FTC: ACOs could increase costs

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Instead of reducing costs and improving quality of care, Federal Trade Commissioner J. Thomas Rosch believes that the potential benefits of accountable care organizations (ACO) are minimal at best and that ACOs may even provide poorer quality of care while causing healthcare costs to rise.

Rosch said that healthcare organizations’ exemptions from anti-trust laws raise the possibility that previously competitive providers partnering as ACOs could form monopolies.

“The antitrust agencies recognize that the formation of ACOs raises a number of antitrust concerns, in particular that ACOs run the risk of price fixing if they engage in joint price negotiations, and that they may be able to exercise market power, particularly in rural markets,” Rosch said at the American Bar Association’s Antitrust Law Fall Forum in Washington, D.C., on Nov. 17.

“Against the very meager prospects for costs savings, there is a very real risk that some ACOs will be formed with an eye toward creating or exercising market power,” he continued.

Citing a Congressional Budget Office (CBO) study that predicted ACOs would save $5.3 billion over ten years, Rosch suggested that potential savings aren’t worth pursuing when compared to the risks. Rosch also said that ACO-like healthcare organizations that are part of a pilot program, the Physician Practice Group Demonstration, have failed to demonstrate significant cost savings.

Because any cost savings associated with ACOs will be negated by increased costs in the commercial sector, Rosch concluded, the net result “may therefore be higher costs and lower quality healthcare.“

Federal Trade Commissioner Rosch’s comments are available in their entirety here.