Late yesterday, CMS announced the preliminary 2014 results of the Medicare Pioneer and Shared Savings ACO Programs.  Combined, successful ACOs in these two programs reduced held health care costs nearly a billion dollars against Medicare projections, while simultaneously improving on 80 percent of CMS quality measures.  The major takeaway: these programs are improving the quality of care for patients, while significantly reducing health care costs.

The better news?  It looks like they’re just getting started.

Population health is a long term effort – and the financial rewards of the approach accumulate over time.  When a primary care physician guides a person through their complex medication regime, eliminates redundant or dangerous medications and increases adherence, the actions don’t necessarily generate savings today, or tomorrow, or even next month. But a year from now those actions could save thousands of dollars. Two years from now they could save a life.

Yesterday’s results reinforce that idea. Unsurprisingly, Medicare ACOs in existence longer generated, on average, more savings. Population health really pays off – especially over time. The Pioneer ACOs and the ACOs that started in 2012 had the highest success rates (55 and 37 percent respectively). Yet even they have only been in existence for two and a half years – a beneficiary who was 67 when the ACO program began has not yet turned 70.  That individual’s primary care physician will care for that person for the next two decades – and investments in the last 30 months will create benefits – in absolute health, and in cost savings – for years to come.

Some are already pointing to the overall success rate of ACOs in earning shared savings – 29% — as evidence of a letdown; a sign that the ACO program isn’t changing health care fast enough.  At Aledade, we think that view is short sighted.  From a population health perspective these results, in a program with less than three years of results, are encouraging.  As providers become more familiar with population heath and the value of EHRs; as systems improve interoperability and state health information exchanges become more effective; and as patients acclimate to preventive medicine, we expect both the rate of ACO success, and its scale to grow.  Participation in the Shared Savings programs continue to grow – Aledade alone tripled in size over the past year.  Most importantly, these programs are rewarding organizations that take a population health mindset, making investments today to create savings for many years to come.

Finally, let us always remember that value is not just about costs. Higher quality can generate more value even if costs do not go down. ACOs in the Shared Savings Program had better quality than average in 18 of 22 shared measures. But again the results highlight the value of ACO maturity — those ACOs in the program for two years improved 27 of 33 quality measures. The value of population health care can’t be measured in savings alone – these quality measures mean that Medicare beneficiaries are getting better care – they are less likely to fall in their homes, have complications from diabetes, or be admitted to a skilled nursing facility.  No matter what percentage of ACOs are generating shared savings, a program that induces these effects is a successful one.