Blog Post

How the first oncology ACO achieves savings every year

March 1, 2016

    We've been following the first oncology-specific ACO formed by Miami Cancer Institute and a regional payer for a few years now, and we recently learned that the program has realized year-after-year savings. Read on to learn how much they saved, how they saved it, and how they plan to save more.

    Need a refresher? Here are the basics of the ACO. 

    To ensure everyone is up to speed on the details of the ACO, here’s a brief overview:

    • The ACO was formed in 2011 by a large regional payer, Baptist Health South Florida (the dominant hospital system in the market), and Advanced Medical Specialties (a physician group now employed by Baptist Health South Florida as a component of the Miami Cancer Institute)
    • Patient attribution is triggered by a diagnosis of one of six cancer types and three E&M visits in any twelve month period
    • The ACO continues to operate under fee-for-service, but any savings are shared among the partners as long as certain quality metrics are met
    • Savings are determined by a year to year comparison of the practice’s patients’ per member per year costs

    ACO enjoys year-after-year savings

    The program has seen financial success since its early days. Though first-year savings were modest, subsequent years saw striking increases. For example, between years one and two, per patient savings increased 631%, and between years two and three, per patient savings jumped 407%.

    Fourth year numbers are still pending, but early estimates suggest that savings decreased 46% between the third and fourth year. Dr. Kalman, deputy medical director and chief medical officer of the Miami Cancer Institute, attributes the fourth year decrease to the natural decline in savings that is inevitable when you’re comparing a practice to its historical cost performance.

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    More savings are around the corner

    A large chunk of the ACO’s early savings are attributed to chemotherapy pathway compliance (current compliance rate exceeds 90%) and a healthy dose of the Hawthorne effect—i.e., physicians being more mindful of costs because they are being observed. To realize the next opportunity for savings, Miami Cancer Institute is employing inpatient oncology hospitalists, palliative care specialists, triage nurses, and a host of advanced practitioners—all with the hope of reducing inpatient admissions and length of stay. And, in addition to chemo pathways, providers will be using radiation therapy and imaging pathways.

    The next step

    While Miami Cancer Institute has realized a primary goal of reducing costs of care, their next aim is to demonstrate an impact on patient outcomes. Dr. Kalman and his colleagues are committed to identifying and using genuine health outcome metrics to determine their program’s success in meeting this goal.

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