Financing, Health Policy, Leadership, Operations Improvement

Optum’s strategy for ACO development

docsMinnesota is proud to be the home town of UnitedHealth Group (UHG), the largest health insurance and health services company in the United States. UHG provides services to over 97 million Americans.

On January 31, 2013, Chris Pricco, senior vice president of accountable care solutions at Optum, presented the UHG perspective on accountable care organization (ACO) development over the next 5 years. This event was co-sponsored by the Minnesota Chapter of the American College of Healthcare Executives.

If you were to attend one event that would encapsulate the future of the American health care system – this was the event. Here are some key points from Mr. Pricco’s presentation.

The most important trends in health care delivery today:

  • Providers are under market share, profitability and consolidations pressures
  • Cost shifting is rising to unsustainable levels
  • CMS is radically revising its payment methodologies
  • Commercial providers are implementing aggressive pay for performance systems
  • Providers are beginning to take and manage risk

As providers move into the ACO and quality payment environment, several key strategies must be effectively executed:

  • Redesign the organization’s care delivery model to be attractive to the market
  • Develop methods to manage risk
  • Optimize contracts with payers and providers in the system
  • Effectively integrate all providers into the system
  • Measure and improved consumer engagement
  • Increase effective branding and marketing at the retail level

The need to move from a fee-for-service environment to a value-based payment system is challenging for most delivery systems. However, Optum’s experience is that this shift is happening to all systems today.  Those systems that move quickly into this new reality are the most successful.

UHG has comprehensive data on care delivery performance and costs throughout the United States. The difference between market leaders and typical providers is remarkable.  If all providers performed as well as the market leaders the cost of healthcare  in the United State could be reduced by 15 to 20%.

Today there are approximately 200 ACOs currently operating in the United State in both the commercial and Medicare markets. It is interesting to note that more than 5 million Medicare beneficiaries now receive their health care in ACOs. Optum projects that there will be between 700 and 1000 ACOs in 2016. They also project that many of these organizations will add certain insurance features, become certified health plans and will be offered in the state-based health insurance exchanges (now called marketplaces).

The health care industry may be at a tipping point. Consider the dramatic change that may occur when ACOs come to the health exchanges with superior quality and 20% lower cost. As market shares shift dramatically, those organizations that are slow to respond to the ACO trend will either merge or cease operation.

Although these forces may be painful for some organizations, an optimist can foresee a future American health care system that consumes only 12 to 15% of the GDP and delivers high quality care to highly motivated and engaged patients.

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