4 Things Senior Living Learned About ACOs in 2014

December 14, 2014, Emily Study, Senior Housing News - There's no doubt 2014 has been a big year for Accountable Care Organizations. We've seen the rise — and fall — of the programs, set forth by the Affordable Care Act and built to improve care, cut costs and reduce hospital readmissions.

In this ever-changing health care landscape, providers big and small are eyeing the strategy, looking for ways to coordinate and compete.

Like the rollout of many initiatives, though, ACOs are not without their fair share of challenges. Still, opportunities remain for those organizations that can gain scale and reap the benefits.

Through SHN's coverage of ACOs in 2014, it's clear that the industry has learned a few things — but may have even more to learn in the year ahead.

Looking back, here are four things the industry learned that providers should consider in the future:

1. It's Not What You Know — It's Who You Know

Perhaps one of the biggest components of an ACO is the network of partners involved in it.

By definition, ACOs "are groups of doctors, hospitals and other health care providers, who come together voluntarily to give coordinated high-quality care to their Medicare patients," the Centers for Medicare & Medicaid Services (CMS) explains.

When an ACO succeeds both in delivering high-quality care and spending health care dollars more wisely, it shares in the savings it achieves for the Medicare program.

So choosing the right mix of partners can prove to be a huge boost to an ACO's success.

Take it from New York's North Shore-Long Island Jewish Health System ACO, which developed an informal continuing care network of independent post-acute care providers, comprising 19 skilled nursing facilities (SNFs).

Thus far, the collaboration with the SNFs has led the ACO to reduce its all-cause readmission rate by 5.5%. The partnership also has resulted in standardization leading to more operational efficiencies.

Other ACOs have chosen home health care providers as their key to success. One Texas ACO has lowered hospital readmissions by 23% and reaped millions of dollars in savings by steering patients toward home health care agencies, a lower cost setting than the hospital.

2. ACOs Take on Many Forms

Medicare offers a few ACO programs: the Medicare Shared Savings Program, Advance Payment ACO Model and the Pioneer ACO Model.

But senior housing providers are finding other ways to gain an ACO edge.

The Avamere Family of Companies, for example, is involved with ACO strategies with health systems such as Kaiser Family Health Foundation, Oregon Health & Science University and Providence Health and Services' Portland network. Additionally, it is involved in the CMS Bundled Payments for Care Improvement (BPCI) initiative.

Alternivest Healthcare, a Texas-based investment and development company extending its footprint in the health care space, is carving out its niche in the ACO fold by building near existing hospitals and health systems.

It's currently in the process of developing a mixed-use senior housing property positioned across from Tenet Healthcare's (NYSE:THC) new Resolute Health Hospital in the San Antonio suburb of New Braunfels, Texas.

More recently, an existing care network and group of 13 Pennsylvania CCRCs are taking a new approach to creating a competitive edge when it comes to accountable health care for seniors.

Anabaptist Providers Group (APG) is forming a joint venture partnership with Convenant Health Network to create an integrated post-acute care delivery system across APG's 13 founding communities, which the organizations say will save the participating CCRCs both time and money, and help them stay competitive in an evolving health care landscape.

3. Millions of Dollars Can Be Saved

The Shared Savings Program now includes more than 330 ACOs in 47 states, providing care to more than 4.9 million beneficiaries in Medicare fee for service. There are currently 19 Pioneer ACOs.

ACOs in the Pioneer ACO Model and Medicare Shared Savings Program have generated more than $372 million in total program savings for Medicare ACOs.

Overall, ACOs last year had higher quality and better patient experience than published benchmarks, according to CMS. The mean quality score among Pioneer ACOs increased by 19%, from 71.8% in 2012 to 85.2% in 2013.

Research from Harvard also suggests the coordinated care model leads to higher satisfaction in delivery of care services — what health care reforms have been drumming up since the passage of the Affordable Care Act.

4. They Don't Always Work

Alas, the model is not without its faults. To date, we've seen more than a dozen Pioneer ACOs throw in the towel, citing a variety of challenges, including not sharing any savings, socioeconomic factors, regional costs and the severity of patients' health in certain local populations.

Three years after CMS launched its Pioneer ACO Model, the initiative is now down to about 60% of its original participants, with 19 of the original 32 ACOs remaining.

The most recent ACOs to leave the CMS program were Franciscan Alliance in Indianapolis; Genesys PHO in Flint, Mich.; and Renaissance Health Network in Wayne, Penn.

Sharp HealthCare in San Diego also announced its decision to pull out of the CMS program after determining "the model was financially detrimental" despite the ACO's performance.

In an effort to boost the programs' success, CMS recently proposed a new rulethat aims to improve incentives to participate in ACOs.

Ultimately, there are a few kinks in the system that need to be worked out in order to reach the program's true potential. And with these points in mind, senior living providers can look to 2015 as the year to conquer ACOs.