Let’s Work Together: ACOs and the Senior Care Industry

Care coordination and cutting down on waste are two major components of healthcare reform, and Accountable Care Organization networks—created through the Obama administration’s Affordable Care Act—will have a measurable impact on the senior housing and care sector, providers say.

ACOs encompass groups of healthcare providers, including doctor’s offices, hospitals, and long-term care facilities, who are jointly responsible for the quality and cost of care for their patients, with the intent of improving outcomes and saving Medicare money. With an election year coming up, there’s a lot of buzz about the future implications of President Obama’s healthcare reform initiatives, and some say the industry is in for an adjustment.

“The overall impact of healthcare reform will affect the [senior care] industry as a whole,” says Aaron D’Costa, Chief Business Development Officer at Pathway Senior Living, based in Des Plaines, Ill.

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An important aspect of ACOs focuses on dual eligibles—those who are eligible for both Medicare and Medicaid—and the best setting to be able to meet that person’s needs, he says; services provided in a coordinated setting can ultimately reduce costs to the entire system.

In a recent interview with NPR, Dr. Donald Berwick, the former administrator of the Centers for Medicare and Medicaid Services (CMS), said less waste in the healthcare system, including in Medicaid and Medicare, will lead to more affordable care.

The nation’s nine million dual eligibles account for about $320 billion of government funds for their care, but “easily a third of that is just waste,” Berwick said in the interview. “If we get them into coordinated care, we could meet their needs much better.”

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Efficiency in the healthcare spectrum is a key component to reform, according to the CEO of Objective Health, a McKinsey Solution for Healthcare Providers, Russ Richmond, MD, in an interview with Becker’s Hospital Review.

“I would like to see it become more efficient,” he said. “There’s a lot of waste in the healthcare sector that can be eliminated by better coordination—by linking together different parts of the healthcare value chain that have not been previously linked. This is a huge opportunity—as much as 10-20% of healthcare spend.”

In the end, this concept of coordinated care changes the way senior housing and care providers will market themselves, says D’Costa. Instead of a business-to-consumer angle, they’ll have to partner with hospitals, pharmaceutical organizations, therapy providers, home health care agencies, skilled nursing, and other parties that each target an aspect of the health care continuum, for a largely referral-based business.

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“Providers will need to have collaborations put together with many of these organizations to ensure best outcomes for residents,” he says. “Independent living and assisted living will still be able to get some customers by marketing directly to consumers, but the vast majority of business will be coming in through referrals, and that changes the whole dynamic of what independent and assisted living is. It becomes business-to-business.”

Written by Alyssa Gerace