Large Healthcare Purchaser Takes Risky Leap Into ACOs

Janice Simmons, for HealthLeaders Media , April 8, 2010

In terms of providing quality care while holding down costs, Davila says it appears the pilot is moving in that direction. He notes that the three organizations do "have skin in the game to make sure" they deliver quality care while holding costs. "We've moved a long way toward that," he says. They are now looking at a "ballpark of over $10 million" in savings—by the end of the year getting interventions in motion that will reduce costs while maintaining quality.

This includes focusing on areas where to provide quality care such as with high risk OB cases or joint or hip replacement. It includes avoiding multiple, repetitive lab tests. And, it also includes repatriation when a plan member is admitted to a hospital outside the plan—a high-cost problem.

"What happens many times is that members go to a non-CHW hospital—and historically no one at CHW was watching that or paying attention if someone was five miles away at a different hospital," he says. Now, a process has been put in place to repatriate individuals when they are medically stable back into the system "as quickly as possible."

The biggest change, though, has been doing business with providers. "Instead, of being in silos and separate, we are all now in a room from the medium levels to the highest levels of the organization—working together to better deliver service, higher quality and get costs out of the system," Davila says.

"It's one thing to talk about [ACOs]. It's a totally different deal when you're doing it," he says. Working together, the entities need to realize they have to get rid of past hurts—what may have occurred to them even 15 years ago—which does come up.

"The neatest thing is the dynamics between ourselves. It's different. I think that's what a system needs—you need to get out of [arguing]" and about who wins and who loses. "I could win or you could lose, and vice versa and none of us should care. Now we care. In fact, it's important that nobody loses. It's the patients or clients who gain," he says.

The biggest lesson so far from this arrangement is that it is important to build trust between the providers themselves and the health plans, says Davila.

"This only happens when you lay all the cards out on the table and start to take a risk. We took a risk of including all these cards on the table [which] could have been used against us—if they chose not to participate," Davila says. "To build trust you've got to take a bit of a risk, but I would say it's sure been worth the effort."

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Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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