Maybe it's a matter of scale. Accountable care organizations in many markets are looking to grow, in some cases expanding to include multiple unaffiliated hospitals and health systems. The question is whether an ACO can be too big and whether competitors in every other aspect except an ACO agreement can effectively coordinate care?
In California, seven unaffiliated health systems and hospitals have joined with Anthem Blue Cross to form Vivity ACO, which will serve as the network for an HMO that will compete with powerful Kaiser Permanente. In an unconsolidated market such as Los Angeles, this large ACO has the potential to be a game-changer in terms of driving new market share to these seven systems and ensuring their survival.
But will it work? When looking at other examples across the country, a few answers emerge:
- Having a large employer already signed on to Vivity appears to be a step towards success. Vivity already has CalPERS, a large and savvy purchaser of health benefits, thrilled about the concept of an alternative to Kaiser Permanente that is large enough to leverage savings while including some of the prestigious, but expensive hospitals in the region that health plan networks have excluded in the past (academic medical centers Cedars-Sinai Medical Center and UCLA Medical Center).
In Indianapolis, a similar arrangement failed that did not have a committed large employer except the health system's own employees. St. Vincent Health and Community Health Network, the market's second- and third-largest health systems, had formed an ACO with the market's largest physician group. The behemoth contracting network wanted to compete with market leader IU Health, and contract directly with employers, but the ACO fizzled two years later with few, if any, large employers.
- But other ACOs formed by otherwise staunch competitors have proven it can work, especially when those competitors have a common opponent. Arizona Health Network in Phoenix includes the market's second- and third-largest health systems Dignity Health and Abrazo Health, and the market's children's hospital. They have had success as a Medicare Shared Savings Program and recently launched commercial ACO contracts in 2014, one of which involves a new health plan with Aetna. Its size now rivals that of its large competitor, and it's on a path to be a dominant collective force in its market. Vivity also has the benefit of including a children's hospital, through the MemorialCare system.
So the answer for ACOs such as Vivity may lie in how much these seven health systems and hospitals need to unite to compete against Kaiser Permanente's market dominance. Having the blessing and support of CalPERS is a huge statement to propel them forward. They've just got to find a way to put their competitor status aside to openly share patient records and population health strategies in order to succeed, reduce costs, and growth their collective market share.
Follow Jenny Kerr on Twitter @ JennyKerrDRG