Learning from AdvocateCare: How Pathologists are Bolstering Growth and Savings in a Commercial ACO
Coordinated care models in the private sector—now totaling over 250 across the country—are far outpacing the 116 accountable care organizations (ACOs) now launched under the Medicare Shared Savings program, driven not so much by the health care reform law, but in pursuit of containing costs and increasing quality of care and value for both patients and payers. And promising early results of one of these models launched on Jan. 1, 2011—AdvocateCare in Chicago—indicate that delivery reform is working, revealed the system’s Executive Vice President and Chief Medical Officer, Lee Sacks, MD, during his June keynote address at the National ACO Summit in Washington, DC.
AdvocateCare is a three-year partnership between one of Illinois’ largest hospital systems, Advocate Health Care, and Blue Cross Blue Shield of Illinois (BCBSIL), the system’s largest payer. Through the third quarter of this year, AdvocateCare’s hospital admissions were down 11.3% and the length of stays were down 1.2%, compared to the previous year, said Dr. Sacks. On the outpatient side, surgeries were down 9.4% and advanced imaging was down 6%. AdvocateCare also began participating in the Medicare Shared Savings Program beginning July 1, 2012.
Of course, many will view these figures as lost revenue, conceded Dr. Sacks. But instead of contracting, Advocate continues to expand—no easy feat given the competitive market in metro Chicago where the system has eight hospitals, in addition to two outside of the city. “In the fourth quarter of 2011, our market share has ticked up in a market that is declining,” he said. In fact, by the end of 2012, the ACO’s attributable lives number is expected to climb 70,000 to 395,000, up from 325,000 at the model’s launch.
Centralizing Lab Operations
AdvocateCare’s pathologists have an important role in helping the ACO achieve its goals, because they have a “laser focus” on quality and costs, explained Michael Weldon-Linne, MD, FCAP, who is Chairman, Department of Pathology at the system’s Illinois Masonic Medical Center (IMMC). One of the largest hospitals in AdvocateCare, IMMC is located on the north side of Chicago and averages approximately 142,000 patient visits to primary care and specialty centers a year.
There has been a robust pathology endeavor at Advocate dating back ten years ago, when Advocate partnered with Aurora Healthcare in Wisconsin to establish a consolidated centralized laboratory operation—ACL Laboratories—to provide laboratory and pathology professional services to the two health systems. Headquartered outside of Milwaukee, ACL Labs is owned and operated equally by Aurora and Advocate. Midwest Diagnostic Pathology contracts with Advocate in Illinois and Great Lakes Pathology contracts with Aurora in Wisconsin to provide pathology professional services for their respective health systems and medical leadership for ACL Laboratories.
Since the establishment of ACL Laboratories and centralization of laboratory operations, pathologists have worked with technical staff to drive down the cost per relative value unit in the laboratory by 20%—from $10.20 to $8.40. “Given that expenses, in terms of labor, supplies, etc., kept increasing, this was a challenge,” said Dr. Weldon-Linne, who is also Vice President of Midwest Diagnostic Pathology and member of CAP’s ACO network. “However, we were aggressive in standardizing policies and instrument platforms, as well as centralizing purchasing contracts, such as for reagents.”
In addition to cutting costs, ACL Laboratories also focused on revenue growth by marketing its “outreach” services to non-hospital customers. Pathologists have also significantly broadened the menu of molecular pathology and genetic tests, which expanded the level of service and increased revenue.
Dr. Weldon-Linne pointed out, however, that a focus on quality and service are equally important as cost efficiency and revenue growth. “We benchmark and monitor numerous performance parameters using dashboards in order to really hone in on quality,” he explained. “Pathologists are held accountable, through leadership and a system quality council, for driving these quality activities.”
The cost savings, increased revenue, quality activities, and strong pathologist integration in the system has also paid off for the Advocate pathologists in their incentive-based contracts with Advocate and Advocate’s PHO – Advocate Physician Partners. These contracts—coupled with the system’s solid bedrock of clinical integration—meant that participating in the MSSP and the partnership with BCBSIL was simply a matter of layering another coordinated care structure atop the existing foundation.
“Advocate has a strong background of being focused on improving quality and service and cost efficiency both in their hospitals and in the PHO, therefore Advocate decided that many of the key pieces were in place to operate as an ACO,” he explained.
Dr. Weldon-Linne also believes that pathologists are central to ACOs, emphasizing that efforts to improve efficiency and quality may take root in the laboratory, but they radiate throughout the entire health system. “The reality is that coordinated care is the direction that health care is going,” he said. “Pathologists need to be at the heart of this movement, particularly when it comes to driving clinical integration.”
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