September 9, 2022
Dear Interested Readers,
Musing About ACO Disappointments
This week I have been thinking, or more accurately “musing,” about the current status of ACOs. “Musing” seems to me to be a word that has more depth and feeling than “thinking”, “reflecting”, “analyzing,” or “considering.” In the course of my musing on ACOs, I looked up the word to see if there was any validity to my feeling that it had some extra dimension of meaning. Vocabulary.com corroborated my sense that musing had some extra depth:
Definitions of “musing”
- adjective deeply or seriously thoughtful
synonyms: brooding, broody, contemplative, meditative, pensive, pondering, reflective, ruminative
thoughtful
exhibiting or characterized by careful thought - noun a calm, lengthy, intent consideration
synonyms: contemplation, reflection, reflexion, rumination, thoughtfulness
types:
cogitation, study
attentive consideration and meditation
meditation, speculation
continuous and profound contemplation or musing on a subject or series of subjects of a deep or abstruse nature
meditation
(religion) contemplation of spiritual matters (usually on religious or philosophical subjects)
introspection, self-contemplation, self-examination
the contemplation of your own thoughts and desires and conduct
retrospect
contemplation of things past
lucubration
laborious cogitation
self-analysis, soul-searching
a penetrating examination of your own beliefs and motives
examen, examination
a detailed inspection of your conscience (as done daily by Jesuits)
type of:
consideration
the process of giving careful thought to something
I did not spend much time musing on what to call my “Dear Interested Readers” Friday letter back in early 2015 when I moved from sending out an email to a long list of recipients to a post on the Internet with an email reminder to subscribers. “Strategy Healthcare” and “Healthcare Musings” as names for the site and the letters just seemed to happen as several events came together with the help of a few people who showed up when I had gone as far as I could go with my limited technical skills.
Without the help of my technical guru, Russ Morgan, I would probably have given up my writing efforts a long time ago. Meeting Russ was one of those gifts that life gives you. I met Russ in a very serendipitous way through Peter Kriff. I met Peter through his childhood friend Steve Matteson who was my friend and a talented teacher whom I met through Simpler which was the leading supplier of Lean expertise to healthcare until it was sold a couple of times before its expertise finally became part of IBM’s Watson project. In 2009, Atrius decided to acquire Lean skills, and after a recommendation from John Toussaint who as CEO had skillfully introduced Lean at ThedaCare, we hired Simpler to teach us what we needed to know to become a Lean organization. So, the string is from Toussaint to Arius, to Simpler, to Matteson, to Kriff, to Morgan, to Strategy Healthcare, to me, and then to you. Isn’t that the way good things happen in life? The outcome of this serendipitous series of events was that Kriff, Morgan, and I were connected for a short time to Vermont’s desire to join all of its hospitals, doctors, and other healthcare professionals into one large ACO which would be the single provider of healthcare in Vermont.
In 2014, Vermont was in the process of trying to convert its entire health care system into a state-wide ACO. Peter was a public relations consultant in Burlington, Vermont with healthcare experience who had won a contract from the healthcare board in Vermont to promote the idea of a state-wide ACOs to clinicians and the public. In a conversation with Steve, Peter discovered my letters, my vigorous support of ACOs, and perhaps an editorial I had written in July 2014 for the Journal of General Internal Medicine that was entitled “Are ACOs on Uncertain Ethical Ground and a Threat to the Autonomy of Patients and Physicians?” The gist of that piece was that ACOs faced challenges, but they were designed to be an ethical boon for both patients and clinicians.
The editorial was in response to an article in the July 3, 2014 edition of the journal that had reviewed some of those issues. There were concerns that using ACOs to lower the cost of care would have the potential, as had been the case with some HMOs, to compromise care and limit clinical autonomy. In my article, I agreed with others that ACOs could be an effective and innovative way of achieving the Triple Aim as promoted by Don Berwick. In 2014 I believed that ACOs could improve the experience of care for individuals and reduce the per capita costs of healthcare while improving the health of populations. In the article, I used my favorite quote from Dr. Robert Ebert who had been Dean of Harvard Medical School when I was a student there in the sixties, and who founded Harvard Community Health Plan which was an early prepaid medical practice in the era of HMOs which in retrospect seemed to me to be a prototype for a successful ACO. I still see the wisdom in that quote from his writing in 1965. It is as true today as it was almost sixty years ago.
“The existing deficiencies in health care cannot be corrected simply by supplying more personnel, more facilities and more money. These problems can only be solved by organizing the personnel, facilities and financing into a conceptual framework and operating system that will provide optimally for the health needs of the population.”
For several years I had been convinced that ACOs were designed to avoid some of the issues that had derailed the HMO movement, and if ACOs were not the “final destination” of our search for the road to the Triple Aim they were a good “next step” on the journey toward a “conceptual framework and operating system” that could provide optimally for the health needs of the population. By 2014, my hope for ACOs was balanced by early concerns that I had already sensed within my own organization and at the conferences that I attended that there was growing pushback against the transition to ACOs and value-based payment from some clinicians. I had seen the reluctance of many practices, hospitals, and care systems to accept ACOs. I concluded that if ACOs had problems they would not arise from ethical challenges that could not be managed or because they were a threat to the autonomy of clinicians or patients. Future problems would arise from the resistance of the status quo. I ended the article by saying:
Transformation of long-standing habits and deeply held values and assumptions will be required as we move to practice in ACOs. Some will surely experience a sense of loss and feel that their values are being violated in this transition. We should listen to their concerns even as we press forward toward the Triple Aim and as we continue to explore the ethical challenges that arise as we practice more and more in the structure of ACOs.
After Peter contacted me through Steve, I drove up to Peter’s home in Burlington, Vermont to get an inside look at what was happening in the Green Mountain State. Peter had developed a business plan and had recruited a talented team for the project. He said that he wanted to use excerpts from my weekly letters and other writing as content in a blog that would promote the ACO transition in Vermont. By 2014 Vermont had already been on a multi-year journey toward a statewide single-payer health care system open to all of its citizens. They believed in the power of a single-payer, healthcare for all system as the way to improve the quality of care for individuals, lower the cost of care, and improve the health of the public. The Commonwealth Fund published a “case study” of Vermont’s efforts in 2018. The introduction to the paper describes the project that I was invited to join:
In 2014, on the heels of a failed attempt to create a single-payer health care system in Vermont, policymakers turned their attention to how they might achieve their goal — lower health care spending and improved health outcomes — without disrupting the existing payment system. Their idea was to encourage the state’s largest payers — Medicare, Medicaid, and Blue Cross and Blue Shield of Vermont — to move more quickly from fee-for-service to risk-based contracting. In so doing, they would also encourage providers to pursue the state’s goals for improving residents’ health.
The concept appealed to OneCare Vermont, a large accountable care organization (ACO) that had engaged more than half the state’s physicians and nearly all its hospitals in its network but had struggled to earn savings in its previous contracts with insurers.
Under the “all-payer” ACO model, the three payers would steadily increase the number of patients cared for under risk-based contracts and provide additional financial support to OneCare to coordinate care for individuals considered to be high medical risks. In return, OneCare would take on downside financial risk for itself and participating hospitals, a move it hoped would spur the latter to collaborate with community partners in helping patients beyond their institutions’ walls.
OneCare’s vision is to unite the physical health, mental health, and social services sectors in serving patients with the most complex needs, much as the federal Accountable Health Communities initiative seeks to forge clinical and community partnerships to address factors such as unstable housing or social isolation that contribute to poor health.1 Rather than hiring its own staff to organize this effort, OneCare is relying on care coordinators already in the field as a result of Vermont’s Blueprint for Health. The Blueprint for Health, a statewide initiative, compels public and private payers to support nurses, social workers, community health workers, and others working to help patients manage their chronic conditions, find treatment for addiction and other behavioral health conditions, and connect with social supports.
My experience with the Vermont experiment began with high hopes. Peter’s original plan was that there would be a twice-weekly publication of a “Strategy Healthcare” blog. On Tuesdays, the post would be prepared by Peter’s wife, who was a professor in the English department at Ohio State University (she had a long commute). She would edit content from one of my previous letters which I would then approve before it was posted. On Fridays, my usual “new” letter would be the post. The blog would be supported by the full array of social media with Facebook, Twitter, LinkedIn, and other ways of growing the readership.
It was during the creation of the project that Peter introduced me to Russ Morgan whom he had contracted to do the technical support of the site. Unfortunately, not long after the project was launched two things happened. First, there were delays in the Vermont role out. Second, Peter was diagnosed with cancer.
Fortunately, a few months before the Vermont project was delayed and before Peter became ill, the Strategy Healthcare site was launched with the help of Russ Morgan. By January 9, 2015, we were online with an article entitled “Accessible, Accountable Healthcare.” On February 20, 2015, I introduced the title “Healthcare Musings,” without much musing and things haven’t changed much since then except that after Peter became ill, and the delays in Vermont occurred, I began to write the Tuesday note as new material. The Tuesday post continued until last year when I returned to the original concept of a weekly letter. Through it all, “good ole” Russ has been my guide.
It’s been a rocky road for Vermont’s ACO project, but it is slowly making progress. There have been times when I was concerned that Vermont would give up its efforts because all of the almost 500 ACOs in the country have been slow to produce the reductions in healthcare costs and measurable improvement in quality and outcomes that were the goals of the movement. Last year was somewhat confusing in the ACO world. In May 2021, CMS announced that the NexGen Medicare ACO project would end on December 31, 2021, and that participating ACOs could apply to continue in the Direct Contracting Model built on what had been learned from NexGen and the original Pioneer ACO. The National Association of ACOs (NAACOS) puts a positive spin on the situation and explains the passage of NexGen and the arrival of the new REACH ACO this way:
On February 24, 2022, the Centers for Medicare & Medicaid Services (CMS) Innovation Center announced the ACO Realizing Equity, Access, and Community Health (REACH) Model that will replace the Global and Professional Direct Contracting Model (GPDC) beginning January 1, 2023. Much like GPDC, this model builds on the successful Next Generation ACO Model to offer higher levels of risk and reward than the Medicare Shared Savings Program (MSSP) and will include two participation options, Professional and Global, for each of the three types of ACOs: Standard, New Entrant, and High Needs Populations. The new ACO REACH Model differs from GPDC in many ways, including increased provider governance, a heightened focus on health equity, improvements to risk adjustment, lower discounts, and others. The model will run through 2026, the original term of GPDC.
The description of the evolution of CMS-sponsored Medicare ACOs given by the National Association of ACOs is written with a positive suggestion of continuous improvement. Not everyone has been as positive about ACOs. In August 2021, STAT published an opinion piece entitled “ Accountable care organizations don’t cut costs. It’s time to stop the managed care experiment” written by Kip Sullivan, JD, and James G. Kahn, MD. Attorney Sullivan is a healthcare attorney who has worked for Health Care For All–Minnesota for many years. James G. Kahn, MD, MPH is a professor in the Philip R. Lee Institute for Health Policy Studies, Global Health Sciences (GHS), and the Department of Epidemiology and Biostatistics at UCSF.
The title is stark and gets an immediate negative reaction from someone like me who was inspired by the ACO movement and saw it as a more virtuous and potentially effective organization of healthcare delivery and finance than Fee-For-Service finance. I was surprised when I researched the two authors. Mr. Sullivan has been writing about healthcare for many years and is an advocate for universal coverage, as is Dr. Kahn, who is a member and speaker for PNHP, Physicians for a National Health Program, which advocates for a universal, comprehensive single-payer national health program. You would think that both authors might advocate for ACOs and would not believe that ACOs were a strategic mistake. The authors begin by saying that managed care was always a bad idea.
For the last half-century, Congress has endorsed essentially the same approach to cutting health care costs, an approach that came to be called “managed care” by the mid-1980s. Based on the assumption that U.S. health care costs are double those of other wealthy nations because doctors order services patients don’t need, the solution is to “manage” doctors and provide financial incentives that nudge them to cut services.
The managed care approach has not only failed to cut costs, it has contributed to health care inflation by encouraging mergers and driving up administrative costs. The failure of the accountable care organization (ACO), a prominent iteration of managed care, illustrates the problem.
The authors have recently published an analysis of all of the Medicare ACO pilots and programs of CMS going back to 2006 and conclude that all have failed to achieve their stated objectives. Their conclusion is that managed care and ACOs have failed because they were conceptualized on the twin fallacies of “overuse of medical resources” and the inherent conflicts of interest in the fee-for-service payment system. They push back by writing:
…the assumption that overuse is widespread, and that all overuse is caused by doctors caving in to fee-for-service incentives, is wrong. Over the last two decades, research has clearly demonstrated that overuse of medical care isn’t why health care costs are rising. Per capita health care costs in the U.S. are high compared with other nations because the prices at which medical services and drugs are sold is excessive.
Futher along they offer their explanation for why prices are high. It’s because of consolidation and excessive administrative costs.
Why are U.S. prices so high? Because incessant consolidation of its health care system gives those who sell medical services and drugs the power to raise prices. And the huge cost of administering the country’s stunningly complex health care system motivates sellers to raise prices: Excessive administrative costs account for 15% of the $4 trillion the U.S. spends annually on health care, or more than $2,000 per person.
I disagree with both of their points. I do believe that we have not only overuse but also misuse of medical resources, and for many populations of underserved Americans, there has been a denial of access and a devastating “underuse” of appropriate care. The authors make one other charge against ACOs which they believe has contributed to the disappointing results ACOs have produced.
The accountable care organization solution has failed not just because it addressed the wrong problem (overuse rather than excessive prices and inefficiency) but also because these organizations were never clearly defined.
Here I agree with them. The programs have been excessively complicated and their design has often included aspects that seem to hamper the efforts of high-performing organizations and offer rewards for poor performance from organizations that have traditionally been high-cost providers. The sense that no good deed goes unpenalized pervaded the experience we had in the Pioneer ACO. Our original budgets were lower than those of more expensive systems with lower measured quality, and our reward for achieving the objective of further lowering costs and improving quality was less rewarded by the payment mechanisms. I would say that if your BMI is 22 it is harder to lose weight and remain healthy than if you are morbidly obese with a BMI of 40.
I also agree with the authors when they say that most doctors are not inherently dishonest and are motivated to overcharge and overutilize tests and procedures, but I do believe that today doctors are often employed within systems of care that are driven by revenue and that these systems are engineered more for financial gain than for efficiency and effective care delivery. Caregivers may be more “trapped” than greedy. They are often driven by the revenue expectations of their organization that preclude adequate time with patients so it is understandable that they might attempt to use testing and procedures as substitutes for a more thoughtful and patient-focused practice model that yields less revenue.
Finally, ACOs can’t succeed without a vigorous process of continuous improvement that mines the experience of clinicians and integrates that knowledge with data about the population being served. It is rare to see effective integration between what clinicians and frontline healthcare professionals know that needs to be improved and the data about the populations they serve and the effectiveness of their system of care. ACOs were never going to be a success by just doing less and providing everyone with access to a system that is making no effort to improve. No system of finance or conceptual framework for the organization of care will ever deliver patient-centered, safe, equitable, timely, efficient, and effective care without the participation of practicing healthcare professionals in the work of solving the problems associated with the care of populations. The fundamental idea behind ACOs isn’t the problem. The problem is one of vision and understanding. Peter had the right idea. He knew that for ACOs to be successful clinicians needed to understand why we get unacceptable results with unacceptable variation for an unacceptable expense and realize that they were the only solution and accept the challenge of achieving the Triple Aim. I still believe that ACOs are the most likely path to a better system of care.
An Eventful Week
I was stunned but not surprised to hear yesterday afternoon that Queen Elizabeth had died. The tributes to her calm and regal presence over seven decades seem inadequate acknowledgments of her contributions to the efforts to make a better world. Being a Queen did not protect her from domestic and family disappointments. More remarkably the troubles she experienced did not cause her to retreat from her duties. To live to 96 is an achievement that more and more people have accomplished. To be working as an effective head of state at 96 is a singular accomplishment. It is remarkable that forty-eight hours before her death Queen Elizabeth was accepting Boris Johnson’s resignation and greeting Liz Truss as her fifteenth prime minister.
My first memory of the Queen was her coronation on June 2, 1953. I was not quite eight years old. My family had traveled to North Carolina to be with my grandfather who had just sustained a massive myocardial infarction at age 64. He never recovered and would die of severe congestive heart failure a month later on the day before my eighth birthday.
My grandparents had a seventeen-inch black and white TV with rabbit ears that produced a grainy picture. I had heard for several days that the new Queen’s coronation would be broadcasted as soon as the films could be flown across the Atlantic. The image from that day that is the clearest “snapshot” in my memory was her arrival in her royal coach for her coronation at Westminster Abbey. I was delighted to discover yesterday that through the miracle of YouTube her coronation is still visible in the same grainy black and white format!
I got the news flash that the Queen had died as I was headed out on my afternoon walk. I listened to the flood of respectful statements of condolence and respect from world leaders and the memories of the Queen from famous people and ordinary people as I continued my walk. Perhaps the most remarkable clip I heard was from Winston Churchill who was the Prime Minister when she was crowned. He delivered a radio speech to the British people on the evening of her coronation. In the speech, Churchill delivered the prediction that the new Queen would be a stable force in a world “where the present is hard and the future is veiled.” When I heard that clip, I mused to myself that not much has changed in the last seventy years. Queen Elizabeth more than fulfilled Churchill’s prediction of her abilities which was echoed in the statement of the current prime minister, the Queen’s fifteenth PM, Liz Truss, who praised the Queen as “the rock upon which modern Britain was built.”
Before the Queen died, my plan for this section of my “musings” was to describe the joy I had experienced on Sunday when my wife and I joined many old colleagues and the family of my former colleague Geof Hirsowitz, a patient-centered clinical cardiologist par excellence, to celebrate his and his wife Deb’s seventieth birthdays with a cruise in Boston Harbor and on the Charles River. The header on today’s post is a shot my wife took while we “cruised” in Boston Harbor at sunset.
I enjoyed practicing with Geof from 1984 until I moved on in 2008 to the role of CEO. Deb and Geof are the reasons I now live in New Hampshire. They invited us to spend time with them at their new weekend home in the Eastman recreational community in Grantham, New Hampshire in the early 90s. After “borrowing” their home many times we finally bought our own in 1995. Geof has announced that he will retire this year and we are looking forward to seeing much more of Geof and Deb in the years to come.
In retrospect, I was apprehensive about seeing so many old friends and colleagues. I had not seen many of them since my retirement at the end of 2013. As the day approached, I kept hearing Ricky Nelson’s 1972 song “Garden Party” on the stereo in my head. The first lines summed up my apprehensions:
I went to a garden party
To reminisce with my old friends
A chance to share old memories
Play our songs again
When I got to the garden party
They all knew my name
No one recognized me
I didn’t look the same…
My apprehensions about not remembering names or having time change old relationships turned out to be ill-founded. It was great to see old friends. We had all changed, but in the deeper more important ways we were still in sync. It was a wonderful evening that ended too soon.
I hope that you had a great Labor Day weekend despite the heat and monsoons in some parts of the country. In New England, we had the heat on Sunday and the monsoons on Monday. This weekend is looking like it is still more summer than fall. Enjoy it!
Be well,
Gene
