From Medical Home to ACO: A Physician Group’s Journey

At a Glance

  • The Medical Clinic of North Texas (MCNT) launched a population health initiative in 2010 that has involved working with self-insured companies to manage the health of their employee populations
  • To achieve the goals of providing high-quality care at a low cost, MCNT uses historical electronic health record and claims data to calculate state-of-health (SOH) scores for a company’s individual employees and for the entire employee population
  • SOH scores reflect risks related to chronic conditions for each patient, thereby providing clinical teams and care coordinators with the information they need to design and execute patient-specific care plans.

In FY10, the Medical Clinic of North Texas (MCNT) saw total medical costs for its managed population trend 2.4 percent better than the average for its market. This trend was reflected in a number of performance measures for the year:

  • Potentially avoidable emergency department (ED) visits decreased by 13.3 percent
  • Cost increases for outpatient diagnostics trended only 1.9 percent versus a market trend of 9.7 percent &
  • Cost increases for outpatient surgical services trended 5.6 percent versus a market trend of 15 percent &
  • High-tech scans per 1,000 patients decreased by 12 percent
  • MCNT’s overall cost performance index surpassed that of the market in the areas of facility outpatient services (by 5 percent), other medical services (by 6 percent), and professional services (by 1 percent)
  • MCNT attributes this success to its efforts related to population health management—including an initiative in which MCNT worked with self-insured companies to more effectively manage the health of their employee populations

Initial Steps

In 2009, MCNT piloted projects with Blue Cross Blue Shield and CIGNA to serve as a patient-centered medical home (PCMH) when the two insurers shifted their focus from episodic care to coordinated care and long-term healing relationships.

Under the PCMH approach, a physician-led care team assumes responsibility for meeting the healthcare needs of each of MCNT’s patients, including arranging care by other qualified physicians when appropriate. Rather than waiting until illness strikes to create a treatment plan, the team considers all aspects of an individual’s health—medical history as well as lifestyle—when creating an individual wellness plan aimed at providing the right care at the right time, which includes a treatment plan should an illness make one necessary.

Developing and implementing the new PCMH processes, including the utilization of new standards and protocols, took more than 18 months. By December 2010, 29 of the MCNT clinics and all of its primary care physicians had been awarded Level 3 Recognition by the National Committee for Quality Assurance (NCQA) Physician Practice Connections®—Patient Centered Medical Home™ (PPC-PCMH).

The backbone for MCNT’s medical home initiative is an electronic health record (EHR) that the organization implemented more than 10 years ago. The EHR provides a communication platform for care team members, physicians, and patients, enabling patient-physician, physician-care team, and physician-physician dialogue to promote collaboration, information flow, and enhanced quality of care. Real-time access to patient charts, care coordination, benchmarking, and tracking reduces the likelihood of medication errors and duplicate tests. As a member of North Texas Health Information Exchange (NTHIE), MCNT also is able to connect with other physicians and hospitals throughout North Central Texas through the communication platform and can more easily integrate new patient health records into its EHR. Overall, enhanced communication and sharing of information among providers helps reduce duplication of services, such as MRI and CT exams.

A New Chapter

MCNT’s leaders believe that the next wave of success will come from helping self-insured enterprises to manage employee population health and optimize the cost of delivering high-quality Healthcare. To this end, the organization has begun to fully embrace the principles of accountable care through collaborations with large self-insured businesses. MCNT’s goal is to deliver high-quality, low-cost Healthcare that can help employers lower healthcare costs by reducing acute care admissions and preventable costs while engaging physicians to practice evidence-based medicine to reduce process variability.

Why focus on self-insured employers? MCNT’s leaders believe these organizations have demonstrated the highest degree of commitment to achieving and maintaining quality outcomes for their employees while managing the cost of care. Self-insured employers provide health insurance benefits to employees and pay for claims from their own coffers instead of paying premiums to a traditional insurance provider.

Although these employers may still look to traditional insurance providers to administer benefits and often supplement their benefit plans with major-medical coverage, they assume more of the risk while enjoying significant cost savings associated with self-funding.

MCNT established the following goals to drive down healthcare costs and improve quality of care for self-funded employers:

  • Improve the healthcare delivery process
  • Enhance patient satisfaction
  • Improve provider performance visibility
  • Lower chronic and inpatient costs
  • Increase employee productivity
  • Close gaps in chronic care
  • Improve working capital and operating margins

To achieve these goals, MCNT uses historical EHR and claims data to assess the state of health (SOH) across each company’s employee population. MCNT is now actively pursuing at-risk deals with local employers, in which the organization expects to retain a portion of any savings in per-member-per-month cost through its care management programs.

Population Stratification: Understanding a Population’s SOH

To assess the SOH of a company’s employee population, MCNT conducts a comprehensive healthcare clinical data analysis and reviews the company’s existing claims and pharmacy data. The aim of the analysis is to stratify the population in three risk segments—high, moderate, and low risk—for which MCNT can design appropriate care management programs.

To this end, MCNT uses a proprietary population SOH analyzer to perform employee risk assessments and develop SOH models. Historical claims data and the current SOH models provide the basis for creating customized health management programs for patients, focused on chronic care management and care coordination, and a performance-based incentive program for the care teams.

MCNT recognized the limitations of using actuarial, claims-based analysis of patient risk. Using an insurance company’s method for creating risk scores is not likely to provide any clinical perspective to enhance the patient’s day-to-day healthcare management. Most physicians object to claims-based risk models as lacking necessary timeliness, because patients have already been admitted to the hospital. The problem is that claims-based models are not built using actual health records in real time, focusing instead on historical costs and admissions. The result is a narrow perspective of high costs as the primary indicator of high-risk patients—a perspective that is flawed because it does not provide insight into a patient’s clinical risk of catastrophic illness and hospitalization. To adequately reflect patient risk, an SOH model must include actual clinical data.

MCNT’s SOH analyzer eliminates discord and creates risk-model consensus by measuring SOH using clinical data from the organization’s EHR system. For each individual, the SOH analyzer calculates the risk or likelihood that the patient will be admitted to an acute care facility due to a complication from chronic conditions. Trends in SOH scores can provide a benchmark for changes in quality, indicating whether quality is improving, declining, or staying the same.

The SOH analyzer calculates a set of SOH scores rating risk levels related to chronic conditions for each patient based on clinical EHR data. SOH scores are calculated at the encounter level and range from 0 to 100, where the higher the score, the greater the patient’s risk. All scores are rolled up to a population level. This approach enables physicians to understand causal clinical factors for patients with high-risk scores so they can diagnose and manage clinical parameters and lower the risk scores for each chronic condition. It also gives clinical teams and care coordinators the right information to design and execute patient-specific care plans, allows MCNT and employer management teams to understand trends over time and measure the effectiveness of care management programs and evidence-based best practices, and provides employers and MCNT with insight needed to develop health prevention/maintenance programs for the specific populations. (An example of the type of process used to analyze SOH and assign SOH scores).

A team of MCNT clinical teams, physicians, and leaders spent 18 months developing SOH risk models for the major chronic conditions that constitute 90 percent of employers’ costs (i.e., diabetes, congestive heart failure, coronary heart disease, chronic obstructive pulmonary disease, asthma, osteoporosis, and hypertension). The SOH chronic models were built using nationally accepted clinical disease models and then adjusted to fit practical applications without loss of integrity. The models were validated using historical data over a three-year period. The exhibit below shows how SOH scores can be powerful predictors of near-term hospitalizations.


MCNT analyzes healthcare claims monthly to gauge program effectiveness and continually adjust care plans based on SOH scores. By analyzing risk groups, MCNT can monitor how much employers spend on inpatient and outpatient care, understand the quality of care in relation to the cost, and identify program needs based on population clinical profiles. Because these profiles include frequent hospitalizations, medication compliance, gaps in evidence-based care, and histories of high costs in the mix, MCNT is highly equipped to customize programs and define incentives according to the habits and needs of specific employee populations.

Care Coordination

Teams of care coordinators and physicians within MCNT’s medical home use the SOH scores to identify high-risk employees and create a customized plan for each of them. For example, the care team would recommend an educational program focusing on weight control rather than on diabetes for a diabetes patient who is managing HBA1C well, but whose body mass index is very high.

By identifying and applying best practices, care teams can provide each patient with an evidence-based care plan that includes appropriate medications, laboratory tests, and periodic visits with the primary care physician or specialist. Physicians and care coordinators also work with high-risk patients to develop emergency care plans. This approach helps patients take more control of their health, recognize changes in personal health status, and know when to activate the plan should it become necessary. MCNT’s care coordination approach helps self-insured employers reduce avoidable hospital admissions and readmissions and achieve even greater bottom-line savings.

MCNT also has built templates within its EHR to track referrals to specialists, use of diagnostic and laboratory services, and pharmacy refills as a way to monitor patient noncompliance, which can be as high as 50 percent. Care coordinators then follow up with patients to understand the psychosocial reasons behind noncompliance and more effectively address such issues.

Incentive Management

MCNT’s goal in working with businesses is to institutionalize healthcare value. Care teams partner with employers and their employees in striving for the highest level of well-being at the lowest possible cost. As a result, every stakeholder shares in the financial rewards, whether it takes the form of lower premiums and claims (employer and employee), pay-for-quality performance (physician), or shared savings (care coordinator).

By routinely performing “what if” analysis for evidence-based care and wellness programs, MCNT ensures that employers focus on the right healthcare problems and create the right wellness programs for their unique population mix. Employers can analyze and use historical claims data to establish baseline costs, while MCNT delivers employee health risk assessments and an accurate SOH model and provides healthcare management programs tailored to employees’ needs.

By promoting health and lifestyle changes, and facilitating individualized plans for chronic conditions, self-insured companies reduce the total cost of Healthcare across their businesses and minimize the life-cycle cost of chronic conditions. In most cases, employers can reduce costs to such a degree that they are able to pass additional savings and financial incentives on to employees.

Based on its contracts with self-insured companies, the incentive for MCNT is simply to lower employers’ claims costs while improving quality. Using SOH scores to understand population risk for major chronic conditions like hypertension and diabetes, MCNT can design specific programs with a focus on prevention and helping employees with health goals. As preventable hospitalizations and frequent unnecessary emergency department visits decline, employee productivity increases. And as interventions become more timely, length of stay per acute care admission declines.

Lessons Learned

Providers committed to healthcare transformation can benefit from several lessons that MCNT learned.

Create a vision with a purpose. MCNT committed early on to being the quality-of-care leader in its local market, and all physicians committed to this vision. This shared commitment to quality made it easy for leadership to invest in an EHR more than 12 years ago.

Maintain ongoing communications. After implementing its EHR, MCNT began to invest in developing care protocols—an effort that physicians objected to initially as “cookbook” medicine. But MCNT’s leaders listened to physicians’ objections and systematically addressed them one at a time to obtain physician buy-in, allowing MCNT to adopt standard practices of evidence-based medicine. As a result, MCNT was able to reduce variability and waste and build a low-cost care platform. MCNT used external experts to educate physicians on industry changes, best practices, and trends in the marketplace, particularly the benefits of PCMHs.

Build on core assets. Once MCNT established a reputation as a high-quality provider in the North Texas market, its leaders’ next goal was to translate the core asset into financial gains. MCNT approached the payers Blue Cross Blue Shield, Cigna, and Aetna to pilot the medical home concepts. Developing a PCMH provided MCNT with the means to exploit its EHR and help ensure that it would be recognized for the quality of care it was providing while optimizing payment from these payers.

Institutionalize the new processes enabled with technology. In developing accountable care programs that target the needs of self-insured employees, a population health management approach is key. MCNT invested in an EHR-based risk prediction tool in 2010 because the patient risk reports sent by the payers lacked credibility with the clinical teams.

Seize the benefits of being first. As an early adopter of the medical home concept in Texas, MCNT was in a position to work proactively with payers to design its population health management program. MCNT’s leaders believed in taking the lead and driving the design of the program rather than letting payers drive it.

Jay Reddy, MBA, is CEO, VitreosHealth, Allen, Texas.

Karen Kennedy, MPH, is Chief Administrative Officer, Medical Clinic of North Texas, North Richland Hills, Texas.

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