ACOs: Recognizing the Opportunity for Your ASC

This article is written by John R. Seitz, CEO and Co-founder MMX Healthcare and Tamar R. Glaser, President and Co-founder, MMX Healthcare.

While once a remote possibility, ACOs are now a fast growing reality. This article (attend the presentation at the 20th Annual Ambulatory Surgical Center’s Conference, October 24 @ 11:45) will prepare your ASC for this opportunity by:

•    Reviewing the current status of ACOs
•    Discussing the hurdles you face in preparing for ACO and health system integration
•    Presenting options for the development of an integrated ASC network as a vehicle for contracting.

The current status of ACOs
The goal of an ACO is to encourage physicians and hospitals to coordinate care by holding them jointly responsible for the quality and the cost of care. An ACO can bring together any number of unrelated entities – primary care practices, hospitals, ASCs, diagnostics, home care, pharmacies – to oversee and coordinate care for a defined population of patients. At its core, an ACO attempts to gain the benefits of an integrated delivery system (such as Kaiser) without the restrictions of common ownership or physical facilities.

As the Becker’s ASC article “100 Accountable Care Organizations to Know” 1 demonstrates ACOs are here and they are proliferating. CMS issued a press release in January 2013 that opened with this statement: "Doctors and health care providers have formed 106 new ACOs in Medicare, ensuring as many as 4 million Medicare beneficiaries now have access to high-quality, coordinated care across the United States."2 Although coordinated at the federal level by the Centers for Medicare and Medicaid Services (CMS) to reduce Medicare spending, the ACO model has also captured the attention of commercial payers.  Rather than wait for the results of the CMS pilots, they are partnering with physician groups and hospitals to launch ACOs that cover their members. While reimbursement models are still being defined all ACOs use a "shared savings" approach to motivate participants to coordinate care and lower costs. This requires the use of evidence-based care practices and shared information technology.

Hurdles in preparing your ASC for ACO and health system integration
To participate in an ACO and to generate “shared savings” revenue, your ASC must be prepared to meet certain requirements. Most of these requirements are related to being part of a larger network, or a network of independent ASCs formed to participate in ACOs. Requirements include:

•    Legal Structure: A legal structure that allows the receipt and distribution of bonuses to providers
•    Common Leadership: A common leadership or management structure that has decision-making authority for the organization
•    Information System: A common information system (or a way to gather information into a common platform). This could include a health information exchange that enables participates to leverage existing information systems and to exchange data across locations.
•    Quality Reporting: A defined process to promote care quality, report on costs and report on outcomes.

Options for developing a network of ASCs
ASCs are in a position to benefit from contracting with ACOs and to participate in the revenue that shared savings may generate. While there may be many options for ACO contracting, it makes sense to consider the two extremes that can be termed "local/general" and "wide/specific" networks.

In a local/general network one or more ASCs would form an integrated network with other geographically related providers (imaging, therapy, specialty physician groups, hospital) while meeting the requirements detailed above. The ASC would negotiate internally within the organization for rates and shared saving dollars. The benefits of this approach could include working with known providers, an understanding of the local market, and an easier implementation of communication and system integration. The disadvantages of the local/general network could include lack of leverage with other providers (hospitals, physician groups) in the same organization, lack of control, and limited market revenue.
In the wide/specific network a group of independent ASCs for an organization to cover a broad geographic territory and bid on all ACO contracts within that territory. The advantages to this approach could include rate and marketing leverage, contracting benefits (wider area covered), and overall higher reimbursements. The disadvantages would be the incremental complexity in developing a wider organization with the inherent governance and control issues.

ACOs are here to stay. ASCs must examine the opportunity and determine where, when and how to enter this opportunity.

About the Authors:
John Seitz is CEO and Founder of MMX Healthcare. John has an extensive and proven track record in the development and management of surgical centers for over 11 years. Prior to that, John worked extensively with physicians and medical groups – forming one of the largest and most successful integrated physician groups (a precursor to CINs) in the country.

Tamar Glaser, RN, President and Founder of MMX Healthcare; CEO of Accreditation Services, Inc.Tamar is a well-established leader in the field of ASC accreditation and compliance. Tamar provides both the design-input and the subject matter expertise for AccredAbility. As CEO and Founder of Accreditation Services, Inc., Tamar has a proven track record of success with over 120 surgical centers in the United States.

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