The Accountable Care Organization: Almost a Perfect Solution…

This article is the first of a series that will explore different care and reimbursement models. As our healthcare system evolves, providers are being presented with new ways to organize their businesses and get paid for their services. Over the next few weeks, William Rusnak will provide some quick insight into several different models, some newer than others, and discuss the pros and cons of each.

A relatively new concept, the accountable care organization (ACO) is a group of doctors, hospitals, and other health care providers, designed to give high quality, optimally value-based, care in a coordinated approach. It consists of three essential parts: organized care, performance measurement, and payment reform. [5] These organizations have a lot of potential for being a great thing for patients. Entire care teams will be communicating with each other, including specialists like orthopedists or cardiologists, and monthly premiums are predicted to drop. What could be better?

The ACO is the central operating system of the recent Affordable Care Act. Each patient will see a primary care physician (PCP) that provides referrals for any further care the patient may require, including visits to specialists like a cardiologist, pulmonologist, or gastroenterologist. [4] In a well-run ACO, both specialists and PCPs will have access to all of a patient’s lab work, imaging (like x-rays, CT scans, and MRIs), and tests (such as pulmonary function tests, treadmill stress tests, and more), thus making a good electronic health record system an essential part of an ACO. An EHR that achieves interoperability will eliminate duplicate services, further reducing costs and keeping patients happier because they won’t have to repeat tests/exams at each healthcare facility they visit. It also removes the task of transporting compact disks or packets of paper containing fragmented documentation of diagnostic tests or outside care, which is commonplace today.

An Industry Slow to Change

There are, of course, some potential limitations. Some argue that care coordination and the implementation of new technologies are proving more difficult than previously thought. To aid in this task, CMS launched a bundled payments initiative and paid out thousands of dollars as part of the Meaningful Use program to encourage physicians to adopt EHRs into their practices. Additionally, most physicians are terribly busy today. It is not enough to encourage physicians via financial incentives to fully communicate amongst themselves. The act of informing the entire care team needs to become common practice, which in a perfect system would be as standard as taking a good history and physical.

Danger of Capitation Model

Another obvious issue with ACOs is that most rely on a capitation model between insurance companies and healthcare providers. Capitation works be giving a fixed amount per patient to the practitioner for providing care during a set interval (i.e. per month or year). This may give physicians the temptation to provide less care in order to decrease expenses, thus increasing profit for the year. Fortunately, though, there are financial incentives to avoid that sort of activity. As a way to focus on quality rather than quantity, physicians and healthcare facilities that meet pre-determined performance measures are reimbursed for their success, essentially being paid to keep patients healthy. [4]

Too Few Primary Care Physicians

The development and success of ACOs may also be limited by the number of primary care physicians who have been assigned the key position of "ACO coordinator." These physicians see patients and send them to specialists as they see fit. Many believe that there are too few primary care providers to create and run the number of ACOs needed to care for the current population in need. Moderately effective solutions, such as loan repayment for physicians in underserved areas, have been tried, but the biggest impact has been made by mid-level providers, such as physician assistants and nurse practitioners, filling the role.

Monopoly Risks

Last, some worry that the creation of ACOs will result in healthcare organizations with powerful negotiating capabilities that far exceed those of private healthcare purchasers. [7] This is a legitimate concern for any industry where one company can achieve the overwhelming majority of market share, however the focus on quality is something unique to the ACO model. Even if a health system exists as the sole provider in a particular geographical area, which often happens anyway, the constant emphasis on performance should be able to keep the organization in check.

An Improvement to a Fragmented System

Overall, the ACO is a much-needed improvement for the current fragmented system – which focuses more on volume than quality. Improved communication, record keeping, and appropriate compensation for services provided will be the foundation of this new model. ACOs will help to reduce medical errors, eliminate duplicate services and facilities, and provide financial incentives to demonstrate high-quality, patient-centered care. [7] It is not an entire solution, but it is certainly a step in the right direction.

William Rusnak is a fourth year student at Drexel University College of Medicine, financial investor, writer, and entrepreneur. He writes about topics such as healthcare technology, biotechnology, and nutrition. He is currently applying to residencies with plans to practice in Primary Care and Sports Medicine. Outside of his professional life, he is a family man, performing musician, and paleo-diet enthusiast.


  1. Burns, L. R., & Pauly, M. V. (2012). Accountable Care Organizations May Have Difficulty Avoiding The Failures Of Integrated Delivery Networks Of The 1990s. Health Affiars, (31). doi: 10.1377/hlthaff.2011.0675
  2. Centers for Medicare & Medicaid Services. (2013, July 16). Press Release: Pioneer Accountable Care Organizations succeed in improving care, lowering costs. Retireved from: Press-Releases/2013-Press-Releases-Items/2013-07-16.html
  3. Fisher, E. S., & Shortell, S. M. (2010). Accountable care organizations accountable for what, to whom and how. Journal of the American Medical Association, (15), 1715-1716. doi:10.1001/jama.2010.1513
  4. Gold, Jenny. (2013, August 23). FAQ on ACOs: Accountable care organizations, explained. Retrieved from january/ 13/aco-accountable-care-organization-faq.aspx
  5. Lee, T. H., Casalino, L. P., Fisher, E. S., & Wilensky, G. R. (2010). Creating Accountable Care Organizations. New England Journal of Medicine, (363). doi: 10.1056/NEJMp1009040
  6. Noble, D. J., & Lawrence, P. (2013). Can accountable care organizations improve population health? Should they try? Journal of the American Medical Association, (11), 1119-1120. doi:10.1001/jama.2013.592
  7. Richman, B. D., & Schulman, K. A. (2011). A cautious path forward on accountable care organizations. Journal of the American Medical Association, (6), 602-603. doi:10.1001/jama.2011.111
William Rusnak, MD's picture

William Rusnak, MD

Medical Information Advisor

William Rusnak, MD (@RusnakMD) is a resident physician in diagnostic radiology, financial investor, writer, and entrepreneur. He writes about topics such as healthcare information technology, data science, biotechnology, and prevention of chronic disease. With his involvement in several emerging healthcare companies, he is actively attempting to bridge the gap between medicine and information technology.

comments powered by Disqus