CHICAGO — On a stormy evening this spring, nurses at Dr. Gary Stuck’s family practice were on the phone with patients with heart ailments, asking them not to shovel snow. The idea was to keep them out of the hospital, and that effort — combined with dozens more like it — is starting to make a difference: Across the city, doctors are providing less, but not worse, health care.
For most health care providers, that would be cause for alarm. But not for Advocate Health Care, based in Oak Brook, Ill., a pioneer in a new approach known as “accountable care” that offers financial incentives for doctors and hospitals to cut costs rather than funnel patients through an ever-greater volume of costly medical services. Under the agreement, hospital admissions are down 6 percent. Days spent in the hospital are down nearly 9 percent. The average length of a stay has declined, and many other measures show doctors providing less care, too.
This approach is one small part of a growing effort by providers to hold down costs without restricting needed care.
Nationwide, health care spending has grown over the last three years at the slowest rate since the federal government started keeping data more than 50 years ago. While the bulk of that is related to the poor economy, changes among insurers and health care providers have contributed as well. If the trend continues, even at a reduced pace, it could help alleviate Washington’s long-term deficit problems and ease the strain on family budgets.
“The part that’s not driven by the economy, that’s the part we can theoretically control,” said Drew Altman, president of the Henry J. Kaiser Family Foundation. “If we can shave even a small percentage off of it, it has a huge impact on public programs, a huge impact on premiums, a huge impact on employers.”
But even as more health systems seek to replicate Advocate’s early success, its experience shows just how hard it may be to expand the approach and keep medical costs from resuming their relentless rise.
“It’s hard to imagine that you could start from scratch and do this and be successful in three years,” said Dr. Lee Sacks, Advocate’s chief medical officer, noting that other systems may find it far harder to flip the traditional fee-for-services system on its head. “We had a running head-start going back to 1995.”
Nonetheless, the Affordable Care Act, President Barack Obama’s health care law, has helped encourage a shift to Advocate’s payment model. Such agreements were merely a theory four years ago. But an estimated 428 accountable-care organizations now cover 4 million Medicare enrollees, and millions more people with private insurance.
Under Advocate’s deal with Blue Cross Blue Shield, certain patients are assigned to the accountable care framework — about 380,000 — and their health costs are projected. If Advocate achieves savings below that amount while meeting explicit quality targets, it splits the money with the insurer. If not, its revenue is at risk.
In some ways, accountable care resembles earlier efforts to control medical spending, including the health maintenance organizations that proliferated in the 1980s but fell out of favor, in part because they severely limited the patients’ choices. But accountable care differs by giving doctors and hospitals a direct financial stake in saving money and a reason to invest in various programs of preventive care rather than relying exclusively on the fees they would normally earn from providing services.
“There’s an enormous amount at stake in getting these reforms to work,” said Alan Krueger, the chairman of Obama’s Council of Economic Advisers.
To help control costs, Advocate has hired scores of workers to coordinate care and keep an eye on the highest-cost patients, like those who are obese or have diabetes. It started providing doctors’ offices with report cards on their performance. Dozens of quality-control measures — cover items as varied as blood pressure, rehospitalizations for asthma attacks or the use of expensive imaging machines.
On a blustery spring morning, those changes were visible in Advocate care centers across the metropolitan area. Sumera Khan, a clinical pharmacy specialist, popped into the hospital room of Noraine Scarpelli, an elderly woman with congestive heart failure, to check her prescription drug levels — an additional level of scrutiny that can help prevent complications.
In another building, Dr. Karen O’Mara flicked between eight computer screens, peering at intensive care patients miles away, ready to alert a doctor if they looked in distress.
Advocate — a faith-based nonprofit has an advantage over other health systems just jumping into what is more broadly known as “value-based care.” In the late 1990s, well before it forged its contract with Blue Cross Blue Shield, Advocate began taking steps to control costs and improve quality. A decade ago it adopted a “clinical integration” program, requiring doctors to work together on patients in common. It was also a pioneer in the use of electronic health records.
“A lot of these early adopters were systems that were already putting things in place,” said Ani Turner of the Center for Sustainable Health Spending at the Altarum Institute, a national health care research group based in Ann Arbor, Mich. “In a way, the contracts are rewarding behaviors they were already pursuing.”
So far, Advocate has achieved a small but significant savings of about 2 percent below projected costs, Blue Cross Blue Shield said, but it is not clear whether it can continue to make progress. Already, some Advocate hospital chiefs have expressed fears over losing revenue and warned about the threat to their financial performance. Doctors fret that their incomes may suffer. “We’re doing it because it’s the right thing to do for patients,” said Stuck, the Advocate family physician. “We’re not making more money.”
At the same time, Advocate and Blue Cross Blue Shield have no way to prevent patients that fall under the accountable-care agreement from seeing doctors outside Advocate’s network. That means patients might see doctors without an incentive to cut costs as well as deliver excellent care, eroding or even erasing the cost savings the agreement achieves.
“You’re trying to overlay a payment design onto a benefit model that allows a patient to go anywhere he wants,” said Steve Hamman of Blue Cross Blue Shield, noting that patients can undermine the advantages of the new approach if they ignore the advice or insist on unnecessary tests and procedures. “We can talk all we want about provider accountability and how important that is. But there is a measure of patient accountability that is critical as well.”
For all the obstacles, most health economists agree that accountable care organizations are one of the most promising recent developments in the giant industry. Kaufman Hall, a consulting firm that studied Advocate’s results, said its research showed that the older and the bigger a value-based care system, the more capable it proved at controlling costs — and the more it was able to influence the larger community of health care providers.
“Doctors who practice with Advocate often also practice at other hospitals,” said Mark Grube, Kaufman Hall’s managing director. “What is occurring is that even when they are practicing at hospitals that are not under value-based contracts, they’ve changed how they practice. We’re seeing declines in utilization there, too.”
That ultimately might be what helps the accountable care model catch on and hold down spending in the longer term.
“You can see a synergy with all these initiatives,” said Turner of the Altarum Institute. “There are a lot of forces out there trying to move things in the same direction.”