Norton Healthcare and Humana Launch Accountable Care Organization in Louisville, Ky.

LOUISVILLE, Ky.--(BUSINESS WIRE)--Humana Inc. (NYSE: HUM) and Norton Healthcare, both based in Louisville, Ky., have been working together to launch the region’s first commercial Accountable Care Organization (ACO). The Norton-Humana partnership began in early 2010. An ACO model establishes incentives for health systems to increase quality and efficiency, better coordinate patient care, eliminate waste, and reduce the overuse and misuse of care.

“The ACO model really gets at bending the cost curve, which is so vital to achieving a sustainable system”

The Engelberg Center for Health Care Reform at the Brookings Institution and The Dartmouth Institute for Health Policy and Clinical Practice selected Humana and Norton Healthcare to partner in one of only five national pilot sites, the only one in Kentucky, to implement the ACO model through the Brookings-Dartmouth ACO Pilot Project. The other pilot sites include Carilion Clinic, Roanoke, Va.; Tucson Medical Center, Tucson, Ariz.; HealthCare Partners Medical Group, Torrance, Calif.; and Monarch HealthCare, Irvine, Calif. Humana has worked with Brookings-Dartmouth since 2008 on exploring the ACO concept and other innovative payment models.

“Norton Healthcare’s work in developing an integrated health care delivery system and Humana’s commitment to continuous improvement in quality provide a strong foundation from which to pilot the payment reforms central to ACOs,” said Dr. Elliott Fisher, director of the Center for Population Health at The Dartmouth Institute for Health Policy and Clinical Practice.

“Norton Healthcare is proud to be a participant in the Brookings-Dartmouth ACO Pilot Project and we feel this is a tremendous opportunity to participate in an alternative model for health reform,” said Dr. Steve Hester, Norton Healthcare senior vice president and chief medical officer. “Considering our health care system’s industry-leading commitment to measuring and openly reporting on the quality of our care; our progress toward a system-wide integrated electronic medical record; and our large base of employed primary- and specialty-care physicians, Norton Healthcare was the logical choice in our region to be an ACO pilot participant.”

Humana is a leading health-benefits provider in its corporate hometown of Louisville, Ky., with a broad network of hospitals and health systems in Kentucky and Southern Indiana. Humana has had extensive experience in partnerships aimed at improving health care delivery and reimbursement models for many years. Norton Healthcare is the Louisville area’s leading health care system, caring for nearly one of every two patients at more than 100 locations throughout Greater Louisville and Southern Indiana.

“Humana is committed to innovative local and national models that improve clinical outcomes, reduce costs and improve efficiencies,” said Bruce Perkins, senior vice president of Humana’s healthcare delivery systems and clinical processes organization. “Humana plans to continue to develop more ACO models by partnering with providers in multiple regions. Our focus in exploring additional ACO relationships is to help drive innovation in the marketplace.”

Rewarding effective care, not quantity

The ACO model has gained national recognition as a meaningful way to create new financial incentives in our current health care system by holding health care providers accountable for the overall effectiveness, efficiency and cost of the care they provide. In contrast, the current fee-for-service payment system rewards volume and intensity rather than efficiency and effectiveness of care, often penalizing those systems that attempt to improve care. ACOs have been specifically addressed in the recent federal health care reform legislation through a new Medicare shared-savings program. And ACOs have been applauded for their intent to support patient engagement and the promotion of evidence-based medicine.

“Accountable Care Organizations are a model for delivery reform that can be part of a solution to help transform our nation’s health care system from one that promotes excessive costs to one that explicitly supports providers when they take steps to achieve high-quality care at lower costs,” said Dr. Mark McClellan, director of the Engelberg Center for Health Care Reform at the Brookings Institution. “We look forward to working with Norton Healthcare and Humana to test this promising new model.”

The Brookings-Dartmouth team, led by Drs. Fisher and McClellan, is working closely with Humana and Norton Healthcare to offer technical and strategic support in the implementation of the ACO model. Each ACO site defines the patient population it serves and establishes a spending target that reflects the predicted costs for their patients. The goals of ACOs are to improve efficiency and effectiveness of care and slow spending growth. ACO providers who can demonstrate that they meet these goals will receive in return a portion of the savings achieved.

“The ACO model really gets at bending the cost curve, which is so vital to achieving a sustainable system,” said Dr. Fisher. “Only health systems that can slow their spending growth, compared to previous years, will have the opportunity to receive shared savings.”

Although the Norton-Humana ACO is still in its early stages of implementation, the pilot has identified several initial areas of emphasis, such as improvements in the use of preventive screenings and tests (such as mammograms) and vaccinations, better coordination in the management of chronic illnesses (such as heart failure), more effective treatment of common problems (such as back pain), appropriate utilization of generic drugs to lower costs, and improved access to the appropriate level of care (such as primary care rather than emergency department treatment).

Going Forward

As the Louisville area’s largest hospital and health care system, Norton Healthcare is committed to providing quality health care. Norton has a sophisticated infrastructure for measurement of quality and data management in place. Looking ahead, Norton plans to move from process metrics to outcomes metrics, further develop innovative delivery models of care, and assume broader responsibility for health care delivery.

“Humana recognizes the need for change in health care delivery across the country. We are excited to participate in the development of new processes that encourage continuous improvement in quality while finding greater efficiencies in the delivery of care,” said Dr. Tom James, Humana corporate medical director.

In addition to providing technical support in the implementation of ACOs, the Brookings-Dartmouth team will evaluate the pilots to see how ACOs can impact the future of payment reform. The goal is to develop a model that can be replicated across the nation, building on health reform legislation which will likely make ACOs a voluntary option with Medicare participation in 2012.

“We are excited about the launch in Louisville and look forward to expanding the ACO model to other patient populations, including other commercially insured, Medicare and Medicaid beneficiaries,” said Dr. Fisher. “We are hoping that the hard work of Norton Healthcare and Humana will lead the way for other health systems and will be the start of a successful national roll-out.”

About Norton Healthcare

For more than a century, Norton Healthcare’s faith heritage has guided its mission to provide quality health care to all those it serves. Today, Norton Healthcare is the Louisville area’s leading hospital and health care system (44 percent market share) and third largest private employer, providing care at more than 100 locations throughout Greater Louisville and Southern Indiana.

The not-for-profit system includes five Louisville hospitals; 12 Norton Immediate Care Centers; 10,900 employees; more than 400 employed medical providers; and nearly 2,300 total physicians on its medical staff. For five consecutive years, Norton Healthcare has been recognized as one of the Best Places to Work in Kentucky.

The health care system serves patients in the Greater Louisville area, including Southern Indiana, and throughout Kentucky. For more information, visit www.NortonHealthcare.com.

About Humana

Humana Inc., headquartered in Louisville, Kentucky, is one of the nation’s largest publicly traded health and supplemental benefits companies, with approximately 10.1 million medical members and 7.0 million specialty members. Humana is a full-service benefits solutions company, offering a wide array of health, pharmacy and supplemental benefit plans for employer groups, government programs and individuals.

Over its 49-year history, Humana has consistently seized opportunities to meet changing customer needs. Today, the company is a leader in consumer engagement, providing guidance that leads to lower costs and a better health plan experience throughout its diversified customer portfolio.

More information regarding Humana is available to investors via the Investor Relations page of the company’s web site at www.humana.com, including copies of:

Annual reports to stockholders
Securities and Exchange Commission filings
Most recent investor conference presentations
Quarterly earnings news releases
Replays of most recent earnings release conference calls
Calendar of events (including upcoming earnings conference call dates and times, as well as planned interaction with research analysts and institutional investors)
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