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In 2011, Aetna leaders bought into the theory that a population health management program undertaken by a group of physicians and hospitals working together as an ACO should be able to control healthcare costs without hurting the quality of care. Three years later, the insurer has more than 40 ACOs under contract, including one with Banner Health Network. By 2017, Aetna intends to have ACOs in markets that cover two-thirds of the United States.
The ACOs under contract with Aetna are hitting cost targets that allow the insurer to offer the ACO insurance product at premiums that are often 8 to 15 percent below the lowest-priced competitor in a given market—and consumers are willing to buy. “Because health insurance is such a price-sensitive marketplace, we are pretty confident that we are going to continue to grow very rapidly with this product,” says Charles Kennedy, MD, CEO of Aetna’s Accountable Care Solutions business unit.
Kennedy shares his perspective on the ACO movement.
What is Aetna looking for when it chooses ACO partners?
Kennedy: Far and away, the most important success factor is the commitment level of the executive leadership team of the delivery system. Some hospitals or medical groups aren’t really committed to accountable care; they are just kind of putting their toe in the water. Those organizations will not have as much success as organizations that say, “We see this is the future, and we are committed to it as an organization.”
An organization needs to have a certain breadth and depth to be able to take this transition on. So the size and the financial strength of the organization also matters. And the clinical community is essential. The delivery system needs to communicate to the physicians, bring them into the process, and win their buy-in. That is a very, very important success factor for rewards in accountable care.
Does Aetna contract with more than one ACO in a given market?
Kennedy: Yes. For example, we have an ACO with Banner Health Network in Phoenix, and we also have an ACO with Arizona Care Network (a collaboration between Dignity Health Arizona and Abrazo Health.) We will only enter into multiple ACO relationships if the market will allow for the success of both. If there are five hospitals in a region, and we believe the market can only support two ACOs, we would only choose two.
When an organization becomes more efficient and more effective, that actually reduces the revenue to the delivery system. So the system has to find new patients to make up for that slack. We only pick a small number of delivery systems so we can go out and help them find additional patients.
What are the most common barriers to success?
Kennedy: One significant barrier is technology and data. To look at a population of patients and ensure that the care you are providing is keeping them healthy, you need to have a very strong data-driven clinical and financial infrastructure. Most delivery systems that we work with do not have that in place today.
The second challenge is the clinical integration of all the providers. Many physicians are still in private practice or group practice, so getting them to work together as a coherent whole is another very, very significant challenge that requires focus, resources, data, and analytics.
Probably the third biggest challenge would be the patients themselves. When patients buy an accountable care health plan product, they have to be educated about how that works and how to get the best financial results and clinical results for themselves.
What would you say to health executives who are not yet participating in an ACO?
Kennedy: My advice is this is not something that you should take a wait-and-see attitude toward. This is something you need to be very aggressive with because the consequences for your organization if you don’t are pretty severe. When consumers buy a health plan product centered on an ACO, they are buying into a network built around that ACO, and if you’re not in that network, you are going to be locked out of servicing that patient.
Charles Kennedy, MD, is CEO, Accountable Care Solutions, Aetna, Woodland Hills, Calif.
Access related article: ACOs: Results from the Front Lines
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