ACO Pilot Program Judged a Failure

[T]he experiment involves “accountable care organizations,” one of the hottest trends in health policy and an idea included in the year-old federal law intended to overhaul the nation’s health-care system.

The five-year test enlisted 10 leading health systems around the country and offered financial bonuses if they could save enough by treating older patients more efficiently while providing high-quality care.

In 2010, the final year, just four of the 10 sites … slowed their Medicare spending enough to qualify for a bonus …  Two sites saved enough to get bonuses in all five years, the evaluation shows, but three did not succeed even once.

Full article on the failed ACO pilot program in The Washington Post.

Comments (7)

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  1. Bruce says:

    I’m supposed to be surprised at this?

  2. Devon Herrick says:

    There was an earlier report on ACO-type demonstrations that failed to find consistent savings across all participating hospitals. In this example, only 40% of the providers increased efficiency enough to earn a bonus payment. In addition, a recent report by the American Hospital Association estimated the startup costs at several times higher than the government estimated.

    There’s nothing wrong demonstrations that encourage providers to experiment and find out what works and what doesn’t work. But a cookie-cutter, one-size-fits-all model won’t work. A hospital may get good at one type of patient or one type of procedures; but not all patients or procedures. Providers need to be able to reprice and repackage services and share in the savings. A top down approach is unlikely to work as directed.

  3. Tom H. says:

    Of course it was a failure. Why would anyone expect otherwise?

  4. John Goodman says:

    This is Gail Wilensky, who headed CMS under George H.W. Bush, via Megan McArdle:

    [it is] “astounding” that savings were not greater among 10 long-established groups that she said “should have blown it out of the water. . . . It’s like, are you kidding me? . . . If it was this tough for this group that I had just assumed would be hands-down winners, what does it say for groups that don’t have a long history of coming together?”

    The experiment, she and other health policy experts point out, was less risky financially for the groups than the proposed ACO rules, because the participants were not penalized for overspending. Under the proposal, ACOs that spend too much would have to forfeit some Medicare funding — from the start or by their third year.

    Full Megan McArdle post here:

  5. Bart says:

    I’m surprised that Gail was surprised by these results.

  6. Aaron Ginn says:

    Could it be that ACOs will only work at certain locations? Even Berwick believes only 10% of hospitals will apply for the program. What is fascinating to me is that Hospital Executives do not see the bursting acquisition bubble coming to healthcare.

  7. John R. Graham says:

    There is a very funny post by Clive Riddle where gives alternate definitions of the acronym ACO:

    1.Actuarial Consulting Opportunities
    2.Amateur Capitation Organization
    3.Absolute Chaos Orchestration
    4.Assorted CMS Opinions
    5.Additional Compliance Obligations
    6.Acronym Collection Officer
    7.Another Contracting Outfit
    8.Authorized Care Only
    9.Atomic Cloud Overhead