The American Journal of Accountable Care®
December 2015
Volume 3
Issue 4

The Pediatric ACO: A New Frontier in Accountable Care

Considerable attention has been devoted to managing populations around the value proposition. Children, as a population, have received little attention in the accountable care organization (ACO) realm. This manuscript contrasts some of the similarities and differences between adult and pediatric ACOs.

The number of accountable care organizations (ACOs) continues to grow, with more than 700 in place across the country, according to Leavitt Partners.1 Although most ACOs are dedicated to providing adult healthcare, only a few are currently focused on pediatric care.

One of the central promises of accountable care is that it will deliver more value—defined simply as better quality at lower costs—than the current fee-for-service model. Today, healthcare leaders have a significant opportunity to leverage the ACO model to improve clinical and financial outcomes among children.

National data demonstrate that the current model of delivering and paying for pediatric healthcare continues to fail one of the most vulnerable populations: young people. For example:

  • More than 17% of children aged 6 to 11 years are obese.2
  • Nearly 4% of those younger than 18 years lack a usual source of healthcare.2
  • Poor children fare worse than their wealthier peers when it comes to health status.3
  • The incidence of depression among teenagers continues to grow.4

How we address these issues today will have a significant impact on health outcomes in the next 10, 20, and 30 years. Forward-thinking healthcare organizations can address many of these issues in their own communities.

In northern Nevada, a health system, a university, a health plan, government agencies, and nonprofit community organizations are all collaborating on one of the country’s first pediatric ACOs. The difference between adult and pediatric ACOs are highlighted in Figure 1. Compared with the rest of the country, this community faces significant health challenges: nearly 1 of every 5 children lives in poverty,5 25,000 children are food insecure, and 300 are homeless.6 By coming together on accountable care and population health management, a diverse group of stakeholders hopes to reverse these trends by piloting new approaches to pediatric care.

Unique Challenges for a Pediatric ACO

Figures 1-3

To date, population health efforts in adult ACOs have been driven primarily to meet the requirements of CMS and commercial payers, whereas pediatric ACOs, lacking a defined set of priorities, tend to be driven by the specific needs of the communities they serve ().

The most significant difference between adult ACOs and pediatric ACOs is in the baseline health of the populations they serve. On one hand, healthy patients present a challenge for providers because there is less room for improvement on key quality metrics. Because children tend to be predominantly healthy—only approximately 8% have a chronic disease that limits their activities7—their total cost of care tends to be lower than with an adult population.

On the other hand, working with a pediatric population offers providers a unique opportunity to shift their focus from healthcare to health given that most children are healthy and require mostly preventive and wellness care. Healthcare organizations have an opportunity to invest in strategies that make a significant difference in the quality of care for children, at a fraction of the cost of caring for adults. When caring for children, wellness and prevention programs that hinge on immunizations, nutrition, physical activity, and well-child care become vitally important.

By investing in these strategies early in life, healthcare organizations may also help to reduce some of the disease burden in their communities that result from conditions like diabetes, obesity, and asthma, as these patients grow into adulthood.

Critical Success Factors for a Pediatric ACO

Although there is no proven template for a pediatric ACO, the American Academy of Pediatrics has developed guidelines for healthcare organizations that aim to develop pediatric ACOs.8 In addition, many providers are designing their own strategies based on community needs. The following are some of the factors that will likely determine a pediatric ACO’s success:

A Sound Operational Infrastructure

In northern Nevada, Renown Health, a large integrated health network with its own children’s hospital, has invested $5 million to create the infrastructure needed for a pediatric ACO. Healthcare leaders have formed a legal entity, called the Child Health Institute, which has 5 centers focused on social justice, child and family potential, professional education, health services research, and healthcare delivery. The Institute, co-chaired by leaders from the health system and the University of Nevada School of Medicine, will operate under the direction of an advisory board comprised of key community leaders.

A Data Analytics and Research Framework

Half of Renown’s $5 million investment will be used to build the IT infrastructure to support the pediatric ACO. This includes the creation of a pediatric data warehouse, which will be managed by a physician informatics expert, a biostatistician, and data analysts. The Nevada Department of Health and Human Services has agreed to provide 34 pediatric data sets—including birth, immunization, and death registries—to populate the data warehouse. The pediatric ACO also plans to create a pediatric registry to follow the 6000 newborns born each year in the county and target at-risk patients for case management through age 18. Once the analytics framework is in place, ACO leaders will use the data to predict which patients are mostly likely to experience gaps in care and design strategies to address those gaps in the community.

A Focus on the Social Determinants of Health

To be effective, population health management strategies should address the root causes of poor health outcomes in the community: poverty, addiction, and homelessness, to name a few.

For those who lead children’s hospitals, these issues are far too real. In Nevada, managing homelessness, for example, requires buy-in from multiple stakeholders, including local shelters, juvenile detention centers, law enforcement, and nonprofit organizations. Many of these organizations are coming together for the first time with pediatric ACO leaders to discuss strategies for managing population health.

Looking ahead, some of the strategies aimed at improving health in children may include health and financial literacy classes, housing support, and nutrition education. What is most important, however, is that we complement existing programs rather than duplicate what is already in place in the community.

Access to Specialty Care

Medicaid patients in northern Nevada often have difficulty accessing specialty care. Many specialists and primary care physicians alike have opted out of participating in Medicaid because the unfavorable reimbursement makes it difficult to sustain their practices. The healthcare and government organizations involved in pediatric population health need to develop partnerships with these providers and develop a payment mechanism that will provide these Medicaid patients with access to appropriate care.

New Payment Structure

Managing the cash flow continues to be a challenge for providers interested in population health. Transitioning from encounter-based payment to per member per month (PMPM) payments could help to facilitate more of a focus on population health in the pediatric population. Nevertheless, as is the case with the adult population, it will take time before these incentives become aligned.

Health systems that own health plans are well positioned to work with state authorities on pilot projects to move children from episodic payment structures to a more comprehensive PMPM payment structure that serves the wellness, prevention, and healthcare needs of this population. In such a scenario, the payment and provision of care are organized in the same place, allowing providers to manage gaps in care more directly than in a traditional insurance model.

Market Share

Owning a children’s hospital is not a mandate for a pediatric ACO. Although health systems that do not own a children’s hospital may be at an initial disadvantage, they can partner with a local children’s hospital in an ACO. Often, what is more important is having the market share to drive real change, and having a strong base of

physicians also helps support these efforts.

Strong Community Partnerships

The role of a health system in a pediatric ACO, as with an adult ACO, is not to “own” the initiative, but rather to act as a convener. Building a pediatric ACO requires a grassroots approach to building relationships with government agencies, local Federally Qualified Health Centers, faith-based organizations, and nonprofit and social service organizations. Together, they can develop real-world strategies to address key health issues affecting children, such as the attempted suicide rate among adolescents—14% in Washoe County, which is well above the national average.6 The service area also faces a critical shortage of mental health professionals. By partnering with other providers, the university, and advocacy groups, the pediatric ACO can focus on increasing behavioral health services and improving health outcomes in the long run.

Another opportunity for partnership is in education. Despite many years of improvements, Nevada still has the lowest high school graduation rate in the United States.9 Those who fail to graduate are more likely to have poor health outcomes and live shorter lives, according to the Robert Wood Johnson Foundation.10 By ignoring educational issues in our communities, we are cultivating the next generation of patients who are likely to have chronic conditions. Partnering with schools can help healthcare organizations address some of these issues, although it will take time.

Working with local law enforcement is also essential to pediatric population health management. Healthcare leaders focused on population health should care deeply about substance abuse and public safety issues, which can have lasting effects on community health over the long term.

Education for Healthcare Professionals

As part of the partnership with the University of Nevada School of Medicine, Renown plans to establish a pediatric residency program that will eventually accommodate 4 residents a year. The pediatric ACO also plans to launch health education programs for physician assistants, nurses, social workers, and public health professionals to ensure that staff are available to serve the needs of children in northern Nevada.

A Better Future for Children

Figure 4

Although improving care for children in the community will take time, one pediatric ACO in Columbus, Ohio, has already demonstrated modest effects on quality and costs by focusing on the needs of the entire pediatric population.11 Additionally, pediatric ACOs in San Diego and Houston are also making prog ress. Sustaining improvements will be critical in tackling these long-range issues. As healthcare leaders, we may be able to sustain our early successes by continuously bringing in new stakeholders through a “quality fusion” approach ().12 Traditional quality improvement approaches rely on the same team members during the course of an initiative, and as a result, momentum slows over time. Conversely, the quality fusion approach infuses new members into the team or assigns a different team to the project after the initial successes are realized; therefore, this new team can view the problem through a fresh “lens,” thereby creating new wins that fuel the process of continuous improvement. In the ACO environment, the quality fusion approach allows the critical work of a not-for-profit organization focused on immunizations, for example, to be complemented by a group of healthcare providers who can assist in better understanding the attitudes, beliefs, and other barriers that affect vaccination rates.

Through their efforts to build a pediatric ACO, healthcare leaders can create a template to address the health needs of other vulnerable populations, such as those who require behavioral health services. Clearly, the time has come for providers to deliver on their promise of improving the health, not just the healthcare, of their communities.Author Affiliation: Renown Health and University of Nevada, Reno, NV.

Source of Funding: None.

Author Disclosures: Dr Slonim is the President and CEO of Renown Health. Dr Slonim is a paid advisory board member for the ACO Coalition, and has also received lecture fees for speaking at pharmaceutical conferences.

Authorship Information: Concept and design; drafting of the manuscript; critical revision of the manuscript for important intellectual content; administrative, technical, or logistic support; and supervision.

Send correspondence to: Anthony D. Slonim, MD, DrPH, president and CEO, 50 West Liberty St, Ste 1100, Reno, NV 89502. E-mail:

1. Muhlestein D. Growth and dispersion of accountable care organizations in 2015. Health Affairs Blog website. Published March 31, 2015. Accessed September 18, 2015.

2. FastStats: child health. CDC website. Updated July 17, 2015. Accessed September 18, 2015.

3. Bloom B, Jones LI, Freeman G. Summary health statistics for US children: National Health Interview Survey, 2012. CDC website. Published December 2013. Accessed September 18, 2015.

4. American’s children: key national indicators of well-being, 2015. Federal Interagency Forum on Child and Family Statistics website. Accessed September 18, 2015.

5. Selected Kids Count indicators for Washoe County, Nevada. Kids Count Data Center website. Accessed October 5, 2015.

6. Washoe County community health needs assessment, January 1, 2015-2017. Accessed September 18, 2015.

7. About chronic diseases. National Health Council website. Published July 29, 2014. Accessed September 23, 2015.

8. Accountable Care Organization Workgroup (2010). Accountable care organizations (ACOs) and pediatricians: evaluation and engagement. American Academy of Pediatrics website. Published 2011. Accessed September 18, 2015.

9. Vasilogambros M. How states rank on high-school graduation rates. The Atlantic website. states-ranked-graduation-rates/401330/. Published August 16, 2015. Accessed September 23, 2015.

10. Better education = healthier lives. Robert Wood Johnson Foundation website. Published August 28, 2012. Accessed September 23, 2015.

11. Kelleher KJ, Cooper J, Deans K, et al. Cost saving and quality of care in a pediatric accountable care organization. Pediatrics. 2015;135(3):e582-e589.

12. Slonim AD. Risk informed evaluation of patient safety training. Presented at: the Agency for Healthcare Research and Quality 2009 Annual Conference; September 15, 2009; Rockville, MD. Accessed September 23, 2015.

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