The Pioneer Accountable Care Organization (ACO) concept is to test how to change the regular fee-for-service system we've always used in this country—you pay a certain amount to the provider for certain procedures—to a system that doesn't reward doctors or hospitals for the number of procedures they conduct, but for the results they achieve. If the participating hospitals provided care for Medicare patients at lower-than-expected costs, they get to keep 70 percent of the savings, and the remaining 30 percent goes back to the government. If the hospitals spend more than expected, they have to pay back the difference. It really appears to have worked, with $384 million saved. What's remarkable in that number is that just an initial 32 hospitals (13 dropped out after the first year) achieved those savings, about $300 per patient on average.
This wasn't because doctors skimped on care: quality metrics show that patients in and outside the Pioneer ACO program generally reported similar satisfaction rates. And in some ways, the Pioneers did better: patients in those programs reported more timely access to their doctors, perhaps because hospitals wanted to put more effort into preventing costly complications down the line.How scalable this project is remains a big question. The hospitals that joined the program were larger and more advanced than the average, and thus had kind of a leg up in incorporating this new system. Spreading it to more traditional hospitals will likely be much more challenging, and the results probably aren't going to be as dramatic. There's also the possibility that savings at these rates aren't sustainable. The Pioneer ACOs have already claimed the low-hanging fruit for savings, like switching to generic drugs. But they're still spending less than they had been, and still saving Medicare money. It's a project definitely worth expanding.
The Pioneer ACO program was always meant as an experiment. Once it started, new hospitals couldn't join even as some participants dropped out. The Obama administration did launch other ACO programs in the meantime but they were generally less aggressive, with smaller rewards for the doctors who did the best (and, in tandem, smaller penalties for those who screwed up). And those programs really haven't saved much money at all, not nearly as much as the Pioneers.
With these new, positive results in hand, the Obama administration now says it wants to expand the Pioneer approach to other hospitals. And, of course they do: if they can deliver better care at a lower cost, that's pretty much delivering on the Holy Grail of health care right now.