Health policy leaders are meeting in Washington this week to discuss what are called Accountable care organizations. Hopes are high that ACO's will create the ultimate win-win: better patients and lower costs. Sound too good to be true? Maybe it is.
In the basic ACO model, doctors and hospitals get a pot of money to take care of patients. If they come in under budget and meet health quality targets, doctors and hospitals get a piece of the savings. If they go over budget, they can be on the hook financially.
"Some ACO's are having success in not only lowering cost but improving quality," says Larry Kocot with the Brookings Institution. Kocot thinks it's too soon to say ACO's work, but they are multiplying like mushrooms.
"In 2009, for example, there were just over a dozen ACO's. There are now upwards of over 390 ACO's in every region of the country," he says.
More ACO's means hospitals and doctors -- who usually compete -- will now team up. That worries Carnegie Mellon health economist Martin Gaynor.
"You put people who are competitors together in a room, it's just natural that they are going to start engaging in some kind of scheme to benefit themselves," Gaynor says.
Gaynor sees the upside to ACO's, but he says when doctors and hospitals join forces its easier to negotiate higher prices with insurers. And that could mean higher prices for us.