Blog: ACO finds savings harder to find as time goes by

The first two years of a Sacramento accountable care experiment cut spending by $50 million, including $13 million that was divided by the participating doctors, hospitals and insurer.

But in year three, those savings have grown more elusive. That's according to Kristen Miranda, vice president of provider network management at Blue Shield of California, which launched the project with Dignity Health, formerly Catholic Healthcare West, and Hill Physicians Medical Group. “It does get harder,” said Miranda.

The partners were scheduled to meet last week to review new strategies for further savings, such as development of patient-centered medical homes, she said.

Miranda said the inaugural effort has so far done well by “getting the basics right.” The partners improved care coordination as patients leave the hospital or move from one provider to another. The initiative also reduced how long patients need to say in the hospital, and how often they return, she said.

Indeed, shorter hospital visits accounted for most of the first-year savings, Paul Markovich, Blue Shield of California's president and chief operating officer, reported in the latest Health Affairs, according to an audit by the consulting firm Milliman.

The audit found other evidence that healthcare use and spending dropped. One measure, total inpatient days, dropped 12.1% for the 41,000 California Public Employees' Retirement System workers and dependents included in the experiment, the audit said. Health spending per month for those included in the first year of the accountable-care experiment fell 1.6% to $393 compared to an increase of 9.9% for those not enrolled.

Fewer ACO patients returned to the hospital within 30 days of leaving during the first year, a trend that continued in the second year.

Markovich projected spending for the current year would be similar to the compound annual growth rate for the first two years: 3%.

Miranda said the Sacramento pilot results helped Blue Shield of California convince others to enter into similar contracts. The insurer now operates eight ACOs.

Blue Shield of California will seek to increase that number to 20 by 2015.

There is one notable difference between the Blue Shield accountable care efforts and Medicare's ACOs: Blue Shield does not require doctors and hospitals to achieve quality performance targets in order to share in savings that result for their efforts. Miranda said the insurer does monitor quality measures and has moved to include member satisfaction scores.

You can follow Melanie Evans on Twitter: @MHmevans.