July 17: Lower costs elude hospitals

“Pioneer’’ health systems in a federal pilot program made progress in improving medical care, but most were unable to cut costs.

Hitting the bull’s-eye on a “triple aim” of improvements under the federal health law promises to be a major challenge for the nation’s hospitals.

Initial results from a federal pilot program released Tuesday showed that hospitals excelled at improving the quality of medical care and in getting high marks from patients. But a majority struggled with the third goal — lowering the cost of care.

After the first year of the program, just 13 of the 32 participating health systems were able to lower health care costs for such conditions as diabetes and high blood pressure. Two hospitals lost money.

“We’re still learning,” said Patrick Flesher of Allina Health, one of three Minnesota health care organizations selected as a pioneer Accountable Care Organization as part of a program created under the federal health law.

Still, federal officials heralded the program’s first year, saying it saved nearly $33 million in the Medicare program primarily by reducing hospital admissions and readmissions.

“The Affordable Care Act has given us a wide range of tools to realign payment incentives … and these efforts are already paying off,” Marilyn Tavenner, an administrator with the Centers for Medicare and Medicaid Services (CMS), said in a statement.

Health care systems in 18 states signed up to be “pioneers” to help set standards that could move the U.S. health care system away from the current mode of paying doctors and providers for each medical service toward one that rewards health systems for being efficient and getting patients healthier.

None of the Minnesota hospitals — Allina, Fairview and Park Nicollet — succeeded in lowering costs, which would have rewarded them with additional federal money. But officials with the three Twin Cities organizations said they had slowed the pace of cost increases or otherwise “controlled” the total cost of care for their patients covered by Medicare.

Allina’s expenses grew by eight-tenths of 1 percent, which officials said was “very low” compared with historical rates, and annual costs for Medicare patients were 10 percent below the national average.

A key was forming advance care teams of nurses as well as pharmacists and social workers to focus on the more chronically ill patients at clinics, said Flesher, who coordinates the initiative for the Minneapolis-based Allina. The hospital also used data analytics to try to identify patients most likely to be readmitted.

“It’s a lot of work we were already doing, but the benefit of participating in the Pioneer ACO program is that it gave us an extra incentive, and extra kick, to perform and focus on it,” Flesher said.

Fairview and Park Nicollet wouldn’t provide numbers but said their results were in line with other Twin Cities-based health care organizations.

Jennifer Amundson, a spokeswoman at Fairview Health Services, said the Minneapolis-based organization will use the second year of the federal pilot to “strengthen our data analytics, care management and clinical capabilities.”

The “accountable care” concept is gaining widespread use among health insurance companies and provider systems, beyond the federal government’s official efforts. The idea centers around more efficiently taking care of patients — such as remotely monitoring their blood pressure or weight gain, and tapping into electronic medical records to coordinate care among specialists or to avoid ordering duplicate lab tests.

In the Twin Cities, a number of health insurers, doctors groups and hospital systems have formed similar partnerships, with the organizations sharing the risk of taking care of the sickest of patients, but also benefiting from the cost savings. Minnetonka-based United­Health Group, operator of the nation’s largest insurance company, now plans to more than double such value-based payments over the next five years.

One of the nation’s top-performing pioneer accountable care organizations was Bellin-ThedaCare Healthcare Partners out of Appleton and Green Bay, Wis. The system lowered its total cost of care by 4.6 percent for the first year of the ACO program. Nationwide, overall care costs by the pioneer ACOs grew by three-tenths of 1 percent.

“On a broad cultural scale, we have providers thinking of preventive [care] coordination,” said Dr. Dave Krueger, Bellin-ThedaCare’s executive director and medical director. “Our primary-care docs are thinking more about taking responsibility for patients after they leave their offices.”

Krueger attributed his group’s performance to cost-control measures that were in place before Bellin-ThedaCare joined the CMS project. He especially credited an emphasis on outcome-based payments built into the contracts with care providers, or “payment for value vs. volume.”

The concept that Bellin-Theda­Care tried to drive home was that primary-care physicians and specialists have to depend on one another for success. The message came through by tying payments in part to what kind of experience patients felt they had when they visited the doctor. It also came from hard metrics like hospital readmissions. “What we thought the [pioneer ACO] program could do for our patients is coming true,” Krueger said. “This dream of high-quality care and lower costs can happen.”

jackie.crosby@startribune.com • 612-673-7335

jim.spencer@startribune.com • 1-202-383-6123

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