With hospitals and insurance groups forming coordinated care organizations, four physician groups have now banded together to maintain independence while being able to participate in a Medicare shared savings program.
Optimus Healthcare Partners LLC is a Summit-based accountable-care organization formed by four independent practice associations in January 2011, representing more than 500 physicians through north and central New Jersey. It was one of 27 ACOs in the United States recently accepted to participate in the Medicare shared savings program, where savings from reduced patient readmissions and duplicative services will be split with the care providers.
Dr. Thomas Kloos, president and CEO of Optimus, said the practices involved are made up of roughly 110 primary care physicians and family doctors, 60 pediatricians and other specialists. While there is no set definition for an ACO, in many cases, care providers work in teams to coordinate the medical care of thousands of patients, with the goal of delivering better health at a lower cost.
Kloos said Optimus decided to “be agnostic in the marketplace” and not join a hospital ACO or a group put together by private insurance groups, like Cigna or Horizon Blue Cross Blue Shield, in order to maintain independence in managing practices and to have the same procedures across all patients, regardless of insurance carrier. This allows Optimus to participate in Medicare’s program while still having contracts with other payers.
Catherine Flynn, a health care attorney with Weber, Gallagher, Simpson, Stapleton, Fires & Newby LLP, in Warren, said physician-based ACOs have the same legal requirements as hospital or insurance provider groups, but face significantly different benefits and challenges.
“The distinctions we’re seeing and the hurdles that the physician practice groups will be dealing with … all boils down to the capitalization and the funding to get the ACO up and running,” Flynn said.
Flynn said hospitals are more favorably positioned to have the funds for the upfront investments, including information technology upgrades and additional personnel. They are also more able to wait out the 12 to 18 months it takes for the shared savings to be realized and distributed — a period of time Kloos said takes millions of dollars on hand for continuing operations.
“The hospitals, because of their economic standing, have the better position to form these ACOs,” said Michael Moroney, another health care attorney at Weber Gallagher. “The downside there is then the hospital owns or controls the ACO, and a lot of the decision-making and the distribution of the profits or the shared savings — basically, the hospital controls that. That’s a turn-off to many physicians — they feel that relegates them to being employees of the hospital.”
Kloos said, while Optimus is independent of hospital ACOs, the group is collaborating with Atlantic Health System. Morristown Medical Center President Dr. David Shulkin is one of two Atlantic Health executives on the Optimus board of directors.
Shulkin said, while Atlantic has its own, entirely different ACO, the system did provide some capital financing to get Optimus started with the ACO formation, and will be on board with coordinating patient care with Optimus-affiliated physicians.
Shulkin said the lack of coordination between hospitals and physicians is often where gaps in care are found, which can result in expensive readmissions and duplicative procedures. Nurse case managers are acting as go-betweens for doctors and hospitals to avoid these kinds of issues.
“A lot of care happens in their physicians’ offices … but there are patients of theirs that will end up needing the resources of the hospital,” Shulkin said. “When that happens, they want to have close coordination of care, be involved not only in what happens in the hospital, but start planning for discharge of the patient, and then work with the hospital to be able to prevent further readmission.”
“It’s really that interface, that coordination of care that we think is important, and that’s really the basis for the partnership,” he said.