Washington, D.C. — How reform is altering the provider side of healthcare and what some of the largest providers are doing to adapt to the world of accountable care was the question at hand for two leading hospital systems at “Emerging Strategies of Leading Providers,” a general session at this year's HCap Conference in December in Washington D.C.

In the case of Chicago-based Advocate Health Care, the arrival of accountable care was a major wake-up call that spurred a large-scale internal initiative to cut costs and rethink its relationship with its largest payer partner, BlueCross BlueShield.

“We decided that if we were going to be successful in the new paradigm and take unnecessary costs out of the system, we have to get serious about lifelong relationships and coordinated care,” according to Advocate's EVP/CMO Lee Sacks, who recounted a meeting between the hospital and BlueCross exactly one month after the signing of the Accountable Care Act in spring 2010.

“We sat down in their offices and looked out at what was coming—the fact that 25% of our market was going to be covered by Medicaid—and we said we have two choices. We can lower our unit costs right now . . . or we can figure out how to partner and reduce waste. We picked door number two.”

Although the concept of a payer/provider partnership is not new, Sacks said the level of trust between the two organizations that came out of the partnership was. It all started with a comprehensive review of performance. By pooling and sharing both organization’s research and data, Advocate and BlueCross were able to make qualitative decisions about how and where to take costs out the system that would serve their mutual benefit.

According to Sacks, the analysis revealed that roughly 11% of patients accounted for more than half of overall costs, and the root of many inefficiencies were traced to readmissions, inappropriate ED visits, avoidable conditions and lack of care coordination.

The result was an internal improvement plan Advocate initiated that Sacks said “virtually mirrors” what's now in the final rules for accountable care organizations.

“We're now being measured on the attributable or assigned patients and we're going to share savings (with BlueCross) based on the trend and the cost of care—our performance compared to the marketplace,” he said. “Our goal is to get our trend in the cost of care to CPI (the Consumer Price Index) for 2014.”

A similar culture of accountability has taken root at Johns Hopkins Medicine in Baltimore, the nation's largest recipient of NIH grants (many of which have been tied to Hopkins' support of the Accountable Care Act). For its part, Johns Hopkins has put in place many programs centered around accountability, according to Deborah Trautman Ph.D., RN, and Executive Director for the Center for Health Policy and Healthcare Trnasformation. They include programs designed to address the uninsured and underinsured; professional accountability; patient safety; professional accountability; and readmissions.

“We've come to recognize that the future for all of us interested in improving health and healthcare in our nation is going to be quite challenging for many years to come,” Trautman said. “It's our trusted voices as healthcare professionals, partnering with others, that is what will help us get through this.”