Financial viability of ACO model questioned

Are accountable care organizations (ACOs) really saving the healthcare system money? That's a question posed by cardiologist Anish Koka, M.D., in the Philadelphia Inquirier.

"We have been sold on the idea that this particular incarnation of (managed care) will save the government, save physicians and save patients all at the same time. I dare say that Brahma, Vishnu and Shiva together would struggle to accomplish those lofty goals," Koka wrote.

Since healthcare costs are highly regionalized, Koka said, it best makes sense to compare ACO savings to non-ACO costs in the same region. Citing recent studies, he concluded that ACOs  that are part of the Medicare Shared Savings Program that began in 2012 saved an average of $144 per beneficiary. For those formed in 2013, the savings have been $3 per beneficiary. However, most of those recent savings were wiped out by bonuses the Medicare program paid to ACO participants, according to Koka.

The presumed failure of most ACOs has been illustrated primarily by the pullouts from the Pioneer ACO program by a variety of healthcare organizations. Many of those participants have cited financial distress barring them from their ongoing participation. Dartmouth-Hitchcock Medical Center in New Hampshire, for example, pulled out of the Pioneer program after losing about $4 million, a significant sum considering its size.

Policy experts say that those providers that have formed ACOs have had difficulties striking a balance between saving money and providing quality healthcare. Some providers have said that the Next Generation ACO--which has providers take on more risk but could provide more of a reward--could be a more palatable option for the healthcare sector moving forward.

To learn more:
- read the Philadelphia Inquirer article