Hot zones / dead zones: Local factors produce patchy national shift to ACOs

Over the past three years, the number of people covered under Eastern Maine Healthcare Systems' value-based payment contracts has swelled from 9,400 to 100,000.

In that period, the eight-hospital not-for-profit system has seen emergency department visits decline 2.8%, admissions drop as much as 21%, and primary-care visits jump 23.7%. The system calculates that it has lowered its per-member, per-month Medicare cost trend by 4.7%, and healthcare costs for its employees have grown less than 5%.

But as Eastern Maine's accountable care organization subsidiary, called Beacon Health, has achieved success in lowering costs and utilization, the system has seen reduced revenue from fewer admissions and procedures. Still, that's not stopping Eastern Maine from pushing ahead with its value-based contracts. “We can't continue to do business the way we've always done business,” said Jeff Sanford, Beacon's chief financial officer. “We're not going to sit here and let the change be upon us. We want to be part of the change.”

Maine is one of a few states that have more than 15% of their population enrolled in an ACO, which offers healthcare providers financial incentives for meeting cost and quality targets rather than paying based on the total number of services delivered. But across the country, the move toward value-based payments has been patchy, with some areas of the country moving much faster than others. 

More health systems are reporting a higher percentage of their revenue from value-based contracts. But most of these contracts involve bonus-only models or supplemental payments linked to quality. The second and more demanding phase will be in assuming full upside and downside financial risk, said Phil Kamp, CEO at Valence Health, which provides technology and consulting services for value-based payments and population health management.