Large Arizona Healthcare System Taking a Close Look at New Reimbursement Models

Arizona’s second largest healthcare system – Banner Health, which employs 28,000 – is struggling to save jobs in the face of up to $100 million in 2011 cuts to reimbursement from the Arizona Health Care Cost Containment System (AHCCCS), the state’s Medicaid program.

This is the opinion of Peter S. Fine, FACHE, President and CEO of Banner Health in a recent op-ed piece in the Arizona Republic. According to Fine, “Arizona’s elected officials continue to struggle with a massive state budget deficit that is primarily made up of healthcare, education and corrections.  I do not envy their job as there are no pain-free options.  Our objective will be to stay ahead of further possible cuts to AHCCCS by the state Legislature and subsequent reductions in reimbursements from AHCCCS to deal with these cuts.”

Fine notes that non-profit hospitals must act when reimbursements are cut or threatened – whether the reductions come from government or private payers.  “In challenging economic times, healthcare organizations that place themselves into a weakened position as a result of inaction, tepid actions or even actions that come too late to make a difference, are organizations in which job security is at great risk,” Fine wrote.

Banner Health is in discussions with private insurers to create new care and reimbursement models.  Typically, these are collaborative efforts where reimbursement is shared by hospitals, doctors and other providers.  The goal is to cut costs by reducing hospital admissions through prevention or cutting hospital re-admissions by better patient management.  “This model is called an Accountable Care Organization (ACO), and it incentivizes insurers, hospitals, physicians and other healthcare providers to work more collaboratively to ensure a higher quality of care at a reduced cost.  Doubtless, there will be those who will decry ACOs as a by-product of healthcare reform and therefore unworthy of consideration.  However, ACOs and similar collaborative models are moving forward whether healthcare reform is implemented or not.”

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