Spotlight on Success: ACO Impacts on Cost & Quality

Leave a Comment
September 25th, 2012

aco cost qualityThe proliferation of ACOs and their potential to reduce costs, coordinate care and improve quality has been a popular topic. For some, the potential benefits of ACOs have been overstated, while for others, ACOs are the way forward in the pursuit of a better healthcare system. Enough time has now passed for some ACOs to analyze their collected data and report on their impacts on cost and quality. As we reported in a previous post, partnerships between private insurers and healthcare organizations have been leading the way in driving growth in the number of ACOs as well as developing innovative models and methods of collaboration.

Below, we highlight a few private ACOs that have reported success in coordinating care, increasing efficiency, and improve quality while reducing costs.

  1. Blue Cross Blue Shield of Illinois & Advocate Health Care
    Advocate Care ACO is a 10 acute care hospital system beginning in 2010 with over 250 other sites using a shared savings model over a three year period. This commercial ACO is considered to be the largest in operation with 250,000 PPO members and 125,000 HMO members.

    • Reduced overall hospital readmissions by 10.6% per member
    • Reduced Emergency Room visits by 5.4%
    • 26% reduction in chronic condition readmission rates with use of "transition coaches"
    • Readmission rate for patients sent to nursing facilities was 13.6%, lower than national average of 20%
  2. Norton Healthcare and Humana
    Norton Healthcare and Humana launched their ACO partnership in 2010, using a 60/40 shared savings model that covers approximately 7,000 members.  This ACO facilitates a strong  payer-provider relationship, performance measurement and reporting, expanding health IT infrastructure and an integrated system that fosters communication and collaboration. The ACO zeros in on care coordination, disease management, hospitals, employee wellness programs and data monitoring to realize efficiencies.

    • 6.7% Reduction in length of stay
    • 7.3% Reduction in direct variable costs
    • 13% Reduction in 30 day readmissions
  3. Blue Shield and Dignity Health
    Dignity Health partnered with Blue Shield of California and Hill Physicians Medical Group to coordinate care for 41,000 CalPERS members, beginning in 2010.  This ACO assigned case managers to review patients prescriptions, called patients within 48 hours of discharge and booked follow up doctor's appointments within 10 days.

    • Saved California Public Employee Retirement System $37 million for 2010 and 2011
    • Cost per CalPERS member dropped 1.6% to $393/month in 1st year of program, while the average for members not in the program grew by 10% to roughly $436/month.
    • Both the number of inpatient days and readmissions dropped 15% in year one.
    • The number of hospital stays longer than 20 days was slashed in half.

PayerFusion is a Health Plan Administrator and Cost Containment company offering comprehensive solutions for self-funded employers and international payers.  Our health plan administration solutions are customized to meet the needs of our clients and include provider network design/support, policy design, full-service TPA, technology solutions/support and informatics.  Contact us for more information and to learn more about our health plan administration services.


  • This is very good information and I see the opportunity for many health care providers to pool their resources as a group and offer it up as an ACO.. Question can you include Assisted Livings,Adult Day centers etc.

    Question 2. I worked for BCBS and whenever we tried to create a smaller network the community went nuts and demanded better access to THEIR providers. Do you see any issues with this?


    • William Bozoki says:

      To my knowledge, up to this point assisted living and adult day centers have not begun entering into ACO partnerships. However, ACO models are still evolving and their role will likely expand to cover more care delivery settings. I think it is feasible for hospitals, assisted living and/or adult day centers to enter into ACO arrangements to better manage post-discharge care, manage functional impairment of elderly populations and improve care transitions.
      To answer your second question,...With ACOs, both patient and physician participation is voluntary. The emerging ACO model does not "lock-in" patients to only seeing providers within the ACO, but the payer (Medicare or private insurers) does provide a financial incentive for patients to do so.

  • Cayla Cook says:

    Great post! Josh Gray said, for all the conversation about the potential effectiveness of ACOs in controlling medical expenses, I examine a different angle here, speculating on how accountable care may affect the cost and utilization of pharmaceuticals over time. At the risk of oversimplification, I’ll focus on two important variants of risk-based accountable care contracts, each presenting a different risk-reward profile.