Monday, November 14, 2011

The Elephant in the Room: The Prequel

At the October HIT Policy Committee, Charles Kennedy described his work with health systems establishing accountable care models.  His clients "have actual health plan products that are private labeled products with the delivery systems' name on it that they’re selling."

Kenedy talked with the COO of one health system that was particularly high cost.  Kennedy asked the COO:  "Why on earth would you want to form an ACO? You’re a monopoly. You’re making tons of money.  You can keep doing this for some period of time."

The COO replied “Look I understand that the jig is up.”

The COO went on to say "I know how to take $60 out per member per month.  $60 - - out of my cost structure.  I know exactly how to do it.  I never had a motivation to do it before - - until health care reform happened."  Kennedy explained that the COO has now "taken those costs out of his delivery system and because he has a product in the marketplace he gets to reap those efficiencies.  The second thing he said was that 'I never really had a use for health IT until I began to take costs out of my infrastructure'."

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