ACO’s maintain that they can save healthcare dollars by co-coordinating care between physicians, specialists, and hospitals thereby reducing duplicate services and unnecessary testing.  While there may be savings to be found in reducing duplicate services, the assumption that the government has that doctors and hospitals are ordering unnecessary tests is probably overstated.  The proponents of the healthcare reform act claim that the ACO’s will be able to save close to $1 billion in healthcare costs in the first 3 years of implementation.

 At first glance the ACO’s look a lot like the HMO’s of the 1970’s and 80’s but there is a significant difference.  Both systems claim to be able to save money while improving the quality of the patient’s healthcare.  The main difference is that patients who are treated by physicians and hospitals under the ACO umbrella are allowed to seek treatment outside of the ACO. 

 There are two significant problems with the assumptions that the government beaurocrats claim as the benefits of ACO’s.  The first is the assumption that doctors and hospitals order unnecessary test in order to pad bills.  I know I don’t perform unnecessary tests or treatment in my clinic and I don’t know of any of my colleagues who do.  I am offended by the implication that healthcare professionals routinely overbill for services. 

 In order to cut down on duplicate services the ACO’s will have to hire nurses or medical administrators to oversee patient care and disallow billing for unnecessary tests or treatment.  The amount of services that these overseers cut will have to exceed their salaries in order for there to be an overall reduction in healthcare costs.  If the cost containment specialists don’t reduce costs more than their salaries then their jobs are at stake.  What do you think these people will do? 

 There are also financial incentives offered to the ACO’s to improve medical care while they decrease costs.  These may be extremely difficult to achieve.  In fact, the American Medical Group Association has already complained about the Obama Administration's recently released regulations for ACO’s, claiming they are too costly and complex to administer and enforce.  According to the Associated Press the AMGA, which represents 400 separate medical groups that provide care for about 100 million Americans, expressed their concern in a letter to the Centers for Medicare and Medicaid Services that their providers could be left absorbing the costs of the many ACO-related regulations. It claimed that up to 90 percent of its membership would not participate in ACO’s under the proposed regulations, claiming that the regulations are "overly prescriptive, operationally burdensome, and the incentives are too difficult to achieve to make this voluntary program attractive."

 I thought that the Electronic Health Records (EHR) regulations, which are also part of the PPACA, were supposed to accomplish the same goal, which is, reducing waste while improving patient care. 

 There is also an anti-trust and monopoly issue involved in the formation of ACO’s.  As the laws currently stand, it is questionable whether hospitals and doctors can group together to control a local market.  If the Federal government grants exemptions to the anti-trust laws, which gives another indication on the direction that the government wants the healthcare industry to move.

 There is not a lot of difference between the ACO’s and the Healthcare Company Clinics that I wrote about last week.  The difference is who owns the group. Bottom line of all of the regulations within the PPACA are to compel doctors and hospitals into groups, and then to regulate them so much that they will eventually be forced into accepting whatever the government bureaucrats decide is the proper amount for medical services.  Everything within the PPACA is geared toward an eventual single payer healthcare system.  On this point there is very little doubt remaining.