As accountable care organizations proliferate across the nation, delivery systems still struggle to balance quality improvement, cost containment, and migration toward accountable care. This paper describes the phased approach where the University of Florida Health Science Center and Shands Teaching Hospital and Clinics, Inc, and Orlando Health have jointly developed a series of clinical and health services that are of the highest quality and are offered at the lowest cost. The result is a regional collaborative that will be the foundation for a regional accountable care organization, first leveraging clinical core competencies, then moving to a more integrated model.
In this era of healthcare reform which is focused on cost containment and quality improvement, health systems are struggling to provide the right balance between quality and cost-efficient services. At the same time, advancements in biomedical knowledge and technological innovation are changing standards for the composition and volume of healthcare that can and should be delivered.1 As such, healthcare providers are working to develop alternative delivery and financing models that enable the provision of high-quality, high-value patient care.
Accountable care organizations (ACOs) hold promise as a model for the financing and delivery of high-value care.2 Since the passage of the Affordable Care Act, there has been a dramatic increase in ACO activity. In a comprehensive report that canvassed media releases, reports, and private payer activities, over 164 ACO entities were identified across the country.3 These entities include those that are actively bearing risk and coordinating care, and those that are still implementing such programs. Additionally, the Centers for Medicare & Medicaid services (CMS) recently announced that 27 entities covering 375,000 beneficiaries in 18 states had been selected to form ACOs under the Medicare Shared Savings Program (MSSP).4 The MSSP ACOs will add to the 32 organizations participating in CMS’ Pioneer ACO Program, which involves a more aggressive payment model and is designed for healthcare organizations and providers that are already experienced in coordinating care for patients across care settings.5 Together with ACOs in the private sector, these Medicare programs put the national total of operating or planned ACOs at well over 200.
However, many organizations are not yet prepared to pursue a full ACO contract with a payer. Moreover, there is no consensus on the optimum design or development path for an ACO. Many provider organizations are looking for ways to enhance their ability not only to deliver high-quality, low-cost clinical care, but also to streamline their many non-clinical lines of operation as a stepping- stone to an ACO, piloting and testing critical competencies first. Thus, providers are looking for innovative intermediate steps that can begin to achieve some of the aims of an ACO: better care for patients, at a lower cost.6 Many are looking for a strategic approach to begin integrating clinical and operational processes aimed at saving on cost and improving the care patients receive. Depending on their particular circumstances, these strategic approaches might involve creative partnerships between entities who realize that patient care could benefit from the steps that lead to accountable care.
The University of Florida Health Science Center and Shands Teaching Hospital and Clinics, Inc, (University of Florida and Shands) has taken a unique and innovative approach to addressing the increasingly complex needs of patients while being conscious of cost constraints: a regional collaborative with Orlando Health. This collaborative leverages each organization’s comparative advantage in the delivery of a number of clinical services and combines efforts in some non-clinical operations. This paper describes the phased approach of the 2 organizations in achieving efficiencies and cost savings. First, we discuss a series of clinical and health services (phase 1) that University of Florida and Shands and Orlando Health have jointly developed over the past 12 months which allow the organizations to share resources in order to offer a comprehensive range of clinical services at the lowest cost of the highest quality. Second, we discuss the University of Florida and Shands and Orlando Health Clinical Integration Network (phase 2), governed by both University of Florida and Shands and Orlando Health executives, which and deepens the collaborative efforts of the 2 organizations.
The result is a unique regional collaborative between 2 contiguous, non-competitive health systems that will serve as the foundation for the development of a “regional accountable care organization” (phase 3), first leveraging clinical core competencies of each organization, then moving to a more integrated model that includes operational and governance integration. This collaborative has allowed both organizations to offer better care, in a leaner, more efficient fashion. Moreover, the organizations’ continued integration plans make possible even greater cost savings and quality improvements by combining the inherent advantages of an academic medical center with a non-academic, non-profit organization.
An Opportunity for Collaboration
The University of Florida Academic Health Center comprises the research institutes and professional schools of the University of Florida and the Shands Teaching Hospital and Clinics, Inc. Known collectively as University of Florida and Shands, it is a $2.7 billion organization under the governance of the University of Florida. University of Florida and Shands operates across 2 campuses—Gainesville and Jacksonville, Florida. Like many academic medical centers, University of Florida and Shands serves a disproportionately impoverished population, with over one-third of their payer mix coming from Medicaid, as well as an additional 9% uninsured.
Its partner, Orlando Health Inc, is an approximately $2 billion not-for-profit corporation, with 1738 licensed beds in 6 hospitals, and is one of Florida’s most comprehensive medical systems, offering a wide range of tertiary and secondary healthcare services to approximately 1.8 million residents of Orange, Seminole, and Osceola Counties in Central Florida, its primary service area. Specialized treatment includes medicine, surgery, cardiology, oncology, pediatrics, orthopedics, obstetrics, and emergency care.
The 2 institutions operate in contiguous and almost entirely non-competitive markets. Beginning over 2 years ago with informal conversations between the Orlando Health senior vice president and the University of Florida and Shands CEO, the idea of a partnership to bring better care to Floridians materialized into an action plan. In October 2010, Orlando Health and University of Florida and Shands signed a memorandum of understanding to develop joint clinical and non-clinical programs, as well as explore the possibility of creating a clinically integrated network (CIN). The affiliation progressed rapidly as evidenced by joint clinical programs such as: teleconferences for heart failure patients requiring ventricular assist devices (VADS) or transplant; staffing of pediatric orthopedics at University of Florida by Orlando Health physicians; and a proposal for a joint personalized cancer care program and non-clinical activities, such as joint supply purchasing decisions, combining reference laboratories, and evaluation of common IT analytic systems. An expressed intent of these programs is the transparent sharing of data to critically evaluate which system has the best program in order to learn from each other and not duplicate costly services in which regional volumes are low.
In May 2011, University of Florida and Shands and Orlando Health leadership agreed to a model of regional clinical integration in order to improve quality and cost. The collaboration has been developing in size and scope for the last 12 months. This model extended and formalized the collaborative efforts to date and began a formal clinical integration network (CIN), an entity that governed joint activities between the institutions within 4 major areas: clinical integration, data analytics, contracting, and operations.
Phase 1: Identification of Opportunities for Collaboration
Early on in the effort, leaders at both institutions identified 11 initial areas of collaboration as seen in Table 1. The collaborative activities cover a range of health and clinical services, combining institutional efforts where possible, and leveraging each other’s expertise and comparative advantage in others. For example, the 2 organizations are exploring options to combine their supply chains for various medical devices and other products. Joint purchasing and a “regional laboratory” model enable the 2 health
systems to leverage their combined purchasing power to obtain cheaper device contracts and laboratory services. From a clinical standpoint, the 2 organizations maintain a shared pediatric orthopedic staff, utilize University of Florida faculty for addiction medicine services, plan to utilize telemedicine for psychiatric evaluations to clear mental health patients held by involuntary or emergency commitment from the emergency department (ED) (a provision of the Florida Mental Health Act of 1971),7 and have 1 pediatric liver transplant surgeon, maximizing their return and eliminating the need for multiple high-cost physicians. The organizations also successfully created a single cardiovascular transplant program and instituted a second opinion/referral telemedicine program for cardiac patients.
As part of the initial effort, the following collaborative activities were implemented through 2010 to 2012 and are now beginning to show specific impact on both organizations:
This initial stage of collaboration was also an important first step to a more advanced model of integration between the 2 organizations, a CIN.
Phase 2: Establishment of a CIN
The CIN is anticipated to be formalized as an LLC that will be governed jointly by both organizations. It is responsible for expanding and deepening the collaborative efforts of the 2 organizations. Table 2 outlines the CIN design principles and goals. The CIN is focused on 4 pillars that will collectively drive care improvements and cost reduction opportunities: clinical integration, data and analytics, contracting, and operations. Activities are under way within each of these 4 pillars driving the 2 organizations toward quality and efficiency
University of Florida and Shands and Orlando Health are in the process of establishing patient registries and integrating patient data into a common electronic health record platform via a complete health information exchange among competing electronic health records across the members of the CIN in order to support expanded care coordination programs and facilitate care transitions. Comprehensive views of patient records will be possible, and will allow for better patient management, referrals across institutions when necessary, and tracking across the continuum to maximize patient care quality.
In addition to a common electronic health record and exchange via the health information exchange (HIE), a new data warehouse and analytical platform will push quality and performance, as wellas clinical data, out into scorecards and reports used to identify variation in care and cost and drive best practice across both institutions. The platform will also enable clinical decision support, evidence-based medicine, and care management. Physicians will be empowered with routine scorecards that analyze performance, and can alter their practice accordingly based on demonstrated best practice. The data and analytic tools also enable new chronic disease management programs for complex patients with chronic obstructive pulmonary disease, diabetes, heart failure, etc, allowing both organizations to shift to an approach more focused on population health management. These tools help prevent costly ED visits and admissions, and allow for better patient management in no-cost or lower-cost settings.
University of Florida and Shands and Orlando Health are developing a contract management platform to enable risk profiling and risk management, ultimately positioning them to engage in risk-based contracting with third-party payers. Using their platform and other jointly developed risk profiling and actuarial tools, the 2 organizations are looking to soon jointly engage in shared savings and bundled payment distribution contracts.
Finally, University of Florida and Shands and Orlando Health are planning to merge and streamline some operations specifically around supply chain management, pharmaceutical management, durable medical equipment, home and long-term health, and tertiary care provision. This will enable joint purchasing with increased consumer leverage, consolidation of post acute services where possible, and streamlined tertiary procedures that share resources rather than duplicate them.
Phase 3: A Regional ACO
Multiple areas within the CIN thus far have shown immense promise in lowering costs and improving integrated care delivery. Further, Orlando Health leadership and an Orlando-based large,private practice primary care group have agreed to file a letter of intent for an ACO in June 2012 that will include Orlando Health and the University of Florida and Shands. The expected start date will be January 2013.
Importantly for University of Florida and Shands and Orlando Health, the work to date between the 2 organizations has laid the foundation for an ACO that spans their 2 regions. A centralized office staffed by University of Florida and Shands and Orlando Health administrators who provide oversight, prioritization, and project management manages this effort. Over the past 2 years and continuing over the coming months, the 2 organizations have created a form of a “pre-ACO,” focusing on the critical elements needed to transition and manage a population of patients. Investmentsin critical information technology infrastructure to support quality and performance reporting at the provider and physician level, clinical decision support, internal business intelligence, disease registries for chronic disease management, etc, will enable the University of Florida and Shands and Orlando Health to improve their collective population management capabilities.
Collaborative efforts around clinical integration are beginning to create the necessary provider culture that pushes for coordination across the care continuum, leverages the expertise for specific procedures between the 2 organizations, and makes use of innovative delivery system transformation efforts such as telemedicine, enhanced home health, and community-based patient management.
Conclusion and Policy Implications
ACOs have attracted considerable attention as promising vehicles for achieving better care, better population health, and lower costs. Indeed, the ability to coordinate care across a variety of settings is a trait of any successful ACO. Yet the success of ACOs—as they are defined by healthcare providers, private payers, and now CMS with its recent announcements of both the Pioneer and Medicare Shared Savings Program ACOs—will depend on whether they can enable care delivery organizations to improve care through the innovative deployment of resources, healthcare personnel, and technology.8
We believe that the innovative approach taken by University of Florida and Shands and Orlando Health has produced not only short-term benefits for both organizations, but also a viable path for transitioning to a more accountable payment and delivery model through a formal ACO contract in the future. Organizations contemplating their own path toward an accountable care future can learn from University of Florida and Shands and Orlando Health’s approach of developing a regional collaboration as a meaningful interim step toward adopting needed accountable care processes and potentially formal accountable care structures (ie, an ACO). Policy makers and health services researchers will benefit from a better survey of the transition phases toward an ACO so that we can gain a better understanding of what the elements of accountable care are and how best they can be harmonized with other delivery system reforms such as bundled payments, patient-centered medical homes, and value- based purchasing. This particular example focuses on how organizations operating in distinct markets can collaborate to address the challenges of an evolving healthcare market, but even organizations in competitive markets and high medical growth rates and spending can adopt some of these principles as stepping-stones toward implementing accountable care models within their organization. The collaboration of University of Florida and Shands and Orlando Health is a novel example of how provider organizations can work together to achieve both shortterm efficiency gains and long-term strategic transformation.Author Affiliations: From Brookings Institution (KP), Washington, DC; Manatt Health Solutions (AM), Washington, DC; UF & Shands Health System (DG, TG), Gainesville, FL; Orlando Health (WJ, CM), Orlando, FL
Author Disclosures: The author reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.
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