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Our Take: Partnering with ACOs & IDNs Summit, June 10-11, Boston

Jun 17, 2019
I’m taking the helm this week to share my experience presenting at a conference. The meeting, ExL’s 13th Partnering with ACOs & IDNs Summit, included representatives from pharma, ACOs, and integrated health systems. Email me at jm@darwinresearch.com if you’d like a copy of my presentation.

I’m not sure why the meeting organizers structure the conference this way, because ACOs and IDNs are two distinctly different entities, and how a pharma company would go about “partnering” with an ACO is very different from how it would with an IDN. So, at the beginning of my talk, I felt the need to get some definitions out of the way.

An ACO, or accountable care organization, is a group of providers and suppliers of services — such as hospitals, physicians, and others involved in patient care — that work together to coordinate care for the Medicare fee-for-service patients they serve. Beyond coordinating care, every ACO has at its core the Triple Aim: simultaneously improving the patient experience, improving the health of populations, and reducing health care costs. These days, many ACO leaders talk in terms of the quadruple aim, which adds provider well-being to the mix of objectives.

In the Medicare Shared Savings Program, each ACO is given an annual budget (CMS calls it a benchmark) based on historical spending and assigned beneficiaries, and annually shares in savings or losses relative to that budget. The amount of shared savings (or losses) is adjusted based on how the ACO performs on a set of 32 quality measures.

Conversely, the initials “IDN” stand for integrated delivery network, but pharma uses the term to refer to any integrated health system, regardless of how integrated the IDN actually is. If you have two hospitals and a physician practice, pharma will refer to you as an IDN.

I think part of the confusion health care professionals have about ACOs is that over time we’ve used the term to refer to other value-based agreements.

  • The Oncology Care Model and the Comprehensive ESRD Care Model, for instance, are referred to as “specialty ACOs.”
  • Employers have come to expect an ACO-branded product from payers, regardless of whether there are shared savings, a focus on process or outcome measures, or coordinated care. So, for example, Cigna offers a “Collaborative Accountable Care” product. Collectively, these are referred to as “commercial ACOs.”
  • Employers contracting directly with payers under a budget with quality and performance measures are referred to as “employer-based ACOs.”
  • There are “Medicaid ACOs,” which exist in about nine states.
That’s one reason pharma has had a hard time justifying ACOs as a customer class worth paying attention to. It’s hard to focus on something with such a broad definition. That’s why I encourage pharma to think of ACOs as falling into two buckets with only Medicare patients: those that are physician-group based, and those that are part of an IDN.

I admit that it’s my bias to think of an ACO in terms of the traditional Medicare ACO model, whether it be Pioneer, MSSP, or NextGen. If an ACO is described more broadly as providers and suppliers coordinating care, with the overarching goal of achieving the Triple Aim, then perhaps there is room to be more inclusive when using the term.

After the brief tutorial on ACOs during my talk, we got into the subject of partnering. I began with a statement: Start with why. Borrowing from Simon Sinek’s famed TED talk, ask yourself, big pharma: Why do you want to partner with an ACO? Why do you have 35 account directors trying to work their way into the C-suite of an IDN?

You may know that Sinek’s three-word statement is about purpose and deeper meaning. So, if your “why” is about the patient — better patient access, better health outcomes and quality of life — then you’re on the right track. Put patients first.

It’s not about the drug, we heard in nearly every presentation at the conference. Your product is the last thing to be discussed when building relationships with ACOs or IDNs.

“The people at the ACOs aren’t responding to us when we reach out to engage in those conversations,” an account manager lamented. “They’re so anti-industry. They don’t see us as partners.”

Well, maybe. In my experience, I don’t find ACOs to be any more hostile to pharma than any other group.

What the account manager’s comment reveals is that, thus far, she has a transactional relationship with ACOs — she’s a vendor. But that’s not the kind of relationship she would like to have.

“We want to accomplish the same thing: less transactional, more transformational, more disease-state awareness,” she said. “It does not have to be a branded initiative.”

To achieve that goal — to evolve from a transactional to a transformational relationship — pharma needs to clearly establish its value proposition and tie that value proposition to customer goals, with patients in mind.

Achieving transformation is easier said than done. One of the Blues affiliates at the conference said that while they had evaluated more than 30 value-based contracts, so far they have signed just one. Cigna had few examples as well, mentioning the widely known value-based agreement for Merck’s Januvia.

In my presentation, I asked who had successfully partnered with an ACO in any way. Not a single hand was raised.

If we were to define partnering as executing a value-based contract, or implementing a major data-sharing initiative, we know why such partnerships are so rare. Partnering is hard. It’s time-consuming and expensive. Think of how difficult it must be for Merck and its payer partners to track all of those patients with diabetes, measuring their progress, assessing adherence, etc.

My biggest takeaways from the conference came during a panel session I led after dinner on the first evening. One of those panelists was Dr. David Caramouche, who heads up Ochsner’s physician group and ACO, and is the likely point-person for any strategic initiative with other providers or suppliers.

First, he said, if you’re trying to put together any major initiative with an IDN, it absolutely must go through the C-suite.

Second, “I would max out at about five of these partnerships,” he said, noting that there is only so much bandwidth for strategic projects.

Overall, I’d say with respect to IDNs, the pharma companies we heard from are well-positioned to effectively manage relationships and have dedicated the appropriate resources for potential high-level partnerships.

ACOs, on the other hand, are a different story. Several conference participants acknowledged that there is an opportunity to work with ACOs to help them lower costs and improve patient care. But despite the efforts of the presenters, they have a long way to go in understanding what ACOs need and how best to approach them.

What else you need to know
Anthem signed a definitivagreement to acquire Beacon Health Options. Based in Boston and owned by Bain Capital Private Equity and Diamond Castle Holdings, Beacon Health is one of the largest independently held providers of behavioral health services in the U.S., serving more than 36 million people across the country — including almost 3 million people in comprehensive, risk-based behavioral programs, according to Anthem. If the transaction is completed, Beacon Health’s president and CEO, Russell Petrella, will lead the behavioral health segment under Anthem’s Diversified Business Group. Anthem anticipates closing the deal by year-end; financial terms were not disclosed.

A team from Penn Medicine has created a clinical alert app that reduces stays in the intensive care unit (ICU), Modern Healthcare reported. It’s called the Awakening and Breathing Coordination (ABC) app, and it helps clinicians continuously evaluate whether patients are ready to be weaned from a ventilator. The app also has an alert system designed to help staff “move patients along the weaning process.” According to Penn Medicine’s internal data, the ABC app has lowered patients’ time on ventilator support by more than 24 hours, on average. More here.

Washington state’s proposal to pay for hepatitis C drugs using a “subscription” model has received CMS’ approval. The state can now negotiate value-based drug rebate agreements with drugmakers in its Medicaid program, paying them a fixed annual amount for an unrestricted supply of a hepatitis C drug. CMS has already granted approval to similar requests by Oklahoma, Michigan, and Colorado.

RWJBarnabas Health and Rutgers Cancer Institute of New Jersey announced plans to develop a new, free-standing cancer pavilion in New Brunswick, N.J., in partnership with New Brunswick Development Corp. At an estimated cost of $750 million, the center will offer outpatient services such as chemotherapy and radiation therapy, along with diagnostic and inpatient services. It will also house research laboratories.

At long last, the New York Proton Center has opened its doors. Located in East Harlem, the state-of-the-art facility cost $300 million to build; planning began more than a decade ago. It’s the outcome of a partnership between Memorial Sloan Kettering Cancer Center, Montefiore Health System, and Mount Sinai Health System. Cancer treatments are expected to begin at the center next month. 

On July 1, Ascension’s leadership lineup will undergo several changes, the St. Louis-based Catholic health system announced Tuesday. Among those changes, Joseph Impicciche, who has been Ascension’s president and chief operating officer since January, will take on the roles of CEO and transitional president. Anthony Tersigni, who is currently CEO and will be retiring at the end of the year, will stay on as board chair for Ascension Capital and as a consultant.

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