1st Edition

Accountable Care Organizations Value Metrics and Capital Formation

By Robert James Cimasi Copyright 2013
    378 Pages 28 B/W Illustrations
    by Productivity Press

    Continue Shopping

    An accountable care organization (ACO) is a healthcare organization characterized by a payment and care delivery model that seeks to tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned group of patients. Accountable Care Organizations: Value Metrics and Capital Formation explores the historical background and evolution of the ACO model as the basis for the development of the value metrics and capital formation analyses that are foundational to assessing the current efficacy and capacity for change.

    The book examines the four pillars of value in the healthcare industry: regulatory, reimbursement, competition, and technology in addressing the value metrics of ACOs, including requirements for capital formation, financial feasibility, and economic returns. It focuses the discussion of non-monetary value on a review of aspects of population health within the context of such objectives as improved quality outcomes and access to care.

    • Explains why ACOs might be the cost-containment and quality improvement answer the industry has been looking for
    • Describes the circumstances and capital structures where ACOs represent a sound investment
    • Includes a foreword by Peter A. Pavarini, Esq.

    The book examines the positive externalities of the ACO model, including results for third parties outside the basic construct of the ACO contracts shared savings payments. It also discusses the potential role and opportunities for consultants in assisting their provider clients in the consideration, development, implementation, and operation of an ACO.

    Background and the Path to ACOs
    History of Accountable Care
         History of Managed Care
         ACO: Another Name for Managed Competition
         The Path to Accountable Care Organizations
         Setting the Stage for ACOs: An Environment Demanding Change
    Chapter Summary

    Federal ACOs
    Purpose of Accountable Care Organizations
    Overview of Value-Based Purchasing
    The Patient Protection and Affordable Care Act (ACA) and the Medicare Shared Savings Program
         Overview and Intent of the MSSP
         Related Affordable Care Act Provisions
              Center for Medicare and Medicaid Innovation
              Value-Based Purchasing Demonstrations
              Medical Home Model
              Bundling Demonstration Project
    MSSP Proposed Rule
         Overview of the Main Provisions of the MSSP Proposed Rule
         Industry Response
         Significant Changes between the MSSP Proposed and Final Rule
    MSSP Final Rule
         Operational Terminology
              Accountable Care Organization
              ACO Participant
              ACO Provider/Supplier
              ACO Professional
              Eligible Entities
              Structural Requirements
              The ACO Agreement
              Accountability: The Assignment of Medicare Beneficiaries
              Quality and Other Reporting Requirements
              Monitoring and Termination
              Shared Savings Payments
    Subsequent ACO Models under Development
         Pioneer ACO Model
         Advanced Payment ACO Model Initiative
         Accelerated Development Learning Sessions
    Proposals for State Payors: Medicaid ACOs
    Industry Feedback and Agency Response
         American Hospital Association (AHA)
         American Medical Group Association (AMGA)
         American Medical Association (AMA)
         American Academy of Family Physicians (AAFP)
         America’s Health Insurance Plans (AHIP)
         Physician Group Practice Demonstration Project Participants
         Medicare Payment Advisory Commission
    Chapter Summary

    Commercial ACOs
    What Are Commercial ACOs?
         Distinguishing between Federal ACOs and Commercial ACOs
         Eligible Entities
         Structural Requirements
              Coordination of Care
         The ACO Agreement
         Quality and Other Reporting Requirements
              Bundled Payment
              Partial Capitation
              Full Capitation
              Global Budget
              Tiered Payment Models
         Shared Savings and Losses
    Chapter Summary

    Hypothetical Models for the Development and Operation of ACOs
    Structural Features
         Federal ACOs
         Commercial ACOs
              Traditional Structure
              Single Healthcare Organization Structure
    Transition Challenges
    Operational Challenges
         Federal ACOs
         Commercial ACOs
    Competitive Marketplace Challenges
         Federal ACOs
         Commercial ACOs
    Chapter Summary

    Impact of ACOs on the Healthcare Industry: Addressing Industry Concern
    Regulatory Concerns
         Impact on Providers
              Antikickback Laws

    Capital Finance Considerations for the Development and Operation of ACOs
         History of Healthcare Financing
         The Financial Crisis: 2007–2009

    Financial Feasibility Analysis for ACO Investments
    Case Studies: Real Investments of Capital
    The Investment Decision
    Value Metrics
         Cash Flow Analysis
         Feasibility Analysis
         Payback Period and Discounted Payback Period Methods
         AARR Method
         Net Present Value
         Internal Rate of Return
         Further Feasibility Analysis
    Chapter Summary

    Considerations of Value for the Positive Externalities of ACOs
    Defining Value
    Value to SOCIETY
         Monetary Value
              Cost of Healthcare
              Productivity Measures
         Nonmonetary Value

    The Role of the Healthcare Consultant
    Economic and Financial Consulting Services Relevant to ACOs
         Episodic Services
         Continuity Services
         Value Metric Services
         Financial Feasibility Services
         Valuation (Financial Appraisal) Services: Establishing Fair Market Value and Commercial Reasonableness
    Selecting and Working with Consultants
         Consultant Skills and the Body of Knowledge
         Organizational and Strategic Capabilities
         The Consulting Process
         Data Gathering & Research
         The Consulting Analytical Process
         Technical Tools
         Reporting of Consulting Engagement Deliverables
    Chapter Summary





    Literature Review


    Robert James Cimasi, MHA, ASA, FRICS, MCBA, AVA, CM&AA, is chief executive officer of Health Capital Consultants (HCC), a nationally recognized healthcare financial and economic consulting firm headquartered in St. Louis, Missouri, since 1993. Cimasi has more than 25 years of experience in serving clients, with a professional focus on the financial and economic aspects of healthcare service sector entities including valuation consulting and capital formation services; healthcare industry transactions including joint ventures, mergers, acquisitions, and divestitures; litigation support and expert testimony; and certificate-of-need and other regulatory and policy planning consulting.

    Cimasi holds a master’s in health administration from the University of Maryland and holds several professional designations: Accredited Senior Appraiser (ASA–American Society of Appraisers), Fellow Royal Intuition of Chartered Surveyors (FRICS–Royal Institute of Chartered Surveyors), Master Certified Business Appraiser (MCBA–Institute of Business Appraisers), Accredited Valuation Analyst (AVA–National Association of Certified Valuators and Analysts), and Certified Merger & Acquisition Advisor (CM&AA–Alliance of Merger & Acquisition Advisors).

    He has served as an expert witness in numerous court cases and has provided testimony before federal and state legislative committees. He is a nationally known speaker on healthcare industry topics, the author of several books, including The Adviser’s Guide to Healthcare (AICPA. 2010) and Healthcare Valuation: The Financial Appraisal of Enterprises, Assets, and Services in the Era of Reform (Wiley, 2005), as well as numerous chapters, published articles, research papers and case studies, and is often quoted by healthcare industry press.

    In 2006, Cimasi was honored with the prestigious Shannon Pratt Award in Business Valuation conferred by the Institute of Business Appraisers. Cimasi serves on the editorial board of the Business Appraisals Practice of the Institute of Business Appraisers, of which he is a member of the College of Fellows. In 2011, he was named a Fellow of the Royal Institution of Chartered Surveyors (RICS) and serves on the editorial board of the RICS Modus Americas journal. Cimasi is also the current chair of the American Society of Appraisers Healthcare Special Interest Group (ASA HSIG) subcommittee.

    "Accountable Care Organizations is the first comprehensive text on capital formation and value metrics for this new healthcare business model… I can think of no one more qualified to write it than Bob Cimasi at Health Capital Consultants ... it is destined to become a classic work … read, review, refer, and profit by this valuable resource."
    —Dr. David Edward Marcinko, FACFAS MBA, Institute of Medical Business Advisors, Inc.

    "The author offers various models and policy initiatives, some of which are in partial test, and updates on other initiatives at beginning stages of organization."
    —Blue Heron Journal, March 2014

    An excerpt from the foreword:

    Although many authors, including the one writing this foreword, have previously attempted to explain the ACO concept in practical terms, virtually no one thought to thoroughly analyze the financial underpinnings of this model until Bob Cimasi decided to write this book. What an ambitious work it is! Even though most existing ACOs remain gestational or in their earliest years of operation, Mr. Cimasi and his associates at Health Capital Consultants have managed to assemble an authoritative body of information on this rapidly evolving subject and to present their findings in an easily understood manner.

    Together with many of my colleagues in the American health law bar, I have long respected Bob Cimasi’s passion and talent for unraveling complex healthcare equations and objectively assigning value to all or part of a business or relationship. That was difficult enough to do in a traditional fee-for-service environment; it will be much harder as the nation transitions to shared savings, bundled payments and other new methods of value-based purchasing. With the publication of Accountable Care Organizations: Value Metrics and Capital Formation, readers will now have insight on the principles and methods Mr. Cimasi and his team of experts carefully use to appraise transactions within a changing healthcare payment and delivery system. This text is much more than a compilation of educational resources on a currently hot topic. Rather, it could become a seminal work relied upon by all stakeholders in a transformed healthcare marketplace. I cannot think of anyone more qualified than Bob Cimasi to take on such a daunting task.

    It is always a privilege to be asked to read a manuscript before it becomes publicly available. This time, however, I found reading Accountable Care Organizations: Value Metrics and Capital Formation to be like looking through a window on a brave new world. I found myself asking: is this finally the way Americans will learn how to assure quality, efficiency and fairness in one of the most important aspects of their daily lives? I hope the readers of this book will be challenged to ask that same question as they seek to understand the ins and outs of ACOs.
    —Peter A. Pavarini, Esq Partner, Squire Sanders (US) LLP, July 2012