Will ACOs Mark the End of Innovation in Medicine?

This is Scott Gottlieb, writing in an American Enterprise Institute report:

The Obama Administration is pinning its hopes for controlling Medicare costs on accountable care organizations (ACOs)—a system in which groups of doctors are given responsibility for a large population of patients, with a share of the doctors’ reimbursement dependent on their ability to reduce spending and improve clinical outcomes.

The Obama team relies heavily on hospitals to develop these new organizations. Yet historically, most of the significant innovation in health care delivery has developed in for-profit companies, often started by entrepreneurs, and has aimed to move patient care away from costly hospital settings and into less expensive outpatient settings.

The Medicare program and the Obama health plan are targeting many of these private businesses with new costs and regulations, so private investors are exiting the health services sector. The number of capital investments in health care services ventures in 2010 was fewer than half the median number of annual deals since 2000.

Comments (7)

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  1. Joe S. says:

    Interesting piece. But ACO is just another name for HMO.

  2. Brian Williams. says:

    ACOs will be as effective as HMOs were in the 1990s. When is someone going to try some free-market reforms?

  3. Ken says:

    I think it is government regulation as such, not the ACO concept, that is driving entrepreneurs from the field.

  4. Stephen C. says:

    ACOs are the means by which the government is going to take over the health care system.

  5. Devon Herrick says:

    Everyone seems to agree upon the goals of ACOs. The question is how do you get providers to implement high quality, low-cost health care when it is not in their self-interest to do so? Low-cost care means giving up revenue providers otherwise would make on redundant tests, over-treatment, etc. ACOs are a worthy goal inhibited by a difficult implementation.

  6. Virginia says:

    I don’t necessarily think you can just blame the ACO’s. It’s the whole system that is discouraging innovation.

  7. Bruce says:

    The answer to you question is “yes.” At least inside the system. But as you post at the Health Affairs blog points out, lots of people are going to leave the system. And outside the third party payer system, there will be lots of innovation. Here’s the post: