Contracing News

Use of electronic health records (EHRs) may slow cost growth in the short term
According to the Annals of Internal Medicine, a new study of community-based outpatient practices suggests that use of commercially available electronic health records (EHRs) may slow the growth of healthcare costs in the short term. Since 2009, the federal government has allocated billions of dollars in financial incentives to encourage physicians and hospitals to achieve “meaningful use” of EHRs. It is believed that meaningful use of EHRs should lead to higher-quality, lower cost care by avoiding inefficiencies, inappropriate care, and medical errors. However, empirical evidence about the effect of EHRs on healthcare costs has been conflicting. Researchers compared medical claims for 47,979 patients who received most of their care from providers who adopted EHRs in experimental pilot communities (806 ambulatory care clinics) with those for 130,603 patients in matched control communities. Practices were a mix of primary and specialty care, and used commercially available EHRs to perform the core clinical tasks that are required of physicians in the first stage of meaningful use. In the 18 months after adoption, the researchers saw ambulatory cost savings of three percent projected savings per-member, per-month (PMPM) and reductions in ambulatory radiology costs. If sustained for a sufficiently long period, these could translate to substantial savings. The author of a related editorial writes that EHRs are unlikely to be the solution to reducing healthcare costs, nor should they be. The author asserts that EHRs are essential to implementing new models of healthcare delivery such as the patient-centered medical home and accountable care organizations. Financial savings will be driven by the new models, and not EHRs.

Banner Health named a “top performer” in first year as Medicare Pioneer ACO
Banner Health (Phoenix, AZ) announced that it had a successful first year as a top performer in the CMS (Baltimore, MD) Pioneer Accountable Care Organization (ACO) program. Banner changed its healthcare delivery model to more coordinated care, and switched away from the fee-for-service model, reducing hospital re-admissions and length of stay. Entering year two, the company has begun recruiting additional physicians for performance year three (calendar year 2014). The central premise of the Pioneer ACO effort is to create value through a highly coordinated, collaborative network of providers who are focused on achieving the highest level of wellness possible for their Medicare patients. Provider revenues are generated through a percentage of Medicare savings. On the flip side, if provider expenses are greater than available Medicare funding, the individual ACO is at risk for that loss.

Adventist Health to launch limited HMO
Adventist Health (Roseville, CA) plans to get a limited HMO license to give its hospitals and physicians more control over patient care under the Affordable Care Act. The move will also expand the system’s market share. Adventist’s board approved the plan in June 2013, and a strategy is currently under development that could launch in three regional markets in 2014. The system will file an application with the California Department of Managed Health Care (Sacramento, CA) later in 2013.