Health Catalyst Exec is on Data-Driven ACO Mission

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[Written July 16, 2014 by Christopher Cheney]

After helping to establish managed care plans for an insurance carrier, David Burton, MD, former CEO and chairman of Health Catalyst, is still committed to helping providers retool themselves into accountable care organizations.

Who can resist a good epiphany?

For David Burton, MD, the flash of clarity that set the course toward the twilight of his career came just weeks after he launched one of his most ambitious enterprises.

Burton, who had a distinguished career as an ER physician, co-founded Intermountain Healthcare’s managed care plans after joining the company in 1982. Now known as SelectHealth, Intermountain’s managed care plans provide insurance coverage to about 600,000 people.

His eureka moment came soon after the rollout of Intermountain’s managed care plans.

“I had 10% of the premium dollar to work with,” Burton says of Intermountain’s payer slice of the premium rate pie. “That would get lost in the noise of the total premium.” He decided the most effective way to build a value-based healthcare delivery system would be on the provider side of the equation.

While acknowledging that  political reality has dictated the terms of transforming healthcare to a more value-based effort, Burton believes federally driven strategies to use payment reform such as Medicare policies to spur change are a “backwards” approach to the problem.

Burton says providers need to lead the value-based transformation, which is a process that will take far longer than any election cycle in Washington. “Transforming the delivery system takes at least 10 years to have a significant impact,” he told me.

Soon after retiring from Intermountain in 2008 with expert data analytics skills he developed while operating its managed care plans, Burton became CEO and later Chairman of Health Catalyst.  After retiring from the board last month, he is now at Health Catalyst in a mainly advisory capacity as a senior vice president.

The Salt Lake City-based company, which has developed a data warehouse platform, is committed to helping providers retool themselves into accountable care organizations. Burton shared his perspectives on ACOs with me last week.

HLM: What’s your vision for accountable care organizations?

Burton: There’s a whole lot of confusion about what we’re talking about. “ACO” is used interchangeably with anything that has anything to do with shared risk. There are building blocks and additional competencies needed in order to be successful with population management.

About 98 percent of the effort is learning how to manage a population… The building blocks include network development and conducting a clinical evaluation of your population… Infrastructure is one of the most important competencies.

You have to have a platform. And that’s where the data warehouse comes in. There are disparate data sources in healthcare. The data warehouse integrates those disparate sources.

HLM: How should ACOs conduct population evaluations?

Burton: Rather than focusing on year-over-year costs, I want to know how many chronic disease patients like diabetics do I have in this population. I want to be able to report out this disease density so I can tell a third-party payer how much risk is present. Then I bear down on the level of severity of disease… It’s clinically-driven underwriting.

HLM: Tell me about the contracting ACO building block.

Burton: I need to find out who is large enough for me to be on their punch list: Medicare, Medicaid, the commercials… I need a pie chart to see who I want to pursue.

In that contract, population evaluation determines the price on which I assume the risk. And I don’t want to be sunk by one or two outliers like a transplant. I will share that risk with the payer or get re-insurance. The contract also includes the provider network.

HLM: Does an ACO require a critical mass of patients?

Burton: It depends on how you are going to assume risk… If you get too small of a population, then a big case can sink you. It also would take a lot of time to collect meaningful data. You’re not able to react quickly enough…

The bigger the better. Kaiser is the ideal. They have millions of patients.
HLM: Is there a major difference between your vision for ACOs and the federal government’s first models, Pioneer ACO, and the Medicare Shared Savings Program?

Burton: In the federal models, you have the worst of all worlds at the patient level. The problem is with the attribution algorithm. The patient may not know they have been attributed to your ACO.

You can market to the… and you can be nice to them; but, beyond that, there’s no financial incentive for patients to stay in your ACO network.

HLM: How can providers develop the expertise needed to operate a successful ACO?

Burton: In this early, adolescent stage of shared risk, you’re going to have people operating in an immature manner. It’s a lot harder than it looks. Providers end up doing it less efficiently than a third party payer. … You do, in fact, need someone to do the administrative aspect of an ACO.

HLM: What are some of the ACO pitfalls for providers?

Burton: There is a group of providers that has its collective head in the sand. There are providers that want to dip their toe in the risk sharing water. Then there are the enlightened few that are committed to managing cost.

You have to avoid a project mentality. The SWAT team approach will improve a particular area, but within two or three months they’ve lost their gains. It’s a permanent investment, but the return on investment is substantial. This is not amenable to a one- or two-year fix.

Christopher Cheney is health plans editor at HealthLeaders Media.