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New London, D-H Team Up On Medicare

Hospitals Forge Link in Providing Accountable Care Model to Seniors

New London — New London Hospital has become the first health care provider in New Hampshire to join with Dartmouth-Hitchcock in an experimental model aimed at improving coordination and lowering the cost of care for Medicare patients.

This month, the 25-bed hospital became part of the accountable care organization, called Pioneer ACO, that was established by Dartmouth-Hitchcock last year.

Roughly 3,000 Medicare patients who receive primary care at New London will be brought into Pioneer ACO, said Bruce King, New London’s CEO. That brings the total number of New Hampshire residents being treated under the model to around 26,000.

New London’s decision to join Pioneer is aimed at positioning the small hospital for changes in health care, in part by strengthening ties with Dartmouth-Hitchcock, King said.

“This is the way that health care is heading towards,” said King. “This is the direction we’re going in. I’d rather start getting on the path now than wait until it’s something that we’re getting forced upon us.”

The ACO concept was developed at Dartmouth College and incorporated into the Affordable Care Act in 2010. The central aim is to encourage doctors and hospitals to lower costs while maintaining high quality care, as measured by 33 benchmarks established by Medicare. In return, providers are financially rewarded through sharing the savings with Medicare. There are now more than 250 ACOs caring for an estimated 4 million Medicare beneficiaries in the U.S., according to the U.S. Department of Health and Human Services.

New London’s decision to participate in the ACO comes as a similar effort gets under way in Vermont. Dartmouth-Hitchcock and Fletcher Allen Health Care in Burlington have formed an accountable care organization called OneCare Vermont, which will cover 43,000 Medicare beneficiaries and involves dozens of physician practices and nearly all of Vermont’s hospitals.

But the Pioneer ACO in New Hampshire is slightly different than OneCare, in that Pioneer poses some financial risk for hospitals. In OneCare, providers can share in the savings, but there also is no penalty if costs rise. If costs go above a certain threshold in Pioneer, however, then the hospitals share in the losses.

King said the New London board weighed those risks and negotiated an arrangement in which its exposure, both on the downside and on the upside, will be minimal.

“It did give us pause and we certainly didn’t have a lot of data and experience to say, do we want to go all in,” King said. “So, for the first year, we’re having a kind of modified internal D-H deal.”

New London has long had organizational ties with Dartmouth-Hitchcock that allow the two hospitals to share some clinical staff and resources. Before he came to New London in 2003, King worked at Dartmouth-Hitchcock for 15 years, seven as the vice president of finance for the hospital and then eight years as vice president for regional development. In fact, he’s still technically a Dartmouth-Hitchcock employee who is “leased” to New London through a management services agreement.

Since last summer, the two hospitals have been in discussions about forging a collaboration agreement.

New London’s board has been eager to strengthen the relationship for a variety of reasons, King said, including finding ways to improve care, eliminating redundancies by sharing services such as billing and providing New London easier access to bond markets. New London is going to be refinancing some debt to pay for expanding a health center in Newport, where it has a significant number of patients. Merely having a relationship with Dartmouth-Hitchcock has opened doors with banks, even though New London would still be carrying its own debt, King said.

The partnership has also opened up strategic opportunities that a small hospital wouldn’t otherwise have, such as joining an ACO.

“The opportunity for New London to participate in a (Medicare) ACO is not being offered to New London,” King said. “Medicare is not ringing my doorbell. I’m going to be part of the bigger system that has the infrastructure and has the reports and has the competencies and capabilities.”

Moreover, King said,

“What I like about it, instead of being a responsive fee-for-service ... my goal is that we want to keep you well,” King said. “I want to keep you healthy and out of our system.”

Chris Fleisher can be reached at 603-727-3229 or cfleisher@vnews.com.