HIStalk Interviews Charles Kennedy MD, CEO, Aetna Accountable Care Solutions

Tell me about yourself and your job.

I’m the CEO of Accountable Care Solutions. This is the part of an Aetna that deals with building ACOs on a national basis. I’m also an internist and have had a variety of roles over the years in informatics, health information technology, comparative effectiveness, and research. I also sit on the HIT Policy Committee, which developed the Meaningful Use regulations.

What do you see as the biggest challenges facing the HIT Policy Committee?

Right now, I think there’s probably three challenges I would point to.

The first challenge is that the number of physicians who have gone through the self-attestation process to say they’ve met the requirements for Meaningful Use is substantially lower than what CMS had forecast. At the Policy Committee, we’re keeping our eye on that. As things evolve, we need to may come up with some nuances that allow more physicians to qualify.

The second big challenge is when we developed the regulations, they were largely based off the existing technology, which is electronic medical records, At times, electronic medical records in and of themselves are insufficient to get the kinds of quality and cost improvements that we want to get from technology deployment. Translating the technology deployments to measurable value, I think, is the next big challenge the policy committee faces.

Thirdly, I would point to the technical challenges. Clinical ontology, semantic interoperability is still very uncommonly found in any of these solutions, and in my view, it’s foundational to getting value — or the kind of value that we want to get –from HIT deployments.

Do you see any threat that Congress will pull back some of the HITECH money?

I’m not aware of any threat. Health information technology has generally enjoyed broad bipartisan support, primarily because if you’re going to try and attack the cost equation, HIT is one of the few tools that doesn’t involve benefit reductions or eligibility reductions or some other unpalatable — especially politically unpalatable — approach. I think the House and Senate still very much want to see it successful and I think we’ll stand behind it.

What is Aetna’s perspective on accountable care organizations and how do the Medicity and Active Health Management acquisitions play to that?

Aetna looks at accountable care solutions as the best business model and operational structure to deliver high-quality care efficiently. Because in order to make that successful, you have to have a structure where physicians can operate, work together, and achieve the team-based approaches to managing the patient, which is so common in clinical care today. ACOs gives you a structure.

You have to have alignment of the incentives. It is very difficult to deliver healthcare efficiently when you’re getting paid on a volume basis. ACOs have the right kinds of incentives around gain-sharing, which makes it much more likely that physicians will be rewarded for high value of care rather than volumes of care.

Health information technology is foundational to ACO successes. If you think about many of the things that ACOs are doing, there’s not that much that’s completely new. Many of these things were tried in the ‘90s and had varying degrees of success, but what’s different this time is health information technology. I was in the industry out in California when many of those IPAs and medical groups and capitated agreements were formed. One of the most important predictors of success was the level of IT sophistication for the group accepting financial risk for a set of patients. I believe that the tools we have today are far better than what the best tools of the ‘90s could offer, and I think that gives us a strong chance of making ACOs successful.

Along those lines, to what extent do you think the ACO model will encourage or even require greater levels of interoperability, business analytics, and population management tools, and how well do you think today’s provider information systems can meet those needs?

All of those needs — analytics, applications which support the care process, knowledge bases which allow you to apply the best in medical thinking to each individual patient within the context of the care … is an absolute requirement. The challenge is primarily a data challenge.

Most of the data that is found today is derived from claims data, which has inaccuracies. It has timeliness issues, and it may not always reflect the actual clinical care process. When you get into the realm of clinical data, you find that much of the information is in textual reports. It may be sent in a structured message, but the pieces of information you need to derive from that structured message are often free text. 

Without that clinical data being in a discrete form that we can run algorithms against, that we can data mine, we can write reports against … until that happens, we’re going to be limited by the depth and breadth of the data available to it. That will cause significant challenges in getting the value from health IT that we would like to get in order to make ACOs work.

I really look at from the perspective of we must improve the quality, breadth, and depth of the clinical data and allow that to be fed into engines, repositories that you can apply mathematical operations to. That’s the challenge.

Ours is very much a collaborative business model with the providers, hospitals and physicians. As we see hospitals and physicians needing to take on a certain amount of risk in managing the populations that are associated with an ACO, Aetna’s business model is one to say, how can we provide our intellectual property knowledge to help hospitals and doctors figure out how to do that truly in a collaborative way, as opposed to it somehow being taken offshore or taken back to a big company like Aetna where it’s all being managed by us. That’s absolutely not our model in any way, shape, or form.

What people are trying to achieve in the structure where clinical care can be delivered more efficiently and effectively, that structure must deliver a better foundation for the care management process to be executed. One way is to actually buy practices. We’ve seen various health plans do that. That’s not our approach, because we believe the delivery of care is sufficiently different from the IT tools, the risk management, the actuarial functions, and all the things associated with what a traditional health plan does. We believe those businesses are sufficiently different that it doesn’t justify acquiring practices. Our model is a collaborative model.

It seems the accountable care model may be affecting the viability of the small independent physician practice and maybe even physician autonomy in general. Do you see that being an unintended consequence?

There will certainly be opportunities for physicians to align themselves with larger organizations. Many will choose to do so for the reasons you are citing. They’ll need help with information technology. They’ll need help with reporting and analytics. They’ll need help with risk management. These are all functions that an individual or small group practice simply doesn’t have the bandwidth or the infrastructure to take on.

However, again with our partnership model, we believe we can preserve the look, feel, and operations of an independent practice, but through technology, bring them all the capabilities they need to be successful in an ACO world. We don’t think it’s an inevitable result, but we believe there will certainly be organizations who go down the integration path and look to individual and small group physician acquisition as a way to get it.

How does the partnership model work and who pays for it?

We have a variety of ways of working with delivery systems. They generally fall into three buckets.

The first bucket is what I’ll call a clinical integration focus. Let’s say you’re a hospital and there are 500 physicians in the community who admit to your facility. What we’re finding in the marketplace is that many hospitals are interested in a clinical integration strategy, because they recognize the benefits of having the physicians more closely aligned with their facility as both benefits from the hospital as well as in improved care process.

One approach that we use is to simply say, we will work with you in a collaborative fashion to allow physicians in your community … so this would be to market and sell a Medicity-style solution, which could include health information exchange, it might include an electronic medical record. Through our ownership of Active Health, it could include analytics and reporting as well. What it allows us to do is to offer a seamless set of tools that allow the community physicians to begin to operate as a virtual ACO with a very light footprint. This is not massive EMR implementations, this is not any kind of rip-and-replace type of approach. This is a lightweight, small-footprint approach to allow health information exchange to occur.

Once you do that, there are significant benefits from both the quality perspective as well as an efficiency perspective in simply getting everyone connected. That’s one way we would start interacting with them. We generally charge for those services, but we have very competitive rates and services may be paid for either by a sponsoring organization or by the end users themselves.

The second approach is what we call a population-based approach. This approach is for organizations that do not want to form an ACO yet, but want to take some steps toward forming an ACO. Two combinations that we commonly use in this style are the employees of the hospital. Frequently a good-sized hospital will have 5,000 or more employees. We use that population as a way to deploy some initial tool sets generally centered around chronic disease management and patient empowerment.

Let’s say you have a hospital with 5,000 employees. We might deploy a part or all of the Medicity solutions, connect all of their various systems, and expose that information — to the patients, the employees — and incorporate it as part of a disease management program. We’re typically paid for these services as well, but these services create a financial benefit in terms of lower utilization of healthcare costs, healthier, more productive employees, and so the hospital can realize a net gain from the deployment of these services. Further, it’s really good way for the hospital to be able to see the employer’s perspective of what their healthcare service offerings might look like, and that can be helpful if you want a commercial health plan itself as an ACO.

The third model is a private label health plan. In these types of circumstances, what we’re doing is we are enabling a delivery system to have their own health plan, powered by Aetna. They go to the market, they use their name, their local market reputation. We provide the same types of services that we do today, but the difference is that it’s done under the direction of delivery system in consultation with us and allows for complete transparency. The delivery system sees direct results from the cost initiatives and those flow directly to their bottom line through all of the members that are associated with their private label health plan. It’s very powerful from a transparency perspective and drives the delivery system’s interest in the using more data, more analytics to become more efficient and as competitive as they can be in the marketplace.

From your comments on the HIT Policy Committee as well as Accountable Care Organizations, it sounds as though the EMR systems of individual practitioners aren’t as important as they once were, becoming more of a tool to feed the network, the analytics engines, and population management tools. Do you think that will change the healthcare IT industry?

I think the healthcare IT industry has largely grown up around the customers that they served. When physicians were largely in solo and small group practice, the EMR industry tended to sign the larger organization because they have the capital and infrastructure to be able to adopt an EMR. Most of the vendors have struggled to profitably serve the solo and small group segment.

Now that we’re seeing more and more physicians become acquired by hospitals or in some way, more tightly aligned with systems, I think you’re going to see the EMR industry change. The organizations that are going to become more employed are the ones that are doing health information exchange, because that’s what’s going to be more important to ACOs and integrated delivery networks, as well as organizations that are very sophisticated with their data management capability. Here I’m talking about semantic interoperability, clinical ontologies, and similar ways of being able to use the data in a way influence the care process.

I do think you’ll see a bit of a shakeout. I really have no idea when. I think those with the more sophisticated data management capabilities will be the winners.

When the smoke clears after Meaningful Use, healthcare reform, and Accountable Care Organizations, how do you think the healthcare industry will look compared to today?

I’m going to give you the optimistic answer, which is I hope that the healthcare industry has transformed from an industry that rewards participants based on volume to one that rewards participants based on the value of the services that they provide.

I would expect that ACOs will become commonplace and will become successful and will allow patients, through the use of health IT, to take better care of their chronic disease. 

I hope we begin to see more effective chronic disease management. Chronic disease is responsible for 60-70 cents on the dollar of our healthcare expenditures. If we can begin to use the data that gets generated through the Meaningful Use deployments and digest it and turn it into a form that is actionable both by the individual physician as well as the individual patient, I think there’s a reasonable chance to think that people will get their diseases in better control and that will help us keep healthcare costs more manageable.

Any concluding thoughts?

As a society, we’ve been very concerned about healthcare reform.  I think part of that is because it so big and so complex and so important, But I think we are starting to see preliminary signs in the industry that healthcare reform may in fact work, and may in fact give us better quality care at a lower price. I see reasons to be optimistic about the future in healthcare.