July, 2011

You've probably been reading and hearing a lot about Accountable Care Organizations and Patient-Centered Medical Homes (PCMH). Both figure prominently in the federal health care reform law of 2010. But though these terms may be familiar, you may have questions about how they may impact the way health care is delivered as well as how Penn State Hershey is approaching these still developing health care models.

Accountable Care Organizations (ACOs)

Accountable Care Organizations (ACOs) are a key feature of the new health care reform law. Promoted as a way to contain health care costs and enhance the quality of care, many hospitals and health care providers are still grappling with exactly how ACO’s will function. The law defines an ACO as a network of physicians and hospitals that work together and share responsibility for providing comprehensive health care to a population of patients. Under the new law, an ACO must be able to commit to meeting the health care needs of a minimum of 5,000 Medicare beneficiaries.

In contrast to traditional fee-for-service approaches to paying for medical care, ACO’s would be paid to manage their patients’ overall health, with greater emphasis on prevention and management of chronic disease. They would have significant financial incentives for meeting high quality standards and for reducing health care costs. Physicians and hospitals within an ACO will need to work together and share information seamlessly in order to accomplish these goals. If an ACO is not able to reduce the cost of providing health care, it would face financial risk. Unresolved questions about ACO’s include who will ultimately run them – doctors, hospitals, and insurers are all leading efforts to form ACO’s across the country – and whether they will have an adverse effect on competition, including driving smaller providers out.

Over the short term, we may or may not participate in an ACO, given the many questions that remain to be answered about how ACO's will be structured and the financial risks associated with them. That said, we fully expect that population-based reimbursement and shared savings/risk models are likely to become the dominant form of payment from governmental and commercial payors in the future. Without a doubt, we must commit to significant organizational readiness over the next year or two, but we plan to take that time to observe how initial ACO pilot programs evolve and apply the lessons learned to our own preparation.

Like many other major health care providers, we at Penn State Hershey are taking a thoughtful approach to the development of an Accountable Care Organization. Meanwhile, I’m pleased to report that we have taken an aggressive and comprehensive approach to the Patient-Centered Medical Home model, one that includes patient care, research and medical education.

The Patient-Centered Medical Home

On a smaller scale than that of an ACO, the Patient-Centered Medical Home is also based on the premise that teamwork and coordination of care will enhance the quality of health care and improve patients’ health. While we wrestle with the decision around ACO’s, we've taken significant steps across our missions to develop and implement medical homes, evaluate their effectiveness in caring for patients and prepare our future healthcare workforce to work within a medical home model.

The Patient-Centered Medical Home focuses on the patient as a whole, rather than a specific disease, and places a greater emphasis on preventive care. By fostering teamwork and open communication between individual patients, their personal physicians, and other members of the care team, the medical home promotes coordinated, comprehensive care and emphasizes keeping patients healthy, not just treating them when they are sick. Providing high quality primary care enables providers to keep costs down by reducing the number of overall doctor visits and hospital admissions.

Penn State Hershey researchers are demonstrating the effectiveness of the PCMH model as a better way to help patients with chronic disease. For example, Dr. Bob Gabbay, professor of medicine and director of the Penn State Hershey Diabetes and Obesity Institute, and his colleagues recently published a study demonstrating that the PCMH model of care significantly improved health outcomes for patients with diabetes. Adherence to evidence-based care guidelines also increased, with more patients receiving recommended care including foot and eye exams and vaccines for influenza and pneumonia. Under the Patient Centered Medical Home model, patients were also more likely to set self-management goals, demonstrating that this model is an effective way to engage and empower patients to play an active role in managing their health.

We are doing more than implementing the medical home model as a new approach to patient care. As an academic medical center, it’s also our responsibility to train future health care providers to perform well in a rapidly changing health care system, one that will include patient-centered medical homes. That’s the idea behind an initiative led by Dr. Shou Ling Leong, professor of family and community medicine. Dr. Leong is redesigning aspects of the medical curriculum around the patient-centered medical home, so that our medical students are exposed to this model and gain experience working with other providers as part of a patient-centered team. Dr. Leong’s project, supported by a federal grant secured with assistance from Congressman Tim Holden, complements other curricular innovations at the College of Medicine and Medical Center, including our inter-professional education programs aimed at preparing medical and nursing students to work together as teams.

Penn State Hershey is a leader in developing the patient-centered medical home, but we still have work to do in order to bring the full benefit of this model to all our patients. There are many challenges associated with implementing the medical home model on a large scale, including additional time required for patient appointments and staffing needs. Currently, over a quarter of our provider workforce is comprised of primary care providers. We believe that number needs to be much higher in order to develop an organization-wide medical home model that can meet the future health care needs of our patients. Just like an ACO, the medical home requires not only more time from more primary care providers, but also new behaviors – from providers and patients alike. Breaking old clinical practice habits and engaging patients in managing their care are essential for success.

The innovative work that we are doing now will set the stage for wider adoption of the patient-centered medical home in ways that will maximize the benefits to our patients. By testing this model of care, measuring and evaluating the results, and identifying the most effective ways to prepare providers to work effectively under this new model, we are demonstrating leadership in an area that will be on the forefront of health care innovation in the years to come. This health systems research benefits our patients and provides our students with the experiences they need as they enter clinical practice.

Over the past decade we have received national attention as one of the few fully integrated academic health centers in the nation. The efforts of our faculty and staff in developing new and innovative health care models not only benefit all those whom we serve but also enhance our reputation as a leader in the health sciences.

Harold L. Paz, M.D.
Chief Executive Officer, Penn State Hershey Medical Center
Senior Vice President for Health Affairs, Penn State
Dean, Penn State College of Medicine