Ring 4: Bundled Payments
April 24, 20153 Myths and Facts about the reforming market in 2015 for Medical Devices
May 26, 2015
The rise of healthcare reform and the Affordable Care Act created a new industry buzzword: Accountable Care Organizations (ACOs). ACOs have become a new focal point of attention in the marketplace for one simple reason: ACOs provide a pathway for simultaneous cost reduction, healthcare utilization management, and positive economic incentives.
There is a lot of confusion on the part of suppliers about the way ACOs are organized, operated, funded, and incentivized. Accountable Care Organizations are forming at many levels in the U.S. market. Some of the ACO models are:
- Medicare sanctioned and are focused on Medicare patients
- 3rd party insurance, primarily as a risk-transfer alternative
- Internal health plans by major employers that “self-insure”
Accountable Care Organizations may be formed and operated by physicians, hospitals, or payers. The accountability depends upon the contracting arrangement. Some ACOs are accountable for all the healthcare needs for a specified population of people, i.e. a number of Medicare enrollees residing in specific zip codes. Other ACOs are structured to take accountability for a specific disease state within a geographic area and/or with assigned patients.
Payments to Accountable Care Organizations also depend upon the contracting arrangement, and can be:
- fee-for-service
- case rates
- episodes of care
- capitation
ACOs are incentivized to deliver high quality healthcare services at lower costs. In this way, ACOs are focused on “shared savings.” Savings are indexed to a combination of quality scores, patient satisfaction, and the cost of delivering care to the assigned population. ACOs are paid a portion of the savings, if A) costs are decreased from a declared starting point, and if B) a target level of cost savings are attained. Cost savings accrue from eliminating duplication of services, applying evidence-based medical processes, coordinating the care of the patients, and applying preventative practices that have high returns in the assigned population.
Some sales and marketing teams have considered how to target ACOs and start promoting devices and services directly to them. Those efforts have borne little fruit because ACOs are a healthcare services management framework that helps providers get their “operational house in order.” The operational challenges that accountable care provokes are: clinical integration, process of care innovations, and population health management. Medical devices are not perceived to be a primary resource in this effort; they become ancillary.
Selling to an Accountable Care Organizations can be successful, if the solution has a population health management, population risk-mitigation, or utilization reduction capability. Few medical devices being offered today have been designed to deliver these capabilities, even if they are integral to the achievement of these goals. Which solutions tend to get the attention of ACOs today?…Informatics solution providers, and population health IT providers. Why? these suppliers are perceived to more directly assist the ACO to operate as a healthcare services entity formed to manage the value-based delivery of services to an assigned population.
Therefore, enlightened device maker organizations should monitor the actions of ACOs to determine which populations and disease states they are addressing. By tracking this activity, the positioning of a device in the care delivery setting can be accomplished more effectively, more credibly. For example, if an Accountable Care Organizations is working on reducing heart-failure complications and costs, the clinics and cardiology departments where these cases land are still the location of the sales call. The enlightened salesperson will seek out the Service Line VPs and orient the discussion toward clinical risk-management, outcomes improvement, streamlining processes, and complication avoidance. To connect with the ACO these goals must be tied to the relevant solution attributes. Therefore, a traditional, feature-function presentation of a previously “in-demand” solution, if made to any decision-makers in an ACO-affiliated provider, is becoming a more difficult path to winning that provider’s business.
By:
Total Innovation Group, Inc. Senior Partner
and
Gunter F. Wessels, Ph.D., M.B.A.
Total Innovation Group, Inc. Practice Principal, Parter
To Read more about 5 Rings of Healthcare Reform℠ see other Blog post below: