Accountable Care Organizations
Healthcare is full of acronyms and one of the newest - that is getting a lot of attention - is ACO, which stands for accountable care organization. For more information about ACOs click here.
As most in our industry know, an ACO is a network of doctors and hospitals that shares responsibility for providing care to patients. In the new healthcare law, ACOs would agree to manage all of the health care needs of a minimum of 5,000 Medicare beneficiaries for at least three years.
ACOs wouldn't do away with the current fee for service model but would be offered incentives and bonuses when keeping costs down and meeting specific quality benchmarks, focusing on prevention and carefully managing patients with chronic diseases. In other words, providers could get paid or reimbursed at a higher rate for keeping their patients healthy and out of the hospital, potentially increasing margins associated with existing Medicare patients. ACOs will be under pressure to provide high quality care because if they don't meet standards, they may not receive savings bonuses - and could lose their contracts and/or status.
To play in the ACO arena, hospitals will need to establish detailed reporting systems that collect data from all of the areas providing care to a patient. This information will help to determine if a provider has been efficient and therefore, worthy of reimbursements and bonuses. In order to know whether or not your organization is efficient, it will be important to understand your total cost of care - for each delivery point. These costs may all be unique with respect to patient mix, acuity and type or form of care with individual product and service characteristics and associated cost drivers.
A key component of establishing that understanding and associated reporting systems, can be found in the supply chain. After all, the supply chain accounts for more than 38% of a Provider's overall operating expense. In an ACO environment, qualifying for bonus or incentive opportunities may depend on supply chains level of efficiency. One of the ways that NML has been working with clients to establish and increase efficiency is in building and deploying optimization strategies.-both for IDN's and for regional partners working for collaborative efficiency gains. These strategies include:
- Product and Process Standardization: Consolidating products will create significant opportunities in every aspect of the supply chain and Identifying best practice processes will improve service quality, reduce operating costs and create consistent measurement capabilities.
- Benchmarking: Establishing metrics and performance targets in keeping with best practices in the healthcare supply chain, including building those that focus specifically on achieving ACO incentives into Integrated Delivery Networks systems and procedures.
- Paradigm Shifts: Helping the healthcare supply chain with "change management" services for stakeholders or IDN management; collaboratively identifying efficiency opportunities and then creating methods for delivering products and services to external and "internal" customers.
- System Integration: Identifying, implementing and operationally supporting supply chain driven software solutions including Warehouse Management Systems [WMS] will collectively help to build bridges that efficiently act upon data and enhance reporting.
If you are preparing to become an ACO, thinking about applying or looking for geographic partnerships which demand supply chain efficiency, give NML a call. Together we can reduce marketplace costs while moving the healthcare supply chain toward the desired ACO model of efficiency. |
