What is an Accountable Care Organization?

An accountable care organization (ACO) is an accredited group of healthcare professionals that share responsibility for their patients’ health outcomes and work together to accomplish three goals:

Reduce the cost of healthcare
Improve the quality of healthcare patients receive
Achieve high patient satisfaction

ACOs also share financial responsibility for their patients, so they actively look for ways to reduce unnecessary medical spending.

What does it mean to be financially responsible for a patient?

Healthcare providers traditionally are paid using what is called a fee-for-service model. This means providers receive money based on the services they provide or the procedures they perform. Essentially, the more services you provide, the more money you make.

The problem with this system is that it doesn’t account for the outcome of these services or procedures. In other words, healthcare providers get paid regardless of whether the service they provided improved their patient’s health, and that drives up costs.

ACOs operate under a fee-for-value model, which means providers get paid if they are able to keep costs down and improve patient health. Providers do this by avoiding unnecessary tests, services and procedures, focusing on preventive care, and keeping patients out of the ER and hospital. If ACOs increase healthcare spending and provide services that do not improve their patients’ overall health, they could receive financial penalties.

How do ACOs benefit patients?

ACOs provide a variety of benefits to patients and the healthcare system as a whole. For example:

Better care coordination: Providers within an ACO are expected to coordinate the efforts of all providers that interact with a patient, including primary care providers, specialists, hospital facilities, nurses, etc. When providers coordinate care, there are less medical errors.

Reduced out-of-pocket expenses: Because providers in an ACO are financially responsible for their patients’ cost of care, they pay special attention to ways they can reduce costs. For example, if a patient needs a minor surgical procedure, a provider within an ACO would recommend performing it at a surgical center instead of a hospital to reduce costs while still providing the same outcome.

Shared information: All providers within an ACO share medical records for the patient, which means everyone has access to the information they need to provide high-quality care. When all providers in a patient’s care team have access to the same information, the quality of care improves because providers do not need to duplicate services for their own records.

How will healthcare reform affect ACOs?

Although ACOs are the result of the Affordable Care Act passed in 2010, experts estimate that ACOs will continue to operate despite changes to the law. In just three years, ACOs were able to save over $2 billion in healthcare spending, which shows that the efforts ACOs are making to improve the quality of care and reduce spending are working.

As the healthcare industry continues to find ways to reduce the rising cost of care, ACOs will play a significant role. For more information about ACOs, click here.