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Several years ago in the early days of Accountable Care Organizations (ACOs), we worried and warned about the importance of how each organization should divide up potential savings. In a white paper published in Physician Leadership Journal and on the Salient Web site, co-author Stephen Sheiko and I called it an “Elephant in the ACO Waiting Room.” In fact, today a new elephant is in the waiting room, and he is trumpeting a different warning message. The message is still about money; however, the elephant is warning about how much money is saved for the payer rather than how it is divided in the ACO. In 2018 ACOs generated net savings of $739.4 million during the year. In the most recently measured year, 2019, ACOs generated $1.2 billion net savings. While this is an improvement, it still begs the same question–is it enough?
The Medicare Program is the second-largest social insurance program in the United States with total expenditures of $739.4 billion in 2018. A ten-percent savings would have generated $74.1 billion. The $739.4 million savings generated in 2018 is a 0.1 percent savings for the system annually. This translates to Medicare costs of $2.03 billion each day, so the heralded ACO savings in 2018 would have covered only about 8 hours and 45 minutes of Medicare’s expenses. Total Medicare costs for 2019 were $785.6 billion, which translates into support for the Medicare spend for only 13 hours and thirty minutes.
The author of this article, Dr. Craigan Gray, is Chief Medical Officer of Salient Healthcare. Check out the Salient Healthcare Exhibit Booth!