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Q&A with Charles Kennedy, MD
Dr. KennedyLess than a week after Charles Kennedy, MD, the CEO of Accountable Care Solutions for Aetna, spoke to Managed Healthcare Executive about the company strategy in the ACO space, the plan announced yet another accountable care agreement. This time, Aetna forged a partnership with Valley Preferred, a PPO aligned with the Lehigh Valley Health Network in Allentown, Pa.
More than 1.3 million of the insurer’s 44 million members could be served by the new ACO. And that’s just one example of the pace at which the accountable-care model growing.
Q: What is the general outlook and the goals for Aetna’s ACO strategy?
Kennedy: To date, we’ve been able to put into play 32 ACO agreements with leading health systems. We have a very robust pipeline of over 200 and if you look at the service area that those delivery systems cover, that’s about 60% of the U.S. population. We’re on a path to really make accountable care a foundational component of what Aetna does and how Aetna creates or supports the attainment of the Triple Aim for its customers and patients and physicians nationwide.
Q: What is something that you’ve learned about ACOs and the dynamic between payers and providers? Because this is an emerging model, it really does change the negotiations.
Kennedy: The most important thing we’ve learned is that the accountable care concept does something important for healthcare, which is change the underlying business model. Accountable care has become critically important to many of our customers because it represents a new way of being financial sustainable.
Second, the relationship we’ve formed with the delivery system is one based on collaboration, partnership and transparency. And, what we mean by that is traditionally the delivery system and the health plan would hoard data and not share data among one another. In our model, we share as much data as we possibly can because through our collaborative relationships, based on gain-share or risk-share contracts, it now makes all the sense in the world for a health plan to deliver all the claims data or other data that it can find because we are now in a collaborative relationship designed to achieve the Triple Aim, rather than a confrontational relationship designed to manage price.
The simplest way to think of what we do is: enablement and monetization. Enablement means we’re going to deliver to our clinical partners the technology, care management programs and the consulting support to allow them to transition from a fee-for-volume to a value-based world. Monetization is providing the contractual relationship that allows you to be rewarded for achieving the Triple Aim as well as the financial administrative infrastructure necessary for you to be successful.
Q: Are providers embracing the value-based care idea? Or do you think they’re reluctantly accepting it?
Kennedy: Some of both. What you will typically see is that the ACO concept has been successful at improving the quality of care. What is much less well documented is the financial viability of these types of arrangements. And, if you look at the results that participants in the federal program have shared, many of the organizations did not save any money. A few did, and some actually were unsuccessful at becoming more efficient.
In the early stages, and in order to get physicians and delivery systems more on board with accountable care, we’re going to have to develop more tools that allow the financial components of the new business model to be more commonly realized.
Q: That’s a big concern because the last thing you want is to create an ACO, and hospitals end up going out of business because they can’t make it financially viable.
Kennedy: That’s not a simple question because we all know that a lot of the savings are going to come out of the inpatient or hospital component of the overall healthcare delivery system.
Think about any business: the hardware business, a grocery store, anything. All of those businesses invest substantial amounts of money in understanding their customers. In the hospital and healthcare delivery system environment, that is not a common way of thinking.
One of the early things we do in many of our ACO relationships is to simply analyze our claim data and find “leakage” and “keepage” percentages. What percent of the dollars that those individuals are spending are staying within your system and what percent are going outside the system? And it’s always a big eye opener to our delivery system customers how much care their patients are getting at other facilities.
Through applying techniques like managing leakage or promoting keepage, there are reasons to believe that this could be a sustainable financial model.
Q: You completed the Coventry acquisition last year. How does Coventry fit into your ACO strategy?
Kennedy: Coventry has had a series of high-performance or narrow networks, types of contractual arrangements that have many similarities with our ACO strategy. We are assessing and actually putting in production ways of taking those narrow network relationships and extending them in full ACO relationships.
[Editor’s Note: Coventry added more than 5 million total members, including 1.5 million Medicare Part D members.]
Q: Do you think ACOs are effectively controlling costs now, and what about for the long term? Is the ACO the way to bend the curve?
Kennedy: I think the jury is still out on that, but I believe it is the best strategy that the healthcare industry has available to it. It’s just too early to know.
What we are really trying to do with the ACO strategy is take delivery systems into a value-based world. That means new technology. Electronic medical records themselves don’t promote value-based care. But you’re going to see a next generation of tools come out over the next year that are more specifically focused on value-based care than volume-based care, which is really when electronic medical records got their start.
The technology’s immature and will evolve, and I’m seeing substantial investments within organizations. We spent over $1 billion acquiring companies like Medicity, Active Health and others with a specific focus on having the technology to work with value-based care.
The other big requirement for value-based care is having successful care management programs. And, traditionally you’ve seen care management programs provided by large national health plans, where we’ve used claim data and programs that have not been integrated with what the delivery system is doing.
But, what has been a weak spot in these models is that that program isn’t well coordinated with the day to day activities of your physician. And that’s another innovation that accountable care provides. Now that we have shared economic interest and now that we have transparency, it begins to make a lot more sense. I do believe we’ll see incremental value as that plays out.
Q: Do you see that health IT is getting a lot more attention for investment from providers?
Kennedy: Not so much an increase in spending on health IT, you’re likely to see a change in emphasis of spending. Instead of focusing as much on the electronic medical records, you’re going to see organizations focus more on adjacent technologies that specifically enable ACOs for things like population analytics.
People use the term “big data” quite a bit to try and talk about using a wide variety of data streams and trying to understand behaviors and actions of patients in their interactions with the healthcare system. You’ll see a switch more toward data-centric strategies than electronic medical records, which are more of a document-centric infrastructure.