New ACO Focuses On Rural Hospitals
Of the hundreds of accountable care organizations formed in recent years, this one might be the oddest: a collection of nine hospitals scattered across three states, some of them more than 2,000 miles away from one another.
But this particular California-headquartered ACO reaches a niche many other do not: rural hospitals.
Most rural facilities cannot muster the minimum 5,000 patients required to form an ACO under the guidelines of the Medicare Shared Savings program. And the average $1.7 million in startup and first-year costs are also a daunting obstacle, considering many rural facilities are often operating on a day-by-day basis.
The Nevada City-based National Rural ACO also keeps in mind something that always haunts rural hospital operators – balance sheets and cash flow.
By contrast to the daunting startup costs connected with going it alone, membership in the National Rural ACO is limited to a $20,000 application fee, and $10,000 a month in ongoing payments, according to Lynn Barr, the organization's founder.
“They get all the benefits of an ACO, but without having to put up the enormous sums of money required to start on up,” Barr said. “This was an effort to create a scale to make this work, to create an ACO-in-a-box model that everyone can use.”
Barr, who previously founded the Rural Health Information Technology Consortium, was able to raise startup rants totaling $280,000 from the National Office of the Health Coordinator to set up the electronic medical records network required to set up the ACO's care coordination program. The organization also received a three-year, $300,000 grant from U.S. Office of Rural Health Policy.
The ACO operates as a for-profit, owned by the nine hospitals that are its initial participants.
They include five California facilities, most in or near the isolated Owens and Yosemite Valleys: Mammoth Hospital in Mammoth Lakes; Northern Inyo Hospital in Bishop; Southern Inyo Healthcare District in Lone Pine; Ridgecrest Regional Hospital in the high desert northeast of Los Angeles; and John C. Fremont Healthcare District in Mariposa.
The remaining four hospitals are in Indiana and Michigan. They include Margaret Mary Community Hospital in Batesville, Ind.; Memorial Hospital in Logansport, Ind.; Alcona Health Centers in Lincoln, Mich.; and McKenzie Health System in Sandusky, Mich.
The hospitals have anywhere from about 250 patients to more than 3,500 who will participate in the ACO.
The hospitals will focus primarily on cutting the costs for treating the sickest populations, mostly those who are ill with diabetes, congestive heart failure and other chronic conditions and wind up being hospitalized on a regular basis. Of particular focus will be patients who have been hospitalized or had three emergency room visits in the past year, and patients that were among the top 10% of each hospital's spend.
Among the first initiatives is for each hospital to hire a nurse practitioner or physicians assistant to help keep closer tabs on the more chronically ill patients and better coordinate their care.
“There are 10% of patients that comprise 60% of healthcare spending, and in these rural communities, we are talking about 100 to 200 people, and everybody knows who they are,” Barr said, making the notion of keeping them healthier and out of the hospital a viable option.
Whether or not such an ACO model can last the long-term remains to be seen, however.
Jerry Seelig, who runs a Culver City-based ombudsman firm and works closely with several rural hospitals in the western U.S., is well aware of their precarious financial difficulties and the need of more coordinated care for their patient populations. But he also noted that many such hospitals tend to partner with larger tertiary facilities in more urban areas in order to do so.
“With the expansion of Medicaid (under the Affordable Care Act), the tertiary care hospitals are more willing to partner with rural facilities. They don't want every patient at their door,” he said.
Barr noted that partnerships with larger urban facilities are likely in the future.
In the meantime, the interest from rural hospitals keeps on mounting. Barr projects that the National Rural ACO will have hospitals in at least 10 states by 2015.
