Where does the money come from when we save on health care spending?

2014

If you read the literature put out by the Department of Health and Human Services and CMS, new payment models for physicians, Accountable Care Organizations, etc. are all going to save money. Physician groups have even embraced such changes as if the changes have no negative impact, they simply save money.

When I have criticized some of the assumptions used in calculating savings, I have been accused of being a naysayer. Hey, I’m all for efficiency and savings. Perhaps all that HHS is trying is the way to go, but let’s not head into new territory thinking there are no consequences, some good, some not so good depending on your point of view.

Here is a slide from a recent CBO presentation on health care spending. Aren’t things clear when you state what should be the obvious?😳

“Paid less in total” of course that is the answer. Doesn’t that make you wonder how Accountable Care Organizations which tout shared savings from health care delivery efficiency can survive or why they are embraced by many doctors groups? If I now pay you $100 for a service, but through efficiency I now only pay you $80 but I share half the $20 savings with you, what happened? You lost ten bucks that’s what happened. Did you somehow make up more than ten dollars from really being efficient? Let’s hope so. 😷