Aetna-NovaHealth Improve Healthcare

Yesterday, Aetna Inc. (AET - Analyst Report)announced results of the Accountable Care Organization it formed with Portland, Maine, based NovaHealth. The results reflected the collaboration’s success in achieving its goal of improving health care quality, while at the same time bringing down the cost of care. Aetna started working with the later by forming an Accountable Care Organizations (“ACO”) back in 2008.

An ACO is a collaboration of healthcare providers, who voluntarily forge alliances to provide coordinated, high-quality care to patients. An ACO is accountable for the quality, cost, and overall care offered to members. By focusing on the needs of patients and linking payments to outcomes, this model of care is intended to improve the health of individuals and communities and curb the rising healthcare costs.

Some of the main result highlights of Aetna ACO model with NovaHealth show that, patients who were a part of the program witnessed a 50% reduction in their inpatient hospital days, 45% lower hospital admissions, and 56% fewer readmissions, compared with other Medicare population, throughout the state and outside the scope of the ACO.

The results also feature that 99% of the members taking Medicare Advantage service visited their doctors in 2011 to get preventive and follow up care. The report also shows a reduction in cost of the Medicare Advantage members who were served by Aetna-NovaHealth ACO by 16.5% to 33%, as compared with those who were not included in the service.

Aetna’s provider collaboration with NovaHealth successfully delivered quality care to its members. It is basically a setup where insurance companies and health care providers work together to improve care while lowering expenses relating to it.

The results also reflect that there was an increase in the percentage of Aetna Medicare Advantage members, who visited the doctor’s office each calendar year. The members who were suffering from serious illness, such as chronic heart failure (CHF), chronic obstructive pulmonary disease (COPD) or diabetes were encouraged to go through a checkup once every six month.

Those who have diabetes were instructed to take blood glucose tests each calendar year. Moreover, the members were kept under observation for follow-up visits within 30 days of being discharged from hospital stay.

Through these tight control and follow-up measures on the early stages of illness, Aetna is focused on controlling health care costs, make patients healthier and create value for the health care system.

Another important feature of Aetna-NovaHealth Collaboration is the nurse case management. With this service Aetna strives to provide a continuum of health care services for defined groups of patients.

It is a dynamic and systematic collaborative approach wherein nurse case managers actively participate with their clients to identify the best options and services for meeting individuals' health related needs. Aetna’s primary objective is to decrease fragmentation and duplication of care, enhancing quality and cost-effective clinical outcomes.

This healthcare insurer started with ACO models in 2007 and has made a rapid progress in this area. Aetna believes that Accountable Care Organizations are the future of the provider and health plan relationship. With each Accountable Care Organization, the company is moving further towards changing the way health care is delivered, and improving quality and affordability of health care.

Other players who are also actively forming ACO include CIGNA Corp. (CI - Analyst Report) and UnitedHealth Group Inc. (UNH - Analyst Report).

Aetna currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the shares.