However, no matter how great quality the ACO has provided for its patient, the focus still comes down to the expense of operation. But fortunately, the Accountable Care Organizations have been resulted as a promising system for enhancing the overall healthcare’s quality and deducting unnecessary expenses through coordination and collaboration among health care provider.
In practicing the new model of ACO, each hospital will result different startup costs based on their structure and investment method, according to the National ACO Survey (See chart 1). But in overall participants who applied ACO to their hospitals, their startup cost has been calculated in a certain range. A national ACO survey has been conducted on November 2013, stated that, …show more content…
In comparing to the regular model of HMO, the start-up cost of ACOs is much less than HMOs and requires less expense in operation. According to the report from the Managed Care run by MediMedia USA in 1996, the start-up cost of HMOs needs to have at least 7 to 10 million dollars in working expense required by the Florida Department of Insurance (Volz), and that was 5 to 8 million dollars more than the start-up cost of ACOs. In addition, healthcare providers lose money due to high HMO’s start-up cost as well. A managing director of Simply Healthcare has stated that they have lost 3.2 million dollars in 2010 due to startup and acquisition costs, according to the South Florida Business Journal (Bandell). However, the startup costs only are the only first step to practice ACO model in the hospital. The technology management plays significant role in ACO operation …show more content…
While most Americans have been adapted to HMO's for the last decade, but there is no evidence can prove that the system has saved money for providers, according to the PNHP (physicians for a national health program).Therefore, the ACO is a new turning point for healthcare providers. Even though the startup costs and IT costs seems to be high in ACO’s plan, however, the survey conducted by the EHR Intelligence (Murphy) found that out of 35 ACOs participating in the CMS Medicare Shared Savings Program that presents the newest data for the range of gains and losses, 13 ACOs was breaking even with their startup costs and IT costs, and 9 ACOs even gained an average of 1.3 million dollars. From a broader view of gross savings from ACOs, according to the Kaiser Health News, ACOs are aiming to save Medicare up to 940 million dollars in their first four years and that’s one percent less of Medicare spending during the four years. Moreover, health providers will save a total amount of 380 million dollars within the first year of the Medicare ACO program, according to the same statistics from the Kaiser Health News (Gold). The result of cost saving has been revealed in the Pioneers ACOs program as well. In other statistics from Kaiser Health News, among all 32 ACOs Pioneers who succeeded in improving quality, they generated a gross savings of 87.6 million dollars in the first year. In contrast to its saving, the