Sustainability of Accountable Care Organizations Bruce Bodaken, MA Visiting Scholar, Brookings Institution; Lecturer, School of Public Health, University of California, Berkeley; Former Chairman and CEO, Blue Shield of California Spring 2015 Berkeley ACO Workshop May 8 th, 2015

2  Isn’t it too early to focus on ACO sustainability?  Many ACOs have a 3-4 year track record  Early lessons from mature models are important for assessing ACO achievement of the Triple Aim Sustainability of ACOs

3 Challenges to Sustainability  Moving from low hanging fruit to tree tops to ??  Living in the world of FFS and VBP even after 4 years  Actionable, real time data for patient care that can be shared remains illusive (after millions of dollars invested)  Purchasers are impatient if initial % savings aren't repeated annually Limited Resources, Unlimited Expectations

4 Facing the Challenges  Developing the appropriate policy framework - the investment horizon distinction between start up and ongoing costs  Federal IT policy should create meaningful financial incentives to fund initial and ongoing investments  Mature business models should distinguish between short term and longer term savings opportunities Limited Resources, Unlimited Expectations

5 Aspirational Attributes of Mature ACOs  Strength in leadership and governance capable of weathering failures  True clinical integration that includes essential data and human elements  Integrated technology designed for long term results  Business model alignment among partners that explicitly resolves questions of ongoing investment Limited Resources, Unlimited Expectations

6 Incarnation of Attributes  Leadership and Governance  Partner senior executives dedicated to a primary care based model that over time delivers ever increasing quality, financial performance improvement, and consistently superior patient experience  Transparent and constant communication Limited Resources, Unlimited Expectations

7 Incarnation of Attributes  Evolved Technology  Modern flexible IT systems enabling and tracking the improved health of a defined population  Predictive analytics, risk stratification of the identified population  EHRs designed to be interoperable with other care systems to create a dynamic picture of the patient  Privacy protection for secure messaging, video communication, and other forms of engaging patients in their own care Limited Resources, Unlimited Expectations

8 Is ACO Success at Risk?  All experiments in care transformation are imperfect in their origin  Success must be properly understood in a policy, political, and institutional context  Declaring success too early could cloud the record  No other change except the creation of HMOs has had such focus and interest  The setting, timing, and support bodes well Limited Resources, Unlimited Expectations