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Texas Hospital Association partners with Caravan Health in statewide accountable care organization

To get to the scale needed for value-based care requires at least 50,000 lives, Caravan says.

Susan Morse, Managing Editor

The Texas Hospital Association and Caravan Health have partnered on a statewide accountable care organization that has the potential to include hundreds of  hospitals in the state.

The value-based payment model, Value TX Health, is a statewide clinically-integrated network focused on achieving the scale needed to improve care and achieve financial results.

The Texas Hospital Association represents more than 400 hospitals, which represents about 85 percent of the acute-care providers and healthcare systems in the state.

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Lance Lunsford, president and CEO of the Texas Hospital Association's HealthShare program, said it's too soon to know how many member hospitals  would be joining the Value TX Health ACO.

Some hospitals, especially the larger systems such as Memorial Hermann and Baylor Scott & White, have established ACOs, he said. Other large systems in the THA include HCA, St. Luke's and Tenet.

What the partnership does is allow not only the larger systems, but the smaller hospitals to become a part of an accountable care program.

"There's pressure put on providers to have this value-based care approach, they're really changing the way they do work," Lunsford said. "This is all the more reason to have a partnership; (hospitals) are being asked to manage patients with complex needs."

Caravan Health CEO Lynn Barr said it's difficult for smaller hospitals to get the benefit of data to achieve results in a value-based program. When Caravan covered 10,000 lives, they could see nothing in the data, she said. When that number jumped to 230,000 lives the next year, suddenly they could see correlations.


Mainly what THA wants to know from joining the program is, what it is they don't know, Lunsford said. 

What hospital executives tell him, he said, is, "'We want to transition to an ACO and value-based care. What are the blind spots?' In a way, that mitigates risk."

Many tell him they've yet to get into a profitable area on risk-based, accountable care, but they know this is where industry is going.


The Centers for Medicare and Medicaid Services late last year finalized a rule forcing ACOs and Medicare Shared Savings Programs to take risk sooner, rather than remain in upside savings programs.


The collaborative will focus first on building a comprehensive readiness program for THA member hospitals as they transition to value-based care models. The second phase will focus on increasing the number of hospitals successfully participating in the Medicare Shared Savings Program.

Hospitals pay to become part of the ACO. Hospitals risk between $100 to $135 a patient.

The benefit is shared revenue on the backend for achieving results.

"Based on our model, we don't believe that either of us will write a check," Barr said. "If we have to move from fee for service to fee for value, we have to figure out how to make that a real payment model."

With 85 percent of hospitals operating on shoestring margins, many are risk adverse and are reluctant to move into ACO models, she said.

The scale of the ACOs help to mitigate risk. Caravan takes 75 percent of the risk; the hospitals have the other 25 percent.

Caravan Health, which was formed by providers, works with more than 250 health systems and 14,000 providers in accountable care organizations in 44 states.

In early 2019, Caravan Health launched the first statewide collaborative ACO in Mississippi. Since the first launch, Florida and Idaho both have started statewide ACOs supported by Caravan Health.

The first quarterly report of an ACO of 130 health systems showed it was saving $32 million. In 2017, Caravan Health ACOs surpassed nationwide ACO performance with total savings of more than $54 million and quality scores of 94 percent, the company said. Along with Medicare savings, Caravan Health ACOs earned shared savings of more than $15 million.

But Barr said she was at first, deeply disappointed by the 1 to 2 percent savings they were able to achieve through wellness visits and better management of chronic conditions.

"I had 38 ACOs running at once," Barr said. "In aggregate, we were saving 1-2 percent per year."

What changed her thinking was a Medicare Payment Advisory Commission report that said a trend of 1 percent savings would equal 50 percent of gross domestic product.

"That's $15 trillion over the course of 30 years, if everybody did this work," she said.

Fee-for-service does nothing to coordinate care for better outcomes and savings, she said.

"Our fee for service system is a mess," Barr said. For patients, "Google is their medical home. We use nurses to work with patients to understand and motivate them and to change the outcome of their disease."

The cost of care continues to rise as well as the service intensity. One surprise for Barr is that she believed value-based care would lower hospital inpatient utilization, and found it hasn't. Instead, the savings have come from DRGs, she said, the diagnostic-related group patient classification system that standardizes prospective payment to hospitals and encourages cost containment initiatives.

Asked if value-based care was working, Barr said "It certainly is for us and for our clients."

Twitter: @SusanJMorse
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