Dartmouth has traditionally had a reputation as the most conservative of the Ivy League campuses, but the Obama administration put its faith in the New Hampshire university to be a valuable example of the successes of the accountable care organizations.
Dartmouth researchers put together an accountable care organization model aimed at saving Medicare money by shifting reimbursement away from the prevailing fee-for-service model.
There are different payment systems being explored by accountable care organizations and encouraged by the Obama administration. One example is bundled payments that compensate a hospital for the entire treatment, including recovery and follow-up care. Payments are also increasingly tied to medical outcomes, such as hospital readmission rates.
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Dartmouth had done a lot of that good stuff and had seen its Medicare spending decrease as a result. But it didn't quite meet the savings goals called for by federal policy, and it was subjected to financial penalties as a result.
So the university is quitting the program.
"We were cutting costs and saving money, and then paying a penalty on top of that," Dr. Robert A. Greene, an executive vice president of the Dartmouth-Hitchcock health system, told The New York Times. "We would have loved to stay in the federal program, but it was just not sustainable."
Another Dartmouth official said the expectations were unfair because they were based on achieving reductions, regardless of whether the provider was already low-cost. Those complaints echo criticism made by other health care leaders that dropped out of the accountable care organization program in recent years. Many have said the outcomes demanded by the federal government simply aren't unrealistic.
It is unlikely that criticism of the accountable care organization model will necessarily lead policymakers to conclude that the idea is flawed, but rather that the current formula needs some work.
This is not the first time that the Obama administration has seen models of care that it held up as champions upended by less-than- flattering results.
President Obama previously highlighted research that showed that areas with large, consolidated hospitals spent less money on Medicare, but subsequent research showed that many of those same hospitals typically charged more than average to those with private insurance.
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