Disruptive Innovators: Safety-net ACO

"The clinics realized that the path to long-term survival, frankly, is to come together in ways we haven’t before." - Deanna Mills, director, Community-University Health Care Center

A group of federally-qualified health centers has banded together to bundle resources, improve care and share in savings

Many of the accountable care organizations in the U.S. are hospital or primary care provider networks banning together to provide care. A group of federally-qualified health centers in the Minneapolis area has broken the mold by creating the first safety-net ACO.

The Federally Qualified Health Center Urban Health Network (FUNH) is a Medicaid-based program of 10 federally-qualified health centers (FQHCs) at 40 sites across Minneapolis and St. Paul, Minn. The providers serve 150,000 patients. Beginning Jan. 1, FUNH will serve nearly 23,000 Medicaid patients in the organizations.

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The group is looking to improve care and, hopefully, share in savings they create by bundling resources and working together, instead of as competitors.  

FUNH came out of legislation passed in Minnesota in 2010. The Department of Human Services was tasked with creating a demonstration that would test new systems for delivering healthcare, including ACOs. That same year, the state’s Association of Community Health Centers began looking at how health reform might impact their organizations. They created a task force to analyze ACOs and the FQHCs saw the state’s demonstration project as an opportunity to work under this model.

“We thought, ‘Healthcare reform has walked in our door and what are we going to do with it?’” said Deanna Mills, director of the Community-University Health Care Center in Minneapolis, one of the members of FUNH. “The law’s here and we can embrace it or turn it away. The clinics realized that the path to long-term survival, frankly, is to come together in ways we haven’t before.”

The providers – Axis Medical Center, Community-University Health Care Center, Indian Health Board of Minneapolis, Native American Community Clinic, Neighborhood HealthSource, Open Cities Health Center, People's Center Health Services, Southside Community Health Services, United Family Medicine and West Side Community Health Services – partnered with Optum (a UnitedHealth Group subsidiary), which will provide strategic and operational support, infrastructure and data.

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According to a case study on the project conducted by the Commonwealth Fund, Optum is taking on significant financial risk for FUNH’s infrastructure investments. Minnesota did not provide any upfront or advance funding for the ACO demonstration. 

The ACO is set up as a reward-only, three-year contract. The FQHCs couldn’t afford to share the risk if they don’t meet quality benchmarks, but they will share the reward if they exceed their goals. Mills said there is an automatic 2 percent that has to be saved to the system and after that, beginning in year three, the ACO receives half of the savings to share among its members.

Karen Schoenherr is a health policy fellow at the Dartmouth Institute for Health Policy & Clinical Practice and the lead author of the Commonwealth Fund case study on the project. She said it is too early to tell whether or not FUNH will be able to lower costs, but the relationships being built between the organizations will help them all greatly.