Without a doubt, reimbursement realities and cost pressures are causing health care in America to change dramatically. The greatest causes of the federal deficit are Medicare and Medicaid. And employers and employees are feeling the effect of the growing cost of health benefits. By the end of the decade, the average family insurance plan could exceed $27,000 per year. This is unsustainable.

America's health care system was designed for the 1950s, but illness has changed significantly since then. More than three-fourths of hospitalizations are due to chronic illness, which requires greater coordination and improved care across specialties. Today, in each population, 5 percent of the individuals will consume 50 percent of the resources, primarily because of the impact of chronic conditions.

Health providers currently are compensated for the volume of services provided. Tomorrow's health delivery model likely will compensate for value — keeping patients healthy … in fact, keeping entire populations healthy. Providers will be expected to assume some financial risk and achieve specified outcomes or measures.

At Catholic Health Partners, our vision is to build high-quality health delivery in each community to empower those we serve to achieve their optimal health status. To succeed, CHP is developing:

  • a tightly aligned physician network;
  • coordinated access to the most effective cost points of care across the continuum;
  • an entire system enabled for population health management and capitated risk.

We're creating organizational changes in structure, processes and capabilities to transition to value-based health delivery. We're implementing evidence-based medicine to eliminate unnecessary procedures and readmissions, reduce complications and ensure the highest quality.

CMS has awarded a Medicare accountable care organization pilot to CHP's Cincinnati market through which more than 22,000 patients will receive their care. CHP will expand ACOs to other markets. CMS's goal is to financially reward organizations that deliver high quality at a low price.

Patient-centered medical homes are at the heart of the ACO model, so CHP's goal is to have 70 percent of its primary care practices achieve National Committee for Quality Assurance certification as PCMHs this year. These certifications involve a number of criteria aimed at having primary care practices work more proactively with patients, especially those with chronic conditions. Nationally, the PCMH has been proven to dramatically reduce admissions and emergency
department visits — expensive care.

In some ways, Medicare has been leading the change from fee for service and episodes of care to compensation for integrated networks that provide value-based care. This started with the value-based purchasing program and the introduction of penalties for omissions or errors in care. In addition to causing harm, errors lead to explosive follow-up treatment.

Medicare has been headed down a path of payment transition and adherence to entirely new structures, including ACOs. Passage of the Affordable Care Act in 2010 guides the nation in the direction of Shared Savings Programs with Medicare and entry into risk contracts via Medicare Advantage and selected commercial plans.

The American Recovery and Reinvestment Act of 2009, the so-called stimulus bill, provided significant funding to accelerate digitized medicine. At CHP, we are investing $400 million in an electronic health record system that enables us to maintain a single, continuously updated record for each patient that can be accessed by our provider teams anytime, anywhere. The result is enhanced safety, quality and efficiency.

Michael D. Connelly is president and CEO of Catholic Health Partners in Cincinnati.