The Obama administration announced a deal with three hospital groups on Wednesday that will save $155 billion in healthcare spending over 10 years, mainly by lowering charges for health services to the poor and elderly.

Vice President Joe Biden said associations representing thousands of U.S. hospitals had agreed to contribute $155 billion in Medicare and Medicaid savings for the next decade.

Biden offered few details on how the savings would be achieved, saying only that they would come about as a result of delivery system reforms and trimming the annual inflationary adjustment to hospital reimbursement payments from the two government health programs.

The administration is pursuing such agreements with key sectors in healthcare to help fund an overall reform of the system, which is estimated to cost upward of one trillion dollars to put in place.

Folks, reform is coming, Biden said as he announced the agreement with the hospital groups. It is on track. It is coming. We have tried for decades and decades to fix the broken system and we have never in my entire career in public life been this close.

Our hospitals are cracking under the weight of providing quality healthcare for Americans who lack insurance, he added. The status quo is simply unacceptable. Rising costs are crushing us.

The three groups participating in the deal were the Catholic Health Association of the United States, the American Hospital Association and the Hospital Corporation of America.