An Experiment That Works in Healthcare: Pioneer ACOs


You might be considered “wonky” for enjoying the topics discussed here at… but that's fine. This is a safe environment for being wonky about Lean and improvement.

From, Sarah Kliff normally does a great job covering healthcare topics, including this latest piece:

This small, wonky Obamacare program saved $384 million over 2 years

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Since the passage of the Affordable Care Act (aka “ObamaCare” aka the “Patient Protection and Affordable Care Act of 2010“), one aspect of the law I've been following is the idea of “Accountable Care Organizations,” or ACOs. A cynic said ACOs are “neither accountable, nor caring, nor organized” and some health systems struggled with the details of an ACO or dropped out of the program altogether.

Listen to Mark read this post (learn more):

But, some systems like ThedaCare were successful with the approach and there's a new study that shows that ACOs can reduce cost and improve quality at the same time. I think the key word is can since, like Lean, knowing and proving that these approaches can work doesn't mean they always do work.

What's an ACO? From the CMS website:

Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.

The goal of coordinated care is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.

When an ACO succeeds both in delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.

ACOs and Lean are highly aligned — it's about providing the right care (the right quality and the right value) to patients, keeping them healthy and out of the hospital when we can. It's not about denying care, but avoiding waste and unnecessary care that often gets driven through a fee-for-service piecework payment model.

From and Kliff:

Thirty-two hospital systems signed up to become Pioneer ACOs in 2012 (13 have since dropped out; you can read more about that, and what it means, here). And two papers reviewing the program's performance — published today here and here — are largely positive in their findings.


The Pioneer ACO hospitals saved $384 million in two years — $280 million in the first year and $105 million in the second. This worked out to a savings, on average, of about $300 per patient each year.

This wasn't because doctors skimped on care: quality metrics show that patients in and outside the Pioneer ACO program generally reported similar satisfaction rates. And in some ways, the Pioneers did better: patients in those programs reported more timely access to their doctors, perhaps because hospitals wanted to put more effort into preventing costly complications down the line.

I'd be curious why the savings fell in the second year…

I'm not sure if the federal government is intentionally practicing PDSA, Plan-Do-Study-Adjust, but the idea of doing a limited pilot, a small test of change, is very much in line with Lean thinking. The feds didn't invite EVERY hospital system to participate. Now that it seems like we have some good results (that hopefully aren't just the Hawthorne Effect), they'd like to expand the program.

With these new, positive results in hand, the Obama administration now says it wants to expand the Pioneer approach to other hospitals. And of course it does: if hospitals can deliver better care at a lower cost, that's pretty much delivering on the holy grail of health care right now.

You can also listen to a podcast I recorded with ThedaCare CEO Dr. Dean Gruner about the early promise of ACOs and their participation.

Tomorrow's blog post is about another experiment: Safety Huddles.

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Mark Graban
Mark Graban is an internationally-recognized consultant, author, and professional speaker, and podcaster with experience in healthcare, manufacturing, and startups. Mark's new book is The Mistakes That Make Us: Cultivating a Culture of Learning and Innovation. He is also the author of Measures of Success: React Less, Lead Better, Improve More, the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, and the anthology Practicing Lean. Mark is also a Senior Advisor to the technology company KaiNexus.


  1. I think you left out “increase” in front of quality on this sentence in the 5th paragraph…
    But, some systems like ThedaCare were successful with the approach and there’s a new study that shows that ACOs can reduce cost and quality at the same time.

    And in the last paragraph, I think you mean “Now” not “How”…
    How that it seems like we have some good results (that hopefully aren’t just the Hawthorne Effect), they’d like to expand the program.

    You mentioned two articles near the top, but you only discuss this article. Is the other one the one you mention will be tomorrow’s post?

    • Thanks for pulling the andon cord.

      I’ve fixed those two mistakes. Yikes, that first one changes the meaning of the sentence dramatically.

      Yes, the second article is tomorrow’s post. Originally, I was going to write about them both in this post, but it got a bit long (and I clearly didn’t go back to proof read the beginning of the post enough). That’s the benefit of doing the Lean Blog Audio podcasts (which I haven’t been doing as much recently) — I tend to catch errors like that when I do the audio recording.

      I need to get back to that… or just proof read better.


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