WASHINGTON — In its quest to remake the nation’s health care system, the Obama administration has urged doctors and hospitals to band together to improve care and cut costs, using a model devised by researchers at Dartmouth College.
But Dartmouth itself, facing mounting financial losses in the federal program, has dropped out, raising questions about the future of the new entities known as accountable care organizations, created under the Affordable Care Act.
The entities are in the vanguard of efforts under the health law to move Medicare away from a disjointed fee-for-service system to a new model that rewards doctors who collaborate and coordinate care.
Medicare now has more than 400 accountable care organizations, serving 8 million of the 57 million Medicare beneficiaries. Obama administration officials say the new entities are saving money while improving care, but some independent experts have questioned those claims.
“There’s little in the way of analysis or data about how ACOs did in 2015,” said Dr. Ashish K. Jha, a professor at the Harvard School of Public Health. “The results have not been a home run.”
In addition, he said, “there is little reason to think that ACOs will bend the cost curve in a meaningful way” unless they bear more financial risk, sharing losses as well as savings with the government.
An evaluation for the federal government found that Dartmouth’s accountable care organization had reduced Medicare spending on hospital stays, medical procedures, imaging and tests. And it achieved goals for the quality of care. But it was still subject to financial penalties because it did not meet money-saving benchmarks set by federal officials.
“We were cutting costs and saving money and then paying a penalty on top of that,” said Dr. Robert A. Greene, an executive vice president of the Dartmouth-Hitchcock health system. “We would have loved to stay in the federal program, but it was just not sustainable.”
Coincidentally on Friday, Dartmouth-Hitchcock Medical Center, based in Lebanon, N.H., said it would lay off up to 400 people. New Hampshire state officials said they are dismayed by the announcement, which was made two days after they awarded the hospital a $36.5 million contract to run a state psychiatric facility. A Dartmouth-Hitchcock spokesman said it is too early to know what the effect would be on the psychiatric hospital in Concord.
Dr. Elliott S. Fisher, director of the Dartmouth Institute for Health Policy and Clinical Practice, said: “It’s hard to achieve savings if, like Dartmouth, you are a low-cost provider to begin with. I helped design the model of accountable care organizations. So it’s sad that we could not make it work here.”
Greene offered this analogy: It is easier for a person who runs a mile in 12 minutes to reduce the time to 10 minutes than for a 5-minute miler to break the 4-minute barrier.
Dartmouth-Hitchcock is the main teaching hospital for Dartmouth’s medical school, of which the Dartmouth Institute is part. Since accountable care organizations began operation in 2012, a number like Dartmouth have dropped out of the program, citing financial uncertainties and unrealistic benchmarks for spending.
Organizations with higher levels of prior spending had a greater ability to achieve cost savings in the first years of the program, by reducing unnecessary services, so they were more likely to qualify for financial rewards, according to the Government Accountability Office.