Nov. 21 2014
Accountable Care: A Q&A with Charles Kennedy

As the chief population officer of Aetna’s Healthagen company, Charles Kennedy, MD, has a front row seat on the shift to accountable care. And as the health insurance representative on the federal Health Information Technology Policy Committee he has plenty to say about the role of technology in improving healthcare. Transmission spoke with Kennedy ahead of his Grand Rounds appearance with Professor John W. Rowe at the Mailman School on December 3.

kennedy-280x328.jpegCharles Kennedy and John W. Rowe will speak at Grand Rounds on December 3 on "The 21st Century Population Health System: The Role of Medical Care in Population Health."

What is an Accountable Care Organization?

An Accountable Care Organization can be a medical group, a hospital, or a set of independent physicians that is accountable for the cost and quality of care for a defined population of patients.

How do ACOs differ from the HMO approach of the 1990s?

HMOs had many characteristics that ACOs of today have but there are important differences. HMOs tried to control costs through strategies such as gatekeepers that frequently frustrated patients. The capitation models with fixed payments incentivized low cost too strongly and rewarded quality too weakly. In the current fee-for-service model where anyone can go anywhere, it is difficult to reward low-cost, high-quality care, so we have runaway healthcare inflation. The ACO model is somewhere in the middle and offers a better balance of incentives. Also, well-designed ACOs leverage new technologies to make high-value care the most convenient care.

At least 15 percent of Americans now get their care from ACOs. Do you see this number increasing?

Employers, individuals, and the federal government are pushing for greater value for their healthcare dollar. When thinking about broad adoption of ACOs, I’ll use a baseball analogy and say we’re somewhere between the second and the third inning.     

How are ACOs making a difference?

The biggest challenge in healthcare right now is affordability. All of our commercial ACOs that we have data on are either meeting or beating their targets. And ACOs in the Federal Pioneer ACO Model and Medicare Shared Savings Program are seeing similar successes, generating more than $400 million each in shared savings.   

I understand the savings at a macro-level. But what’s in it for the provider?

Physicians and hospitals who deliver efficient, high-quality care receive shared savings payments which can be very profitable. The hard part is generating the savings.  We help our ACO providers achieve success through technology, data, and analytics. For instance, we run an efficiency model to show them how their costs compare with their competitors. Then we help them to create a five-year transformation plan and support them to get there.

You envision this as a completely new model. If the bottom line is tied to lowering costs, are patients receiving less care?

Not necessarily. The idea is to eliminate treatment that adds cost but does not contribute to the well-being of the patient.  Focusing on value, re-engineering care processes, and focusing on the evidence base can create great outcomes at lower costs. But, I think the most important dynamic is the patient/consumer.  Adapting to their needs and wishes is going to make the biggest difference. 

For instance, in our Medicare business, we have end-of-life programs that patients and their families can participate in so that they or a visiting nurse are empowered to meet the needs of the patient so that they can avoid or decrease the cycle of ER visits and patient transports. The goal is to make the healthcare system responsive to the needs of the individual, not provide less care. ACOs are designed in part to ensure that this type of individualized approach can be supported by the payment system. For instance, in a fee-for-service payment model, the hospital and physicians would lose revenue and profit for taking care of patients this way. In a well-designed ACO model, they would not lose profit and might make more. 

We hear a lot about how healthcare in the U.S. is the most expensive and has lousy outcomes. Are things turning around?

Healthcare is 18 percent of the economy and it’s going to take a while before we know if all these efforts are successful. But I am optimistic because change in the industry is happening at a rate I’ve never seen. We used to talk to talk with hospitals and medical groups about accountable care and get blank stares. Now, we can show them this is an economically viable strategy that supports individualized care that can better meet patient needs. As a result, many delivery systems are embracing the challenge.

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