specialty panel of 500 physicians but regularly uses 250 of these physicians as preferred.

All New West physicians are on an electronic health record (EHR), thereby making it possible to conduct three major studies each year of the quality of care provided by individual physicians. New West also has a software program that analyzes, on a real time basis, claims submitted to its major health customer, a Medicare Advantage plan. (New West takes financial risk for primary and specialty care, but not hospital care.) The combination of using its EHR to analyze patterns of care and using the analytics package on claims data (supplemented by its own matrices) allows New West to evaluate the performance of its specialists as well as its own primary care physicians. Specialists who are outliers in their care patterns are required to either shape up or be eliminated from the panel. Because New West referrals can amount to as much as half of the business for some specialists, this is a requirement they cannot afford to take lightly.

New West also employs hospitalists at its five major hospitals, and these physicians manage the care of the 25 to 30 New West patients who are likely to be in a hospital at any given time. The hospitalists have access to the New West EHR from the hospitals, and pick up the patients in the emergency department (ED), supervise their treatment in the hospital, and ensure a smooth handoff of patients discharged to post-acute care facilities and back to their primary care physicians. The result? A readmission rate of 8 percent for the same diagnosis within 30 days.

New West’s approach allows it to make money on Medicare Advantage, and thereby increase the income of its primary care physicians to well above the regional average. The organization can deliver care to Medicare Advantage patients at rates substantially lower than regular Medicare rates.

Relative to quality and access, the two other legs of the Triple Aim, New West has outstanding patient satisfaction scores from both its major health plans and its internal surveys. A limited number of its 16 conveniently-located clinics maintain after-hours and weekend services, thus mitigating the need to go to a hospital ED.

So are hospitals and health systems that own primary care practices willing to take tough approaches in their dealing with specialists? Are they willing to give primary care physicians incentives to truly manage the care of their patients? In my view, the changes needed in the delivery of care exemplified by New West Physicians are where our nation’s healthcare system needs to go if it is to bend the cost curve.

Dean is a senior consultant, McManis Consulting, Denver, and a member of HFMA’s Colorado Chapter.