“‘Accessing Accountable Care Organizations: Cost, Quality, and Market Power,’ a special issue of the Journal of Health Politics, Policy and Law (volume 40, issue 4), is an in-depth look at accountable care organizations (ACOs): networks of hospitals, physicians or other health care providers that share financial and medical responsibility for the coordinated care of a patient.
Now numbering over 700 throughout the United States, ACOs were rare prior to the passage of the Affordable Care Act. Their increased presence has sparked a debate about issues important to patients, providers, and taxpayers throughout the nation. ‘Integrated health delivery systems and accountable care organizations are becoming ubiquitous in our health care system,’ Richard Scheffler, special issue editor, states. ‘They potentially could bend the cost curve and improve the quality of care, but they also present a threat to the competitiveness of health care markets.'”
Petris Center Director Dr. Richard Scheffler was awarded the Gold Medal of Charles University in Prague, Czech Republic for his “extraordinary contribution to the international science and post-doctoral education in the field of health policy and health economics from 1990 till present”. This award was presented by the Dean of Faculty of Social Sciences at Charles University during our Fogarty International training conference May 30th, 2015. The full press release issued by Charles University can be found here.
California’s state government, employers and families are concerned about the affordability of healthcare in California. The Affordable Care Act is likely to have opposing effects on healthcare expenditures. On the one hand, the number uninsured in California is expected to decrease from 6.0 million to 2.6 million between 2011 and 2016, leading to increased expenditures (CalSIM, 2014; Hadley et al., 2008). On the other hand, payment and delivery innovations within the Affordable Care Act and private market have the potential to reduce expenditures (McClellan, 2014), but there is a concern that provider consolidation may lead to higher prices (Health Care Cost Institute, 2014; Baker et al, 2014; Robinson, 2011; Berenson et al., 2010). In this report, we forecast health expenditures in California from 2013–2022 using the Berkeley Forum Healthcare Expenditure Forecasting Model discussed in A New Vision for California’s Healthcare System: Integrated Care with Aligned Financial Incentives (Scheffler et al., 2013).
Then, we disaggregate spending by service type and source of payment. Next, we identify the key factors driving health expenditure growth and discuss each factor’s contribution. Finally, we estimate the progress toward the Berkeley Forum Vision of increasing risk-based payments and integrated care. Our principal data sources include the Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary’s National Health Expenditure Account historical and forecasted estimates (CMS, 2014a, 2014b, 2011).
There is new evidence that California’s accountable care organizations (ACOs) are growing in size and number, serving more patients, and improving the quality of care—according to a report released today by the Berkeley Forum for Improving California’s Healthcare Delivery System. California has more ACOs (67) than any other state in the country, with particularly rapid growth over the past two years. The report estimates that, by February 2016, more than 1.3 million Californians will be receiving their care from ACOs. The growth is projected to occur in nearly all regions of the state.
“The next few years are likely to bring continued growth and diversity in accountable care models that move increasingly toward being paid for meeting cost and quality targets,” said Stephen Shortell, lead author of the report and chair of the Berkeley Forum.
ACOs are defined as medical groups that contract with Medicare and/or commercial insurers to care for a defined population of patients and that are held accountable to meet cost and quality criteria. In a 2013 report, Berkeley Forum leaders called for at least 50 percent of Californians to be receiving care under new payment models that encourage keeping people well by 2022; and having at least 60 percent of Californians receiving their care from integrated care systems, versus only 29 percent today.
“California is fortunate to have many integrated healthcare delivery systems at various stages of development. The advancement of these systems into accountable care organizations and partnerships should be viewed as an important and very positive innovation in payment and health care delivery,” said Tom Williams, immediate past-president of the Integrated Healthcare Association and vice president of accountable care operations and strategy at Stanford Health Care.
Emerging evidence suggests that the quality of care that ACOs provide is as good, and on some measures, better than that provided by other models of care. Further, patients receiving care from medical groups with ACO contracts had consistently higher satisfaction scores than patients receiving care from groups without ACO contracts. This included measures of access to care, overall coordination of care, actions to promote health, communication with doctors, helpfulness of office staff, and overall ratings of care. While full cost-savings data are not available, preliminary evidence from an ACO contract in Sacramento found savings of $20 million, with no increase in health insurance premiums for California’s CalPERS enrollees.
The study also addressed the concern that as ACOs grow in size they may exert pressure to increase prices. “But at this point in time, our analysis indicates there is little evidence to support such concern”said Richard Scheffler, report co-author and Vice Chair of the Berkeley Forum.
Based on existing and ongoing study, the UC Berkeley School of Public Health team identified six factors associated with more successful ACOs. These include:
Achieving sufficient size to spread costs,
Developing new models of caring for high complex/high risk patients,
Expanding the use of electronic health records,
Developing effective partnerships with post-acute care providers and specialists,
Motivating patients and families to become more engaged in their care, and
Using standardized and transparent quality of care data for the purposes of public reporting and internal quality improvement.
The report also found that ACO location is positively associated with the number of HMOs in an area, which suggests that ACOs may be a competitive response to HMOs or that the knowledge needed to run a risk-based plan is more available in these areas. Counties with greater hospital concentration were negatively associated with having an ACO in the area and with ACO enrollment.
The report notes the need for continued technical assistance for smaller physician practices, those serving the Medi-Cal population, and those providing care in rural areas. This is particularly true in regard to electronic health record capabilities, and encouraging greater participation in quality improvement training and quality improvement collaborations.
The Berkeley Forum for Improving California’s Healthcare Delivery System is a partnership between private and public sector leaders in California to address the challenge of developing a more affordable and cost-effective healthcare system that will contribute to improved population health for all Californians. The University of California, Berkeley School of Public Health serves as a neutral facilitator for discussions and as the analytic staff for this effort.
A report released November 19 by the Berkeley Forum finds that California hospital spending could be reduced by billions of dollars over the next eight years if patients’ wishes about palliative care were honored. The Forum—a collaborative effort involving executive leadership of major health insurers, health care delivery systems and the State of California with health policy experts from the School of Public Health at UC-Berkeley—previously issued a Vision of increased choice and better value for patients nearing end of life. The new report builds on that Vision, highlighting three major programs that give patients in California greater choice of care outside the hospital. The programs’ interdisciplinary teams incorporate patient goals and wishes when planning treatment, resulting in patient-centered care that tends to move people out of intensive hospital settings and into care in the community.
“Our review shows that offering more choices to patients can not only increase satisfaction with care and improve outcomes, but also divert spending from expensive and unwanted services,” said Eric Kessell, policy director for the Berkeley Forum and lead author on the report.
The study also found that by expanding access to community-based palliative care to over 100,000 Californians a year through 2022, more than $5.5 billion could be moved from high-cost, unwanted hospital services while honoring patient wishes for care at home and in other community settings.
“The wishes of patients, their families and loved ones should be honored at the end of life,” said Richard Scheffler, co-chair of the Berkeley Forum. “Many of them do not want to die in a hospital. This report gives them other choices.”
In order to achieve this Vision, conversations about palliative care will need to be incorporated throughout the healthcare delivery system, with increased use of nurse practitioners and other healthcare professionals, and a tripling of physicians certified in hospice and palliative medicine.
Stephen Shortell, chair of the Berkeley Forum, said, “The increased interest in palliative care is part of a larger movement toward greater patient and family engagement in all aspects of their care over the life course.”
“Expanding palliative care in California is the right thing to do on every level. It is what patients want, it improves outcomes, it lowers costs and most importantly provides compassionate relief to those suffering.”
— David Feinberg, president and CEO of the UCLA Health System and UC Health’s representative on The Forum
In a typical day, Californians spend over $850 million on healthcare. In a typical year, 53% of the state’s healthcare expenditures are spent by just 5% of the population. More alarming is the fact that by 2022, total employer-based insurance premiums for a family are projected to consume almost a third of median household income. Similarly, the share of the Gross State Product consumed by healthcare continues to grow; it is projected to rise from 15.4% in 2012 to nearly 17.1% in 2022, reducing our ability to invest in other crucial areas. We also face a continuing obesity epidemic that results in growing rates of chronic diseases skewed to the lower end of the socioeconomic ladder. Additionally, the state’s healthcare system will be stressed even further due to several million additional Californians gaining insurance coverage via the Affordable Care Act. These are just some of the reasons it is critical that we address the financial sustainability of the state’s healthcare system without delay. It is time for fundamental change. It is time for action.
Recognizing this, California private and public sector leaders came together in an unprecedented collaborative effort, with academic expertise and analytic support provided by the University of California, Berkeley’s School of Public Health, to address these challenges. Determined to avoid solutions divorced from societal, regulatory and political realities, the Forum has devised a transformational, bottoms-up approach to creating a more affordable, cost-effective healthcare system that would, at the same time, improve Californians’ health and well-being.
Do healthy people go to church, or does church make you healthy? If the answer is that church makes you healthy, what is the mechanism? Leaving out divine intervention, what happens in church that produces health?
Economists and other social scientists have examined the relationship between health and social capital, which includes church, social clubs and having a support network of friends. Social capital provides information on health habits, better doctors or hospitals, and reduces stress, which can lead to heart disease and mental problems.
But we must confront the problem of causation. Those who attend church are on average healthier than those who do not: the selection effect. To deal with this, we would need to study the health of those who are randomly assigned to attend church and who do not attend.
Without this evidence, we can only hope that going to church makes us healthier, though it might be a good thing anyway.
Madrid, April 22, 2013
The writer is a professor of health economics and public policy at the University of California, Berkeley.
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Berkeley — An unprecedented, year-long collaborative effort involving policy experts from the University of California, Berkeley, CEOs of major health insurers and health care delivery systems, and
leaders from California’s public sector has produced a detailed roadmap that would transform the state’s health care system and improve care and outcomes while saving billions of dollars in the process.
The members of the Berkeley Forum for Improving California’s Healthcare Delivery System have agreed to support a risk-adjusted global budget model of paying for coordinated care, and on Tuesday, Feb. 26, will issue a detailed report on specific actions that would save the state of California $110 billion – about $800 per household annually – over the next decade.
Global budgets, whereby physicians and hospitals optimize care under pre-determined expenditure targets, are a major shift from today’s predominantly fee-for-service environment. The current system, in which providers are paid for each treatment or procedure rendered, leads to the provision of more and duplicative services rather than efficient care that promotes good health, the report authors said.
“For the first time, the key actors who deliver and pay for our health care have come together to support a roadmap for fundamental change in how we buy and provide health care services,” said forum chair Stephen Shortell, the Blue Cross of California Distinguished Professor of Health Policy and Management at UC Berkeley and dean of the School of Public Health. “They agreed that fee-for-service must be put to bed and that they support actions to move towards global budgets that will facilitate major innovations in delivering better, more coordinated care.”
The report comes as the state prepares to implement the Affordable Care Act, which will add millions of additional people to the health insurance roster. (A PDF of the forum’s full report, “A New Vision for California’s Healthcare System,” is available here. The executive summary is also online here.)
Convened by experts from UC Berkeley’s School of Public Health, forum members include presidents and CEOs of Anthem Blue Cross, Blue Shield of California, Cedars-Sinai Health System, Dignity Health, Health Net, HealthCare Partners, Kaiser Permanente, MemorialCare Health System, Monarch HealthCare, Sharp HealthCare and Sutter Health. The heads of these hospital systems, medical groups and health insurers joined state and federal health care officials in a series of meetings held throughout the past year.
UC Berkeley’s Richard Scheffler, Distinguished Professor of Health Economics and Public Policy and director of the Petris Center on HealthCare Markets and Consumer Welfare, and Liora Bowers, director of Health Policy and Practice at the Petris Center, are lead authors of the report. While designed in the context of California’s unique set of health care challenges, the initiatives endorsed by the forum offer relevant and realistic reforms for states across the country, they said.
“The report represents an innovative private sector approach to a problem that the federal and most state governments have failed at: improving quality and slowing the rate of health care spending,” said Scheffler.
At the core of the forum’s report are two interrelated proposals to fundamentally change how health care services are financed and delivered. The first entails a major shift toward the use of global budgets, which would be adjusted for the underlying health of patient populations. Payments would also be partly tied to quality of care and patient satisfaction measures to ensure that high standards of care are maintained.
The second proposal calls for broader access to and participation in integrated care systems that coordinate care for patients across conditions, providers, settings and time. Many of the forum participants’ organizations are already implementing new payment and care coordination models.
“The Forum Vision represents a bottoms-up, reality-based approach to addressing the cost of health care in California, and it comes as the state prepares to insure an additional two million people or more through the Affordable Care Act,” said Shortell. “Getting the buy-in of the health care industry is critical for this effort. The Berkeley Forum represents the first time that top leaders in the private health care industry collectively voiced support for a transition to global budgeting and integrated care systems.”
The Forum Vision described in the report sets a goal of reducing the share of health care expenditures under fee-for-service systems from 78 percent to 50 percent by 2022. The forum also sets a goal that 60 percent of California’s population – equivalent to about 23 million people today – be enrolled in fully or highly integrated care systems by 2022, a doubling of the current figure.
“Health care costs are a great concern for all of us,” said L. Wade Rose, vice president of external and government relations of Dignity Health, the largest hospital system in California. “It is vitally important that health care services in California are affordable so that all people who need care can receive it. We know how to improve health care in the state, and the Berkeley Forum’s report identifies some of the specific measures that will help sustain access to care for all Californians.”
Beyond expanded use of global budgets and integrated care, the forum members are supporting six additional initiatives that would simultaneously improve care and increase savings.
Those initiatives address the need for better management of chronic conditions; expanded access to palliative care; programs to help the inactive engage in more physical activity; efforts to reduce infections acquired in health care settings; prevention of pre-term births and greater reliance on nurse practitioners and physician assistants for primary care services.
“Creating a forum for multiple parties — medical groups, hospitals, insurers, regulators and academics — to discuss industry issues and collaborate on solutions is groundbreaking, and it puts us on a path to improving the ailing California health care system,” said Pam Kehaly, president of Anthem Blue Cross.
Currently, California spends more than $850 million per day on health care, according to the report. The report projects that health care costs in California will total $4.4 trillion from 2013 to 2022 under the status quo. By 2022, state health care spending is projected to increase to 17.1 percent of the state’s economy, and health insurance premiums for families would amount to nearly one-third of median income.
Full implementation of the Forum Vision will require a new regulatory framework that allows for the development of more integrated care systems, provides incentives for efficiency and quality, and promotes market-based competition, according to the report. The report also noted that the growing rates of employer self-insurance, as well as government policies and private sector market forces that contribute to a decline in commercial HMO enrollment, present additional challenges to the vision that need to be addressed.
“We must make meaningful reform to the health care delivery system,” said Dr. Robert Margolis, CEO of HealthCare Partners LLC. “This Berkeley Forum report provides a roadmap for private industry and government officials that will benefit California residents from a quality and cost standpoint.”
Forum members point out that working in the vision’s favor is the fact that it is aligned with the goals of Gov. Jerry Brown’s recently released “Let’s Get Healthy California” initiative, which is designed to make California the healthiest state in the nation over the next 10 years. Forum participants pledged to work with all sectors to achieve the cost savings that will be needed to support the state’s overall health objectives.
“What makes the actions to be taken stand out is that they were borne out of a collaborative effort among industry and government agencies,” said Scheffler. “Health care reform is just too complex a problem for any single firm, industry or government agency to tackle, so having these parties come to the same table and reach a shared understanding for how to improve health care quality while reducing costs is a remarkable achievement.”
Stephen Shortell, Blue Cross of California Distinguished Professor of Health Policy and Management, dean of UC Berkeley’s School of Public Health, chair of the Berkeley Forum,firstname.lastname@example.org, (510) 643-5346, C: (510) 410-9082
Richard Scheffler, Distinguished Professor of Health Economics and Public Policy, vice chair of the Berkeley Forum, email@example.com, (510) 643-4100, C: (510) 508-5079