Off Just a Tad . . .

ACO's (Affordable Care Organizations) are one way Obamacrap hopes to reign in the cost of health care. The other ways are paying doctors, hospitals and drug manufacturers less than they pay now, reducing funding for Medicare Advantage plans and increasing risk sharing for Medicare beneficiaries.

But we have looked at ACO's before and on the surface at least, they seem to have some merit.

Some . . . merit . . .

A press release from the AHA (American Hospital Association) seems to indicate that CMS (Center for Medicare Services) might have stubbed their toe.

The study found that the costs of the necessary elements to successfully manage the care of a defined population is considerably higher – $11.6 to $26.1 million – than the $1.8 million estimated by the Centers for Medicare & Medicaid Services (CMS) in its proposed rule for start-up and one year of ongoing operations.

Misses the mark by a factor of roughly 10x. That stretches the limit of the old saw "close enough for government work". These figures are not even in the same universe.

The information gathered from four case studies was used to create two hypothetical examples to estimate the start-up and ongoing costs of establishing an ACO. The first represents a single free-standing hospital, 80 primary care physicians and 250 specialists. The second example includes a five-hospital (1200 bed) system, 250 primary care physicians and 500 specialists.

The study was prepared for the AHA by McManis Consulting of Greenwood Village, CO, and is based on a series of case studies of organizations that have already taken steps to manage the care of a defined population in a manner similar to that of an ACO.

So unlike the government, that likes to pull figures out of their butt, these numbers are based on real life situations where a type of ACO actually exists.

Fantasy vs. reality.

Reality wins.