In the search for meaningful patient care improvements and sustainable financing, some independent physician groups are charting unique approaches that may offer models for payers and providers in the age of cost-containment and risk-sharing.
Created in 1979 amid the rise of HMOs in Southern California, the Heritage Provider Network has evolved into an independent group practice with 2,100 primary care physicians working on a clinical model that tries to make managed care feel less "managed" and bridge gaps between social, personal and health issues before they grow into bigger, costly problems.
As part of a large commercial accountable care contract covering 70,000 lives and three Medicare ACOs, Heritage Provider Network is scaling up services it has been pursuing since before health reform and positioning itself as an payer-agnostic partner for insurers for the post-fee-for-service era.
With about one million patients under their watch, mostly in California, as well as in New York and Arizona, Heritage has tried to capitalize on community-and home-based interventions, particularly for Medicare patients.
Some months, Heritage practices help host 200 different events with community centers and assisted living facilities -- from bingo to cooking classes to botanical garden trips -- that offer new social interaction for patients and a way for a nurse to remind them about flu shots, blood sugar testing and the like.
"This is a population that has needed this for some time," said Jonathan Gluck, senior executive and chief legal counsel at Heritage. "Patients who've only left their house to go the store now have something to do and friends to talk to. A lot of the issues that lead to repeated hospitalization are not simply medical issues, they are social issues."
Those events, initially started to help connect with Medicare Advantage patients, also help Heritage primary care physicians develop trust with patients, which can be crucial when it comes to chronic disease management and decisions for high-risk (and high-cost) treatments, said Ian Drew, MD, the network's chief medical officer.
Drew, who has worked at Heritage since 1987, calls it the "intimacy index": "The more intimate we are with patients the more they will be amenable to our advice."
HMOs to ACOs
While some of Heritage's work is reimbursed on a fee-for-service basis, its primary care docs, most of whom are salaried, are prepaid per-patient per-month. The network's model evolved out of an HMO environment, and some approaches remain the same, but the new accountable care paradigm is pushing more change, Drew said.
"The delivery of the metrics on accountable care depends on the ability to provide the population with services that have been proven to be successful and that has been developed on the HMO side for a number of years. We are not trying to reinvent the wheel," he said.
"Where it gets completely different is where the accountable care population can make choices based on value-propositions. They do not need an authorization to access care. The patients get to see and access whichever specialist they want to, very similar to the FFS environment."
Heritage physicians have made "a huge effort" to ensure that patients, particularly ACO beneficiaries, trust them enough to follow recommendations on which specialists and hospitals to use.
"We are very cognizant about where specialists go to provide patient care," Drew said. "There is very little correlation between high prices and outcomes. There are community hospitals that can perform at the level of tertiary hospitals."
This type of specialist and hospital network management takes some of the burden off of health plans, and Drew thinks it will become more important as alternative reimbursement evolves. "We believe that as the revenue compression occurs, there is going to be a huge demand for organizations that can provide care on a fixed budget," he said.
A physician-based ACO future
One challenge for independent group practice networks like Heritage, though, is the rise of large health systems that own primary care and specialist groups.
With growing regulatory and administrative mandates and eroding margins, "health system-based physician practices is increasingly attractive, especially to youngsters," Drew said.
Partly in response to that trend, Heritage has set up a practice management unit that helps physicians stay independent and manage their loads. But health system's practice acquisition strategies may not turn out to be as successful as many administrators think, considering the changes bound to come in hospital care.
"We know that the data show that many patients, especially seniors, are admitted for inappropriate reasons," Drew said. "Care traditionally rendered in the ICU 30 year ago is now the medical bed, and now everything that was in the medical bed is either now at home or in nursing facilities."
Along with other organizations, Heritage has started offering number of services in the home that would otherwise be administered in a hospital outpatient center, such as infusion and ventilator therapies.
The organization tries to prevent hospitalizations through a risk-stratification system that ranks patients in one of five tiers, one being those with a high disease burden and five being those "who are perhaps playing tennis and golf everyday and rarely access the care delivery network," Drew said.
Heritage also has a 24/7 hotline and can dispatch providers to patients home within two hours for urgent but not emergent concerns. For patients that do require emergency hospital admission or acute care, the network has tried to develop a coordination strategy that prevent readmissions, with a general practitioner and nurse working with patients on transition plans.
In the age of accountable care and integration, Heritage does not intend to launch its own hospitals or health plans. Drew says their model works for payers and patients alike.
But the potential success of physician-led ACOs is getting renewed interest.
"A key difference between physician-led ACOs compared with other ACOs, such as those organized by hospitals, is that physician-led ACOs have clearer financial benefits from reducing healthcare costs outside the physician group, which are much larger than physician costs," write Mark McClellan, MD, a senior fellow at the Brookings Institution, and colleagues in the Journal of the American Medical Association.
"In contrast, hospital-based ACOs also receive shared savings for avoiding hospitalizations or shifting care to a less costly ambulatory setting, but those cost reductions are lost revenue for the hospital," McClellan and colleagues write.
With those incentives, they argue, ACOs may present something of a win-win for independent physicians -- an opportunity to remain autonomous, improve patient outcomes and earn a sustainable return.
With some 40 percent of ER visits and at least 10 percent of inpatient hospitalizations estimated to be preventable, "primary care has opportunities to help reduce spending," they write. "Physician-led ACOs could also create efficient networks through their referral patterns, by partnering more closely with specialists, hospitals, diagnostic, and post-acute services that provide evidence-based high-value care and that communicate and coordinate effectively."
About 5.3 million Medicare beneficiaries are now covered in ACOs, and across private and Medicare ACOs, the 260 physician-led ACOs outnumber the 238 hospital-sponsored organizations.
However, aside from incentives, both physician- and hospital-led ACOs are so far showing only modest gains, at least in Medicare. In their first year, 29 percent of the physician-led ACOs demonstrated savings over project baseline growth, compared to 20 percent of hospital-led ACOs, according to McClellan.