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Have ACOs Been Weighed and Found Wanting?


According to its defenders, Accountable Care Organizations are among Obamacare’s greatest cost-saving measures. In theory, ACOs control costs by allowing providers to keep some of the savings they create when they deliver care more cheaply than other providers. But in practice, the results have been unconvincing.

The WSJ has a long-form, informative piece on the successes and failures of ACOs. ACOs have had success lowering readmissions and costs for certain kinds of patients, especially what the article calls “high utilizers” who have chronic diseases. But the only systematic study down on them so far has presented mixed results, with more than half of participating ACOs failing to lower costs. Supporters argue that the programs need more time to prove themselves, while the skeptical say the low savings rates are traceable to flaws in the the concept of ACOs:

Medicare automatically assigns patients to an ACO, whether they like it or not, if they get most of their primary care from a doctor that participates in that ACO. Doctors don’t know for sure which patients are in their ACO from quarter to quarter because Medicare calculates that retroactively, making it hard to plan budgets.

And ACOs are a still a hybrid of managed care and a fee-for-service approach. Doctors share savings when they do cut costs but are paid for services even if they don’t.

“This is a really flawed idea,” says Jeff Goldsmith, president of Health Futures Inc., a health-care consulting firm. “It’s like people were allergic to the HMO, so they tried to design a managed-care plan that didn’t offend anybody, and it doesn’t work like that.”

Whichever side of this debate turns out to be correct, what seems obvious is that Obamacare elevated an untested program to the heart of its cost savings efforts. The way forward is for states, private companies, and health centers like the Cleveland Clinic to experiment with different cost savings measures. These could range from new ways of delivering care through clinics or smartphones, new models for financing employer health care, or other initiatives. Then we can begin to collect data on what works and what doesn’t, and incorporate that into future federal-level health care reform.

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