A cost-saving phoenix rises from ACA’s ashes

I know I’m jumping the gun by saying that the ACA has been burned to the ground by the new administration as what will remain and what will be replaced are both unclear at this point.

But, while sifting through all the usual (and some unusual) internet sources for information on what could happen next, I came across a cost-saving strategy hidden in a white paper published in 2012.

The whitepaper proposes hospitals develop the capability to be the architect and central health care provider in an Accountable Care Organization (ACO) by developing a pilot program for its employees.  The authors call it an eACO and details the steps needed to initiate, monitor and then leverage what has been learned into a broader, more complicated ACO model.
The strategy proposed is simple – at least on paper – and it not only helps a hospital figure out how best to design and lead an ACO, it also addresses the chronic issue of healthcare providers being among the least healthy workforces in the country. (If you’re interested in learning more about why healthcare workers are in such comparatively poor health and what you can do about it, a comprehensive white paper by Truven Health Analytics will interest you.)

The one strategy that stands out as a potential game changing cost saver is motivating employees to use their own hospital’s services when they need healthcare and rewarding them when they do so. It makes a lot of sense to have your employees spend their healthcare dollars in-house.

For this strategy to work in smaller, regional and community hospitals with limited services, you will also need to align with like-minded providers to set up a network of services. In a best-case scenario, employees would use this network for every healthcare need with the exception of when they are traveling or in an emergency.

The white paper states that large hospitals have been able to achieve 90% employee participation using financial incentives for using in-house services and disincentives for outside services.

The financial results have been exceptional for The University of Pittsburgh Medical Center. They reported the combination of wellness initiatives and providing more in-house care resulted in:

  • A health plan cost trend of 1.1 percent in 2011 compared to industry benchmarks of 8.5 percent.
  • A five-year compounded savings over industry benchmarks in excess of $65 million.
  • An overall improvement in the health of its workforce in many areas which reduced unscheduled time away from work by 5.3 percent and saved the hospital $3.1 million

UPMC is a big hospital so the numbers for your hospital will be smaller. However, if the percentages are similar, this is a strategy that could be well worth looking into for your facility.

There are quite a few questions to be asked (and answered) if you want to pursue this strategy. If you would like to discuss this cost saving strategy or other ways you can make your employee benefit program more cost efficient and effective, give me a call or send me an email.


Agent On the Record is my personal opinion column. My goal is to provide you with useful, interesting and timely information that will help you succeed in the increasingly complex world of risk and insurance.

My views do not necessarily reflect the views of HealthSure, my employer.

I welcome your feedback, questions and ideas.


Eric Boudinet


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This communication is designed to provide a summary of significant developments to our clients. Information presented is based on known provisions. Additional facts and information or future developments may affect the subjects addressed. It is intended to be informational and does not constitute legal advice regarding any specific situation. Plan sponsors should consult and rely on their attorneys for legal advice.