An interview with health reform's best hope

Within the health reform law, Accountable Care Organizations are meant to serve as a crucial tool to bring down health care costs by bringing American medicine past the fee-for-service model. The idea is to encourage health care providers to band together and become “accountable care organizations,” accepting a flat fee for any care related to a particular patient or condition. If they delivered higher quality outcomes at a lower cost, they’d pocket some of the savings.

In health policy circles, Accountable Care Organizations, or ACOs, often get compared to unicorns: Everyone knows what they’re supposed to look like, but nobody has actually seen one. We know ACOs are supposed to bring down health care costs and improve quality, but haven’t quite seen a health care system do that yet.

The Obama administration Monday named 32 health care systems across the country as “Pioneer” ACOs. These will be the first places to test out the new payment model; they’ll provide a bit of a sneak peak at what it could mean for the rest of the country. In other words, we may soon see our first unicorns.

Jim Hinton is the president and chief executive officer of one of those 32 newly-anointed “Pioneers”: Presbyterian Healthcare Services in New Mexico. It’s an integrated care network with 30 clinics and its own health insurance plan with 400,000 subscribers. We spoke this afternoon about what it means for his clinics to become ACOs, the challenges that lie ahead and the future of American health care. What follows is a transcript of our conversation, lightly edited for content and length:

Sarah Kliff: Your health system will be one of the first to test out the Accountable Care Organization model. You’ll soon start getting paid by Medicare for the outcomes you deliver, not just the volume of services. How much of a change is that to how you do business?

Jim Hinton: Health care has grown up in a fee-for-service system, and it’s also grown up with a system where the primary unit is an individual doctor taking care of an individual patient. At Presbyterian, we’ve been working on making care more integrated for 20 or so years now and have been able to do a lot by operating our own health plan. We see the Pioneer program as a way to continue to push the notion that we should be accountable for improving costs and quality, as opposed to being accountable for providing discrete services.

SK: What does that mean from a patient’s perspective? Can you spell out the concrete ways that health care could change in the ACO model, where doctors get paid for the outcomes they produce rather than just the number of services they provide?

JH: A lot of what [the Accountable Care Organization model] does is build a system of care where there’s a safety net and we can help advocate for the patient. We’re looking at how can we do more with nurses and other advance practice professionals. How can we use technology? How can we change the visit model so its not one patient with one doctor every 15 minutes?

We’re experimenting with some group visits with doctors, and also another program where we hospitalize people in their homes. One good metaphor is thinking about it as if you were going to remodel your house. If you had a plumber, carpet-layer and someone putting down tiles not talking to each other, the house might not turn out very well. The idea is to anchor all the care in one place, where there’s a lot of coordination.

SK: And what about the cost side of the equation, the idea that ACOs can reduce the cost of health care while delivering better quality? Can you speak a little bit about what this means for Presbyterian as a business model and whether you expect to earn money by participating in this project?

JH: The way the model works is you start with a baseline year, and there’s a projection for what it would cost to take care of these patients in the fee-for-service model. To the extent we can reduce the projected cost of these patients, we would have the opportunity to share in some of those savings. To the extent they cost more, we have to pony up some money.

Our initial projection is, given the baseline, we have some opportunity to get a modest return on investment. We’re not thinking about doing this because we think there’s going to be a windfall. We’re doing this because we see it as where our health care system is going. This is also about having a seat at the table as these things evolve. We’ve been part of helping shape delivery models from the time that the Affordable Care Act was passed. We want to stay directly engaged on with the Center for Medicare Services.

SK: Accountable Care Organizations sound a lot like the HMOs that were popular in the 1990s, but ultimately faced a consumer backlash. What’s different this time around?

JH: The backlash against managed care I think had a lot with the way it was being positioned, as a takeaway with a lot of restrictions and hoops to jump through. At the time, there wasn’t as much alignment in health care. Now, you’re seeing a lot of evidence that fee-for-service is not necessarily the highest quality health care system, that better incentives can also be good for patients.

You also see employers around the country pushing more costs onto employees. So now a lot of employees are looking at what they can do to get the best value for their health care dollars.

SK: As you mentioned earlier, your health system has been working on moving toward more integrated care for over 25 years now. What about the health care providers that haven’t been working on this stuff? How well do you think they’ll be able to use these new incentives?

JH: My colleagues who come from systems that have not owned managed care organizations are trying to assess how they can accelerate into this mindset. Most hospital systems today have some experience employing physicians but I think there are still two big barriers in going towards more integrated care. One is bringing an insurance perspective to populations, where you’re managing care and managing risk. The second is a cultural one. Many health care providers have fee-for-service as one of their core business models. It’s hard to get away from this notion that doing more health care means earning more money.