Public Assets Institute > Policy Areas > Health Care > Will profit-making be Job One at OneCare?

Will profit-making be Job One at OneCare?

By WENDELL POTTER

When I read that Fletcher Allen Health Care and Dartmouth-Hitchcock Medical Center were forming a new for-profit entity to administer Vermonters’ Medicare benefits, one thing leapt off the screen: the term “for-profit.” As someone who worked for two of the country’s largest for-profit health insurers over nearly 20 years, I know how the quest for profit can supercede the best interests of patients.

I want to believe that the executives of Fletcher Allen and Dartmouth think that OneCare Vermont, the business they hope to establish, will lead to better and more cost-effective care. What I have to believe, however, is that they have figured out a new way to make a lot of money, over and above what they are paid now, if and when their venture gets the green light from the federal government.

The two organizations have submitted a proposal to the Centers for Medicare and Medicaid Services (CMS) to set up and operate an accountable care organization, or ACO. An ACO is a structure that, in theory, gives doctors, hospitals, and even insurance companies financial incentives to work together. Instead of the current fee-for-service arrangement, health care providers in an ACO receive a portion of a certain amount of money determined by CMS to provide care for a given number of Medicare beneficiaries.

If OneCare’s doctors and hospitals provide care more cost efficiently and with no decline in quality, as measured by CMS, OneCare will get to keep half of the savings. The Medicare program would keep the other half.

Evaluations of operating ACOs show that they are not a surefire way to save money or improve care, however. That’s partly because of their complexity and partly because ACO providers want to be paid at least as much as they were previously receiving. Nevertheless, Congress authorized CMS to approve ACO proposals from across the country as part of several pilot projects in the Affordable Care Act to try to reduce government spending on health care.

It is possible, of course, that OneCare will deliver the goods and remove costs from the system while taking better care of patients. But one has to wonder: How much will the venture cost taxpayers? Who will profit and by how much?

Fletcher Allen Senior Vice President Todd Moore, who will be CEO of OneCare, told VTDigger: “None of us are drawing a salary from OneCare at this point just because it’s a theoretical entity.” The obvious follow-up question is: How much will the executives and staff of OneCare be paid when it becomes a reality, as early as three months from now? And will that compensation be added to their current pay from Fletcher Allen and Dartmouth?

And how much money will it take to operate OneCare? In other words, what will be the additional overhead cost to taxpayers?

Green Mountain Care Board Chair Anya Rader Wallack has vouched for the transparency of Fletcher Allen executives throughout the ACO application process. But transparent to whom? What information have they provided to the board and CMS? Are the OneCare folks willing to share their business plan and financial projections with Vermonters, many of whom will be enrolled in OneCare whether they like it or not? Are they willing to disclose their projected income and how they propose to spend it? And what will happen to the profits?

What I learned in my career is that for-profit health care organizations know how to do one thing very well: make money. That becomes Job One. Unfortunately, for-profits don’t do nearly so well meeting consumers’ and patients’ needs. If they did, we would not have 50 million Americans without insurance. And we wouldn’t be trailing the rest of the developed world in most measures of health care quality and outcomes.

 

Wendell Potter, who wrote this guest blog, consults with Public Assets Institute on health care issues. He was formerly head of national corporate communications and chief corporate spokesperson for Cigna. Prior to joining Cigna, Potter headed communications at Humana Inc., another large for-profit health insurer. He lives in Philadelphia.

Posted by Sarah Lyons on October 5, 2012 at 8:45 am

5 Responses to “Will profit-making be Job One at OneCare?”

  1. Peg Martin says:

    I find Mr. Wendell’s thought provoking guest blog disturbing. It is hard, probably impossible, to argue about what motivates a for-profit company.

    As an ACO “One Care” may indeed provide excellent care, but so could a not-for-profit ACO. If the need to “make a profit” were absent there would be more money for care. Do we have health care system where only profit can motivate good practice and efficient care? How about an equally effective not-for-profit ACO where the “profit” can benefit those who need care?

  2. J. Churchill Hindes, PhD, Vice President for Accountable Care, Fletcher Allen Health Care / Vermont Managed Care says:

    Will profit-making be Job One at OneCare? No – Caring will be Job One.
    Wendell Potter’s blog post poses a question that deserves informed public dialogue: Are we seeing a shift in Vermont’s health care system?
    But he poses it in terms of whether our system, which has long been predominantly non-profit, is shifting to a “for-profit” model of care.
    The answer, emphatically, is no. Across the nation, we Vermonters are viewed – and envied – for our distinctively non-profit health care system. OneCare will strengthen that, not diminish it.
    OneCare Vermont does have the potential to help produce an important shift in Vermont’s health care system, and one that we think is seismic in nature: away from the current fee-for-service payment structure to one that pays based on the quality and outcomes of the services we provide to our patients. That shift, we believe, will promote and support greater collaboration – greater “systemness” – among providers that will, in turn, lead to better care for Vermonters. That’s the kind of change that must happen if health care in Vermont is to get even better than it is, without breaking the bank and without sacrificing the quality of care that is rightfully expected of us.
    OneCare Vermont’s tax status is an artifact of conflicting state and federal rules. The ACO regulations require OneCare Vermont’s governing board to be constituted in a way that is not entirely consistent with the requirements of Vermont’s non-profit corporation law. Federal rules prevail in cases where federal and state rules are out of sync. Simply said, OneCare Vermont did not have the option of being established as a Vermont non-profit.
    I started my health care career in Vermont the same year that Medicare and Medicaid were established – programs that had one of the biggest impacts on health care in the 20th century. I expect to top off my career on the cusp of what I hope will be the next major change, and am pleased to play a role in it.
    Should it be successful, OneCare Vermont will capitalize on one of the most attractive opportunities on the health care reform scene to earn higher marks for patient engagement in their care, while fostering excellent clinical practice and “bending the cost curve” – three indisputable needs in Vermont and the nation.

  3. John Freidin says:

    Wendell Potter writes that many Vermonters, “whether they like it or not… will be enrolled in OneCare.” Could he or someone else explain how that would happen?

  4. Thank you for your question, Mr. Freidin. The VTDigger article that reported the Fletcher Allen-Dartmouth Hitchcock partnership noted that OneCare would serve the vast majority of the state’s 105,000 Medicare beneficiaries. Although the article did not explain why, one assumes it is because most of the state’s smaller hospitals and 58 physician practices have agreed to participate in the ACO. Other practices likely will apply to participate if OneCare gets approval from the government. The expectation, therefore, is that most of the doctors who treat Medicare beneficiaries will be a part of the ACO.

  5. J. Churchill Hindes says:

    Thanks for the chance to further clarify how a Medicare ACO works. OneCare Vermont, similar to other ACO’s, is a voluntary collaboration among health care providers who agree to work together to improve care and better engage their patients while being more mindful of their use of resources. These hospitals, doctors, clinics and health centers form the ACO’s network of providers. Similar to other types of agreements among hospitals and physicians, there is no need for Medicare beneficiaries to apply or enroll in order to receive the advantages of the network. Beneficiaries will have an opportunity to consider how information about their care is made available to the ACO, and to limit that availability if that is what they prefer. Other than being asked about this aspect of their care, patients continue to receive their health services as usual. Medicare benefits do not change when providers agree to participate in an ACO such as OneCare.

    It might also be helpful to read a blog written recently on ACO’s by John Brumsted MD, Fletcher Allen’s president and chief executive officer: http://fletcherallenblog.wordpress.com/2012/10/10/defining-the-accountable-in-aco/

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