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Memorial Hermann says risk pays off as ACO revenue rises

Texas health system offering patients more choice and nurturing its own health plan, even while collaborating with major insurers.

Photo of Memorial Hermann Hospital at the Texas Medical Center.Photo of Memorial Hermann Hospital at the Texas Medical Center.

Memorial Hermann, the largest health system in Texas, is not afraid of risk.

With a network of 13 hospitals, a large physicians group, numerous outpatient clinics and five urgent care centers in greater Houston, Memorial Hermann is trying to embrace the shift away from the fee-for-service payment, earning a small chunk of its of $4.2 billion in annual revenue from accountable care contracts in both commercial insurance and Medicare.

“We saved the government $58 million and shared half of that,” said Memorial Hermann CFO Dennis Laraway. Memorial Hermann’s Medicare Shared Savings ACO covered about 35,000 seniors in its first year and scored above average in savings and quality, with costs reduced by 11 percent compared to the average reduction of 0.4 percent across Medicare ACOs, and a quality score of 46 out of 58 points, compared to the average of 42.

[Also: See where the Medicare Shared Savings Program ACOs are]

Memorial Hermann is awaiting the results of the ACO’s second-year performance; it now has about 50,000 seniors.

On the other side of accountable care, the health system is participating in a commercial ACO with Aetna, offering a co-branded health plan, Aetna Whole Health-Memorial Hermann, to employer groups. That plan currently has about 30,000 members.

“Consumers are more engaged and more at risk,” said Laraway. The average Texan covered in a employer-sponsored health plan has a deductible of around $1,500 — higher than the average American — and devotes almost a quarter of his or her income to premiums, according to data from the Commonwealth Fund. More than 5 million Texans are living without health insurance

Memorial Hermann’s ACO plan is co-branded with Aetna, which charges patients less for staying within the Memorial Hermann network. It’s a narrow network plan, but with a lot of options, considering Memorial Hermann’s 200-plus facilities and 3,500 doctors across greater Houston, Laraway said..

The health systems is also meeting patient demand for convenient care. When its next Convenient Care Center opens in the town of Spring next year, Memorial Hermann will have five retail care clinics — among more than 700 walk-in clinics in Texas. Memorial Hermann’s clinics offer a blend of urgent and primary care, with primary care physicians, imaging services, sports medicine and, in the new Spring locations, a 24-hour emergency room.

[Also: These 779 hospitals actually scored Medicare bonuses]

The health system is also tackling the administrative and billing end of consumer-driven healthcare, which Laraway called “an important but often overlooked component of the healthcare consumer experience.”

Memorial Hermann lets patients schedule their appointments online, and is using the platform of a company called Simplee to offer patients digital payment options. Patients still get paper bills in the mail as a default, but they’re also being offered the choice to go paperless and use the online platform to get explanations of their financial responsibility and set up payment plans, something a lot of patients with high-deductibles have to do.

Then there is Memorial Hermann’s riskiest but potentially most rewarding venture — its own health plan.

In 2011, Memorial Hermann acquired a state health insurance license after purchasing the UniCare health plan from Anthem, the for-profit Blue Cross Blue Shield company. Now with about 50,000 members, including most of Memorial Hermann’s 20,000-plus workforce, the health system is looking to ply the model of integrated delivery. Memorial Hermann is selling a range of group health plans to employers, Medicare Advantage plans to seniors and individual plans, both on and off the ACA exchange.

“We’re still in start-up phase,” Laraway said, but Memorial Hermann’s insurance plan looks to be doing “very well” particularly for the health system’s employees. The workforce’s medical cost trend has been “zero” on a per- member, year-over-year basis. “Not a lot of organizations can point to a zero cost trend,” he said.

With its own health plan, Memorial Hermann is able to leverage a fairly well-regarded local brand and also tackle the problems of financial risk and consumer experience, using new designs that mirror a narrow network plan but also offer very low premiums.

“We think connecting our insurance arm with our physician network allows us to integrate care management,” Laraway said. “We can take a third party out of the equation, we can eliminate a third party that’s providing for overhead and profit, we’re able to collapse some of that cost and the spread of that and offer a more favorably priced product.” 

2013 Results from Memorial Hermann's MSSP ACO (data via Pulse Pilot)

Description Measures Percentile Measure category
Description Measures Percentile Measure category
How Well Your Doctors Communicate ACO-2 90th+ Patient/Caregiver Experience
Patients' Rating of Doctor ACO-3 90th+ Patient/Caregiver Experience
Health Status/Functional Status ACO-7 90th+ Patient/Caregiver Experience
Risk Standardized, All Condition Readmissions ACO-8 90th+ Care Coordination/Patient Safety
Medication Reconciliation ACO-12 90th+ Care Coordination/Patient Safety
Tobacco Use Assessment and Cessation Intervention ACO-17 90th+ Preventive Health
Proportion of Adults who had blood pressure screened in past 2 years ACO-21 90th+ Preventive Health
Access to Specialists ACO-4 80-90th Patient/Caregiver Experience
Percent of beneficiaries with diabetes whose HbA1c in poor control (>9 percent) ACO-27 80-90th At-Risk Population Diabetes
Beta-Blocker Therapy for LVSD ACO-31 80-90th At-Risk Population HF
Getting Timely Care, Appointments, and Information ACO-1 70-80th Patient/Caregiver Experience
Percent of PCPs who Qualified for EHR Incentive Payment ACO-11 70-80th Care Coordination/Patient Safety
Depression Screening ACO-18 70-80th Preventive Health
Adult Weight Screening and Follow-up ACO-16 60-70th Preventive Health
ASC Admissions: COPD or Asthma in Older Adults ACO-9 50-60th Care Coordination/Patient Safety
ASC Admission: Heart Failure ACO-10 50-60th Care Coordination/Patient Safety
Falls: Screening for Fall Risk ACO-13 50-60th Care Coordination/Patient Safety
Influenza Immunization ACO-14 50-60th Preventive Health
Colorectal Cancer Screening ACO-19 50-60th Preventive Health
Mammography Screening ACO-20 50-60th Preventive Health
"Patients who meet all the following measures: Aspirin Use, Low Density Lipoprotein (LDL) (<100 mg/dL), Blood Pressure (BP) < 140/90, Hemoglobin A1c Control (HbA1c) (<8 percent), Tobacco Non Use" ACO-26 ACO-23 ACO-24 ACO-22 ACO-25 50-60th At-Risk Population Diabetes
Percent of beneficiaries with hypertension whose BP < 140/90 ACO-28 50-60th At-Risk Population Hypertension
Percent of beneficiaries with IVD who use Aspirin or other antithrombotic ACO-30 50-60th At-Risk Population IVD
Health Promotion and Education ACO-5 40-50th Patient/Caregiver Experience
Pneumococcal Vaccination ACO-15 40-50th Preventive Health
Percent of beneficiaries with IVD with complete lipid profile and LDL control < 100mg/dl ACO-29 40-50th At-Risk Population IVD
"Patients who meet all the following measures: Drug Therapy for Lowering LDL Cholesterol, ACE Inhibitor or ARB Therapy for Patients with CAD and Diabetes and/or LVSD" ACO-32 ACO-33 40-50th At-Risk Population CAD
Shared Decision Making ACO-6 30-40th Patient/Caregiver Experience

Twitter: @AnthonyBrino

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