Huntsville Hospital, Sentara Form First Medicaid 'RCO' in AL

John Commins, for HealthLeaders Media , June 16, 2014

Spillers says HHHS wanted a partner with the expertise in managing Medicaid populations and who was willing to share the risk under the capitated model for the population they're serving.

"We felt like if they had skin in the game they're more likely to make sure we are successful," he says. "If you are just providing services and you are going to make your money regardless of what happens to us that is not a partnership as far as I am concerned."

Spillers says being on the leading edge of the RCO movement carries risks and rewards.

"If we didn't have an experienced partner like Sentara I'd be running from this instead of to it," Spillers says. "The state was excited about us coming up first because they want to see it work before they expand it. It's better for them. It also gives us the opportunity to go into other regions if other regions want to partner with us and not have to bring up multiple regions at one time."

Dudley agrees.

"Any time you are the first to the market you are taking some risks that others maybe want to lay back and see about," he says. "On the other hand, given that we have 20 years of experience here in Virginia, we really know this business. We know what we are getting into. We will be able to see very rapidly if the business is going to be sustainable down there."

"We expect that the state of Alabama will be reimbursing at levels that will be sustainable. But if we get six months into this, eight months into this, and the state is not able to offer reimbursement at a rate that is sustainable, then we will have to rethink this whole thing, but we don't expect that at this point."

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