Accountable Care Organizations

This page provides additional resources related to Accountable Care Organizations.  The most recent additions are always at the top of the page. 

CMS Draft Regulations for Accountable Care Organizations are now here.


Trent T. Haywood, M.D., J.D., and Keith C. Kosel, Ph.D., M.B.A., M.H.S.A. The ACO Model — A Three-Year Financial Loss?NEJM March 23, 2011  

Introduction:The accountable care organization (ACO) model is rather controversial among health care experts. Its proponents tout the potential savings and coordinated care that could be achieved through this model.1 Others, however, point out that the model is not without risks, such as the potential for anticompetitive effects as providers leverage it to concentrate market power.2,3 While experts are trying to clarify such matters, many health care executives and physician practices are deciding whether to move forward with becoming ACOs. Yet they may be unaware that the limited data suggest that most organizations will lose money in the first 3 years under the ACO model.

Goldsmith, J. 2011. “Accountable Care Organizations: The Case for Flexible Partnerships between Health Plans and Providers.” Health Affairs 30(1): 32

In this article Goldsmith provides an overview of the challenge to ACOs due to hospital-doctor power struggles – particularly in the West and South.  He also suggests that if ACOs foster more market concentration among providers, they have the potential to shift costs onto private insurers which is the exact opposite of the goal of the ACA to bend the healthcare cost curve downward.

Instead he proposes a more flexible payment model for providers and private insurers that would divide health care services into three categories: long-term, low-intensity primary care; unscheduled care, including unscheduled emergency services; and major clinical interventions that usually involve hospitalization or organized outpatient care.

Each category of care would be paid for differently, with each containing different elements of financial risk for the providers. Health plans would then be encouraged to provide logistical and analytic support to providers in managing health costs in these categories.

Mark C. Shields, Pankaj H. Patel, Martin Manning, and Lee Sacks. “A Model For Integrating Independent Physicians Into Accountable Care Organizations.” Health Affairs 10.1377 December 16, 2010,

Abstract: The Affordable Care Act encourages the formation of accountable care organizations as a new part of Medicare. Pending forthcoming federal regulations, though, it is unclear precisely how these ACOs will be structured. Although large integrated care systems that directly employ physicians may be most likely to evolve into ACOs, few such integrated systems exist in the United States. This paper demonstrates how Advocate Physician Partners in Illinois could serve as a model for a new kind of accountable care organization, by demonstrating how to organize physicians into partnerships with hospitals to improve care, cut costs, and be held accountable for the results. The partnership has signed its first commercial ACO contract effective January 1, 2011 with the largest insurer in Illinois, Blue Cross Blue Shield. Other commercial contracts are expected to follow. In a health care system still dominated by small, independent physician practices, this may constitute a more viable way to push the broader health care system toward accountable care.



Kocher, Robert and Sahni, Nikhil, “Physicians vs. Hospitals as Leaders of Accountable Care Organizations“. NEJM  363:27: 2579

One broad policy goal of the ACA is to promote “systems based care” and the ACO is one of the tools to this end.  However as this discussion has become more intense policy observers have begun to urge caution and have suggested less comprehensive models that might achieve the same goals.

In this article, Kocher and Sahni put the issues starkly in a recent article in the NEJM entitled: “Physicians vs. Hospitals as Leaders of Accountable Care Organizations.”  It describes the age old power struggle between physicians and hospitals for control.  They suggest that the first movers will  control ACOs in a local market for many years into the future.  Here is how:

“If physicians come to dominate, hospitals’ census will decline, and their revenue will fall, with little compensatory growth in outpatient services, since physicians are likely to self-refer. This decline will, in turn, lower hospitals’ bond ratings, making it harder for them to borrow money and expand. As hospitals’ financial activity and employment decline, their influence in their local communities will also wane. And it will be hard for them to recover from this diminished role.

Conversely, if hospitals come to dominate ACOs, they will accrue more of the savings from the new delivery system, and physicians’ incomes and status as independent professionals will decline. Once relegated to the position of employees and contractors, physicians will have difficulty regaining income, status, the ability to raise capital, and the influence necessary to control health care institutions.

 Therefore, the actor who moves first effectively is likely to assume the momentum and dominate the local market.”

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