Cornerstone, which has roughly $200 million in annual revenue, has moved more aggressively than most to invest in payment changes being tested under the Patient Protection and Affordable Care Act.
Terrell, president and CEO of Cornerstone, said that during the past 18 months, the medical group has negotiated financial incentives for all its commercial contracts and became one of 220 organizations contracting with Medicare for shared savings, which awards a financial payout if the medical group can hold costs down and meet quality targets.
Medicare's shared-savings initiative is one of two widely watched attempts to launch accountable care under the reform law. Accountable care pays bonuses—or puts providers at risk for losses—based on how successfully hospitals and doctors meet quality targets and deliver savings against patients' projected medical expenses.
Terrell said that about $8 million to $10 million of Cornerstone's new debt will be used for new technology and contracts to better analyze patient data and identify sick, costly patients. That includes a data warehouse and hiring new information technology staff, such as a chief medical information officer.
The CMIO is one of dozens of new employees at the medical group, including new disease management specialists, social workers and others to help patients navigate and coordinate their care.
But all that investment may also reduce physician income, she said, as doctors work to better control patients' medical costs. Meanwhile, any bonuses based on lower costs won't be paid immediately. So Cornerstone promised each doctor a minimum salary for at least three years, she said.
But even if Cornerstone succeeds, bonuses may still be difficult to earn. Bonuses under accountable care or other incentive-based payments depend significantly on how well contracts adjust for patients' expected costs, based on the severity of patients' illness, said Dr. Elliott Fisher, director of the Dartmouth Institute for Health Policy and Clinical Practice and a proponent of the payment model. “You have to be confident in the accuracy” of those models or risk losses, he said.
“If we succeed, it's exhilarating,” Terrell said. However, failure will leave the medical group with the choice facing so many others: consolidation, she said.