Dive Brief:
- A survey by the National Assoc. of ACOs reveals that the average startup cost of accountable care organizations is $2 million during the first year. In reality, many ACO startups will need twice that amount to stay afloat, as it could take another year for shared savings to flow.
- The study captured information from the April 1, 2012 and July 1, 2012 CMS Medicare shared savings program, at the end of the first years of operations.
- Given that ACO savings emerge slowly, due to data collection and reconciliation complexities, an ACO will have almost a second full year of operations until the cash flow is replenished from shared savings with CMS, researchers found. This means the typical ACO will risk $3.5 million, plus more, for feasibility and pre-application costs.
Dive Insight:
ACOs offer a lot of promise as a means of collaborating and streamlining care, but they clearly don't come cheaply. And, even once the money is spent, ACOs – which are typically constructed of large organizations – don't seem likely to receive shared savings large enough to truly impact these institutions' bottom line. It seems that something will have to change in ACO design to make them profitable and, therefore, sustainable.