The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.


The Five Key Components of ACO Analytics

By Truven Staff

Accountable Care Organizations (ACOs) were created to provide financial incentives for providers to control costs and improve the quality of care. As they continue to advance, it is important for both providers and payers to ensure that risk is being appropriately shared between the two. This creates a unique set of challenges in determining the best way to design, manage and evaluate these programs. Whether you are running an ACO or contracting with one, data is integral to determining the best model. Without the proper data, those providing the care, and those paying for it, are flying blind.

What’s more, not all ACOs are created equal, with three general types of models accounting for the bulk of ACOs: employer-sponsored, employer-direct contracted, and those leveraging existing insurer relationships. The analytic tools used to evaluate performance will depend upon which type of relationship a payer has with the ACO.

The ACO Analytic “Tool Box”

The five analytic methods listed below are key for ACOs managing program performance, and for employers and health plans assessing the value they are obtaining from these programs.

1.       Attribution

All measurement depends on a connection made between the ACO and/or its providers and enrollees. As a result, we need to uncover who the enrollees are, and for whom the ACO is bearing risk.

Often, explicit patient assignment does not exist. Where it does, the evaluation models need to incorporate it into analytic databases. In the cases where it doesn’t, the ACO needs to perform that attribution based upon the observed pattern of care received by the patient population.

2.       Population Health Management

There are multiple tools available to identify and stratify patients, such as predictive modeling, where risk scores based on age, gender, and diagnosis are employed. Other methods employ biometric or health risk assessment information. Examples of these include Health and Longevity Scores, Health and Productivity Indexes, and Health Status/Opportunity Scores, that can be used to segment patient risk levels.

3.       Network Management

If an ACO is at financial risk for the management of individuals, it’s imperative to know where people are receiving health services, what kind of utilization is taking place out of network, and where those out-of-network services are being given.

Many beneficiaries are not locked into the ACO network, which makes knowing whether these services are being given by high quality, efficient providers paramount.

4.       Program Evaluation

It’s important for everyone involved through the continuum of care that an assessment be made on the effectiveness of the ACO. As anyone who has been involved in care evaluation can tell you, there are a host of methodological pitfalls that can throw a wrench into measuring program evaluation. Controlling for differences between populations – specifically those who use the ACO and those who do not – is exceedingly important to determine the effectiveness of that ACO.

5.       Quality Measurement

In addition to evaluating ACOs on the basis of financial performance, establishing core quality measures for ACOs enables us to glean insights we would otherwise not have. Metrics such as potentially-avoidable admissions, screening rates, and specific process and care measures give us a baseline for quality measurement that is imperative in defining how well the ACO is performing.

Embrace the Risk

Risk is a fact of life in healthcare; it always has been. But in this new landscape, the ways in which both providers and payers are sharing that risk has undergone a drastic shift. Everyone will assume risk, but as we’ve outlined above, the key is to understand and properly allocate that risk between providers, patients and payers. The data is there; to guide these decisions, the key is employing the appropriate tools to establish this balance.

John Azzolini
Senior Consulting Scientist

ACO Executives Struggle to Estimate Degree of Financial Risk

By Truven Staff
Michael L. Taylor imageA recent survey found many executives of Accountable Care Organizations (ACOs) are struggling to properly estimate the degree of financial risk their organization can bear. These organizations would benefit from an actuarial assessment of the ACO population for which they are intending to provide care, but many ACOs don’t have the many types of data needed to properly estimate risk. There are two areas of risk to assess:

  • The cost implications for those patients with chronic disease: ACOs need to not only understand the costs associated with chronic diseases such as heart disease, diabetes and cancer, but also the prevalence of these diseases in the population for whom the ACO is assuming risk
  • The cost implications for those without a chronic disease, but at risk for illness due to lifestyle risk factors: A large volume of scientific literature has consistently shown that, in a given population, as the number of risk factors increase, medical cost rises.
Doctors may have this information for the patients for whom they are caring, but they won’t have the data for an entire population. It’s difficult to predict costs without prevalence data.

Obtaining the data necessary to do this risk analysis is therefore necessary, but can be tricky for ACOs. Multi-year administrative claims data can demonstrate the burden of chronic disease, although typically this data isn’t held by any single provider. Regarding lifestyle risk, many large employers use “self-reported” data from health risk assessments for this purpose, but ACOs generally do not have access to these data. There are other factors to consider to predict costs in a population. Socioeconomic factors, level of education, and ethnicity all impact medical costs, but ACOs may struggle to obtain these data as well.

Successful ACOs will need access to these data streams and the ability to analyze the data to make financial predictions and create viable business models. They will also need to factor in the cost of obtaining these various types of data to include in the models. They will then need to partner with doctors and hospital systems to provide high-quality, efficient care in order to be financially viable. It can be done – we have customers that are assembling and integrating multiple data streams, performing and monitoring the analytics, and sharing the results across their enterprises – with careful planning, close coordination, and transparent governance.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Using Big Data to Improve Quality and Reduce Costs

By Truven Staff
Mike Taylor imageA new report on potential uses of big data for controlling cost in the hospital setting has just been published. The report, from Brigham and Women’s Hospital in Boston, appeared in the July 2014 edition of Health Affairs. Six areas of potential benefit were discussed:

  • High-cost patients
  • Preventable readmissions
  • Triage upon hospital admission
  • Decompensation of clinical condition while in the hospital
  • Adverse events, particularly renal failure, infections, and adverse drug reactions
  • Treatment optimization for those with chronic disease involving multiple organs
As the authors point out, these are six key areas for intervention to lower healthcare costs in the hospital setting, and using more diverse data sources to analyze these opportunities will be useful.

As I reflect on this report, it strikes me that this type of report would have probably not been published several years ago. Healthcare reform, particularly changes in the payment methodology, is driving this type of research. I understand the need to minimize the healthcare spend and agree these are six key areas for research. But, in my opinion, the more important clinical issue is the improvement in the quality of care and probable saving of lives from better care. This is the real issue and opportunity.

All six of these areas are a result of missed opportunities to improve care. These areas are inter-related: high-cost patients are often a result of those who are readmitted multiple times for the same condition, suffer complications, are inappropriately triaged, and have missed diagnoses or have adverse events. Some of these problems can be prevented medically, but some of these issues have broader root causes. Take readmissions – many cases are due to socioeconomic factors such as inability to pay for medications, poor access to outpatient healthcare, or inability to pay for home care. Doctors and hospitals have historically not been paid to consider and manage these non-medical factors that lead to increased medical cost. While no physician wants complications to develop in their patients, hospitals and physicians have never before been penalized if this happened, so there has not been a focus on preventing these complications. New payment incentives are driving these changes and new approaches to care are developing. The promise of higher pay for better value in healthcare of populations, not for providing more services to individuals, is leading to new solutions in these six areas. “Big data,” meaning information about socioeconomic factors, living situations and other new data sources, and then using these data in predictive algorithms, will improve our ability to care for populations, not just treat individuals. 

At Truven Health Analytics, we use data to understand high-cost medical care. As we work with the payers of healthcare, especially large employers, part of our study is high-cost patients. I consistently find these cases to be complex, often involving advanced cancer cases or complicated heart failure cases. Closer oversight of these patients, team-based care, and better methods to predict and manage complications is warranted in many of these cases. Accountable Care Organizations (ACOs), with a patient-centered focus and a population health strategy, are promising new approaches to improving care. The tragedy of many of these cases however, is the missed opportunity to prevent these cases from ever occurring. If screening guidelines were followed more universally, advanced colon cancer would almost never happen. Heart failure is usually due to multiple heart attacks that could be prevented by paying closer attention to decreasing risk factors. Not all high-cost cases can be prevented, but many could be avoided.

Why, as a nation, are we not doing a better job in managing the health of our population? The most obvious answer is because we aren’t focusing on and prioritizing disease prevention among our population. Up to 70% of healthcare costs are due to preventable disease, but our healthcare system hasn’t been paid to focus on this issue. But change is apparent. The healthcare industry is undergoing more rapid change at this time than I’ve ever seen in my 30+ years of being a doctor. The new clear message is this: the way to manage costs is to improve the quality of care for entire populations, including new ways to prevent disease. Technology in the form of implementing integrated electronic health records, using more diverse data streams, re-designing healthcare delivery, and better predictive analytics are all tools to improve the quality of healthcare in the U.S. This is the right path to reduce costs.

Michael L. Taylor, MD, FACP
Chief Medical Office

The Expanding Role of Pharmacists: Out of the Basement and Into the Spotlight

By Truven Staff
Tina Moen imageWhat does it mean to be a pharmacist in 2014? I recently presented at the Health Connect Partners Spring Pharmacy Conference to a room full of pharmacy leaders from across the country. We discussed the evolution of the practice of pharmacy, the things we have seen change over the years, and the opportunities (and challenges) we see on the horizon. Throughout the conference, many attendees shared stories of how their responsibilities as a pharmacist have evolved throughout their careers. Our conclusion is that now – more than ever – there are visible, meaningful changes to our role as it relates to patient care, collaboration with our peers, and in leadership participation in the healthcare community.

Clinical pharmacy services, as we know it, are a result of continuous evolution of the historical pharmacy role – namely dispensing medications from behind the counter or in the basement. This evolution has taken many years. Pharmacists now deliver enhanced value to their organizations and their patients with a focus on quality, safety, and efficacy of medication therapies. Programs such as enhanced Medication Therapy Management continue to highlight the impact pharmacists can make on reducing adverse effects and improving efficacy of a patient’s medication regimen. Additionally, pharmacists contributing to Medication Reconciliation and specialty services, like Anticoagulation or Diabetes Clinics, continue to demonstrate that rounding out the care team to include a medication specialist improves patient outcomes and enhances the practice and performance of clinical peers. And recently, I have seen emerging cross-functional leadership teams working toward goals such as the IHI “Triple AIM,” begin to include Pharmacy; tying personal goals and incentives for DOPs to these efficiency and quality objectives.

Clearly, great progress has been made in the practice of pharmacy, and I for one am proud of the role pharmacists play in enhancing the patient experience and outcomes. So, what's next? Here are the things that come to mind when I ask myself this question.

Healthcare IT
A recent article in Healthcare IT News advocated for pharmacists playing a larger role in EHR strategy. As a pharmacist who works within the healthcare IT industry, I couldn’t agree more. What percentage of patients in a hospital has at least ONE medication order? I would venture to say “most.” It’s an obvious conclusion that the profession charged with the safe and effective use of medications should have a significant role in the development, selection, and implementation of tools used to properly care for those patients. And then there is Meaningful Use. How many of the Meaningful Use Objectives are related to medications and the services in which pharmacists participate? Who better then to take the lead in organizational efforts for Stage II attestation and Stage III planning?

Care Collaboration
Cross-departmental coordination for initiatives that span hospital leadership continues to grow in scope and importance. Benefits of pharmacists as integral members of rounding teams within the inpatient setting are well-documented. With organizations designing and implementing Population Health and ACO strategies, pharmacy leaders can capitalize on the combination of data analytics and clinical insight that are the hallmarks of pharmacy practice. As Population Health initiatives evolve – who better than a pharmacist to guide trends in medication recommendations in treating high-risk conditions and ensuring safe, cost-conscious practice remains top of mind?

Quality Patient Care
Providing quality patient care has always been a focus of healthcare providers. Today’s environment adds a variety of incentives and penalties to drive quality. How are pharmacists contributing? In many ways! Pharmacists are well-suited to lead the charge on initiatives like Antimicrobial Stewardship, a quality and a cost management initiative. The importance of medication education and adherence in the improvement of HCAHPS scores and the reduction of readmissions are additional examples how pharmacists can and should use their skills as medication specialists to drive improved patient care. Because results summaries from nation-wide HCAHPS surveys indicate that Medication Safety and Pain Management questions are still amongst the lowest performing areas – shouldn’t pharmacists’ input at the patient care level be paramount?

As I said during my visit to Health Connect Partners, it’s good to look back occasionally to see the progress that has been made and to help motivate us for the challenges and opportunities ahead of us. What is next? What have I missed? I would love to hear from my fellow pharmacists on where the practice of pharmacy will be in the next 10 years. What are you doing today to move the needle in the evolution of pharmacy?

Tina Moen, PharmD
Chief Clinical Officer

Three Reasons Why Doctors are Choosing Employment Over Independence

By Truven Staff
Mike Taylor imageA recent commentary notes the shifting of doctors from self-employment to being employed by a heath system. Fully 60% of pediatricians and family medicine physicians are now employed, with 50% of surgeons employed. The number is expected to rise to nearly 75% over the next several years. What is driving that trend? There are at least three compelling answers: debt level, work-life balance, and the hospital’s need to develop market share and control referral patterns.

A recent report states the average medical school student graduates with a debt of nearly $280,000. In 1978, the average debt was $13,000. The student may also have debt obligations from college. Newly trained physicians with that staggering level of debt often don’t want to incur more debt by starting a private practice. The average annual salary of a family medicine provider is $224,000, but for newly trained physicians in private practice, initial revenues are much lower, and it may take several years to get to the average level. Add a home and car mortgage, as well as other personal expenses, and it becomes clear why it’s becoming impossible to absorb the start up costs of a medical practice, which often run as high as $100,000 for a solo practice. By working for a hospital or health system, physicians can avoid all the office costs and the professional liability insurance, while knowing they have a guaranteed salary.

I believe a strong second reason physicians are choosing employment rather than independent practice relates to the difference in lifestyle and work life balance. Most newly trained physicians were born after 1980, and the prospect of managing an outpatient practice and hospitalized patients 24/7 is just not appealing for many of these younger physicians. Working as an employee in a healthcare system that provides a guaranteed salary, utilizes hospitalists, and covers all practice-related expenses is too compelling to turn down. Young physicians also find having personal time off from work very important.

A third reason is the changing market itself. As the country moves away from a fee-for-service payment model to a value-based system, hospitals are moving into risk contracting or capitated payments. The best strategy for hospitals and health systems is to exert more control over the markets in which they serve. By employing physicians, hospitals can transfer office-based services into their own outpatient labs and radiology suites. Hospitals with employed physicians can more effectively direct patient admission choices. As Accountable Care Organizations (ACOs) mature, they will assume financial responsibility across the entire care continuum, from outpatient services to admissions, rehabilitation and long-term care. ACOs will drive the need for more efficient care with less wasteful spending. Hospitals can drive that efficiency with smart IT investments, treatment guidelines and care coordination. This can be done without employing physicians, but it’s more efficient to employ physicians and have them be a part of the process. To fully support care, a newer trend is for hospitals to employ specialists in addition to primary care physicians.

One potential advantage of employing physicians is the opportunity to reduce the variation in medical care that is rampant in the U.S. today. Reducing variation should improve the quality of care and reduce costs by avoiding wasteful and unneeded treatments that may be costing the U.S. up to 30% of the total medical spend. Aligning physicians and hospitals to the triple aim – better care for individuals, better care for the population, and slowing medical inflation is best accomplished in an organized approach – and individually owned practices are less likely to deliver on that promise.

Michael L. Taylor, MD, FACP
Chief Medical Officer