A Poor Prognosis for the ACO Model

The results of the Pioneer ACO program were released by CMS after completing its second year.   This is not a front page news story for good reason.

The Pioneer program attracted 32 of the most confident and motivated medical centers that were willing to take on full downside risk if they failed to spend less than their target amount.  After year one, 9 centers dropped out of the program.  Three more did so this past August.

14 of the remaining 20 centers saved money in year two for an average of 3.11% below the target.  Six of 20 centers overspent their target in year two by an average of 1.97%.  The net result for the group of 20 centers was a 1.59% savings under the goal set for them by CMS.  Again, these are the most highly motivated medical centers trying to reduce costs by going after the “lowest hanging fruit”.

The US spends more than twice as much on per capita healthcare as all other countries in the world.  Every statement about waste within the US healthcare system indicates that 30% of our expenditures are unnecessary.  Therefore, a 1.59% savings by this group of medical centers sends one clear message:  the ACO model is not likely to be the answer for our broken healthcare system.  We can do better than this!