Accountable Care Organizations: Theory and Practice

Since early 2012, a growing number of independent physician groups, physician-hospital organizations, hospitals and their employed physicians, and fully integrated health systems have entered into contracts with both CMS and commercial insurers to become accountable care organizations (ACOs). It is estimated that the health care of close to 20 million patients is now being provided under such arrangements [1].

ACOs are one manifestation of payment reform intended to slow the unsustainable cost of health care in the United States. While the details of the payment models vary widely, with many combinations of fee-for-service, bundled, and capitated arrangements, the underlying goal is consistent: ACOs are held accountable for both the cost and quality of care for a specific population. While some ACO models offer the promise of shared savings alone, others offer potential savings but also entail associated risk [2]. That pre-specified quality targets have to be met before savings can be accessed is presented as a safeguard against the perceived excesses of the managed care experience of the 1990s.

To succeed as an ACO, health care organizations face sobering structural, fiscal, and—perhaps most daunting—cultural challenges. Coordinating care between providers [3,4] and across episodes and sites of care—not a traditional strength of many provider entities—will become increasingly important. Creating equitable systems to distribute whatever savings are garnered may disrupt traditional relationships between primary care and specialist providers. Convincing organizations to make the necessary investment in an “evolved” primary care infra-structure—a prerequisite for accomplishing the goals of decreasing unnecessary and expensive health resource utilization—will be problematic in an era of shrinking overall reimbursement [5]. Finally, convincing clinicians that this model means that they are quite literally “in it together” will challenge long-standing and proud departmental and divisional identities and silos [6].

Recognizing that this grand experiment is still very much in its formative stages, we nonetheless thought that this was an opportune time to examine ACOs from several perspectives. Over the next few issues and beginning with this issue [7], we will sequentially hear from an expert in health care policy analysis, a clinician-leader working in a high-functioning patient-centered medical home practice, and a team in a large health care system charged with the overall success of population health management. We are confident that you will find these observations timely, interesting, and informative. We welcome your feedback.

Since early 2012, a growing number of independent physician groups, physician-hospital organizations, hospitals and their employed physicians, and fully integrated health systems have entered into contracts with both CMS and commercial insurers to become accountable care organizations (ACOs). It is estimated that the health care of close to 20 million patients is now being provided under such arrangements [1].

ACOs are one manifestation of payment reform intended to slow the unsustainable cost of health care in the United States. While the details of the payment models vary widely, with many combinations of fee-for-service, bundled, and capitated arrangements, the underlying goal is consistent: ACOs are held accountable for both the cost and quality of care for a specific population. While some ACO models offer the promise of shared savings alone, others offer potential savings but also entail associated risk [2]. That pre-specified quality targets have to be met before savings can be accessed is presented as a safeguard against the perceived excesses of the managed care experience of the 1990s.

To succeed as an ACO, health care organizations face sobering structural, fiscal, and—perhaps most daunting—cultural challenges. Coordinating care between providers [3,4] and across episodes and sites of care—not a traditional strength of many provider entities—will become increasingly important. Creating equitable systems to distribute whatever savings are garnered may disrupt traditional relationships between primary care and specialist providers. Convincing organizations to make the necessary investment in an “evolved” primary care infra-structure—a prerequisite for accomplishing the goals of decreasing unnecessary and expensive health resource utilization—will be problematic in an era of shrinking overall reimbursement [5]. Finally, convincing clinicians that this model means that they are quite literally “in it together” will challenge long-standing and proud departmental and divisional identities and silos [6].

Recognizing that this grand experiment is still very much in its formative stages, we nonetheless thought that this was an opportune time to examine ACOs from several perspectives. Over the next few issues and beginning with this issue [7], we will sequentially hear from an expert in health care policy analysis, a clinician-leader working in a high-functioning patient-centered medical home practice, and a team in a large health care system charged with the overall success of population health management. We are confident that you will find these observations timely, interesting, and informative. We welcome your feedback.

Since early 2012, a growing number of independent physician groups, physician-hospital organizations, hospitals and their employed physicians, and fully integrated health systems have entered into contracts with both CMS and commercial insurers to become accountable care organizations (ACOs). It is estimated that the health care of close to 20 million patients is now being provided under such arrangements [1].

ACOs are one manifestation of payment reform intended to slow the unsustainable cost of health care in the United States. While the details of the payment models vary widely, with many combinations of fee-for-service, bundled, and capitated arrangements, the underlying goal is consistent: ACOs are held accountable for both the cost and quality of care for a specific population. While some ACO models offer the promise of shared savings alone, others offer potential savings but also entail associated risk [2]. That pre-specified quality targets have to be met before savings can be accessed is presented as a safeguard against the perceived excesses of the managed care experience of the 1990s.

To succeed as an ACO, health care organizations face sobering structural, fiscal, and—perhaps most daunting—cultural challenges. Coordinating care between providers [3,4] and across episodes and sites of care—not a traditional strength of many provider entities—will become increasingly important. Creating equitable systems to distribute whatever savings are garnered may disrupt traditional relationships between primary care and specialist providers. Convincing organizations to make the necessary investment in an “evolved” primary care infra-structure—a prerequisite for accomplishing the goals of decreasing unnecessary and expensive health resource utilization—will be problematic in an era of shrinking overall reimbursement [5]. Finally, convincing clinicians that this model means that they are quite literally “in it together” will challenge long-standing and proud departmental and divisional identities and silos [6].

Recognizing that this grand experiment is still very much in its formative stages, we nonetheless thought that this was an opportune time to examine ACOs from several perspectives. Over the next few issues and beginning with this issue [7], we will sequentially hear from an expert in health care policy analysis, a clinician-leader working in a high-functioning patient-centered medical home practice, and a team in a large health care system charged with the overall success of population health management. We are confident that you will find these observations timely, interesting, and informative. We welcome your feedback.