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The PGP Demonstrations: Were They Sufficient to Justify Accountable Care Organizations?

Abstract The Physician Group Practice (PGP) Demonstr-ation Project was designed to try to establish whether high-quality healthcare can be delivered to Medicare patients, while simultaneously lowering overall Medicare costs. In this project, participating healthcare organizations were provided a portion of any savings achieved, provided that certain quality goals were also achieved. The results of this project were used to provide evidence as to the feasibility of Accountable Care Organizations (ACOs), a healthcare delivery approach, which is rapidly becoming more prevalent. While the quality measures achieved by the vast majority of participants in the PGP Demonstration Project were widespread, the financial performance of these organizations was quite mixed. Many participating organizations received no shared savings whatsoever, while one received more “shared savings” payment that the others combined. Problems with the evidence supporting PGPs’ cost savings are discussed, and, based on these concerns, the future success of ACOs is questioned.