What is An Accountable Care Organization (ACO)? New White Paper
[This blog post introduces HealthStream's new Accountable Care Organization (ACO)-focused white paper series. As the first of eight sponsored papers, it serves as an introduction to the ACO, its history, goals, and structure.]
In response to decades of rising healthcare costs without corresponding improvements in the quality of care, policymakers, providers, and payers across the country have been working on developing new models of care that potentially could “bend the cost curve” while rewarding for high quality and improved health status. A required model for the future, since the passage of the Patient Protection and Affordable Care Act (PPACA), is an Accountable Care Organization (ACO) that provides infrastructure and information technology solutions for moving from a disjointed, siloed “system” of delivery to one that is well coordinated and aligned to provide real value to patients, providers, and payers alike.
One Target of ACOs is Cost Containment
Healthcare costs have continued to increase and erode the ability to balance state and national budgets, as well as weaken the country’s position in the world. The Kaiser Family Foundation estimates that Medicare alone, currently 3.6 percent of the United States Gross Domestic Product (GDP), will grow to 4.2 percent of the GDP by 2018 and to 6.4 percent of GDP by 2030. The Commonwealth Fund National Scorecard on U.S. Health System Performance 2008 shows that U.S. healthcare spending per capita and as a percentage of GDP is respectively more than twice and 50 percent higher than the next industrialized nation. Concurrently, physicians’ and hospitals’ per unit of service revenue increases are not meeting their increased costs, and employers and payers are seeing utilization and technology use skyrocket, driving double digit premium and per member medical cost increases. The Congressional Budget Office has estimated that potential savings to Medicare from promoting ACOs could amount to $5.3 billion between 2010 and 2019, although net savings would not begin to realize until 2013. The savings would be realized as providers reduce volume and intensity of services delivered to their patients. The potential savings to Medicaid and the Commercial market are still being reviewed and formulated but early estimates show savings in the $50 to $100 billion range over the same time period.
Let’s Define an Accountable Care Organization (ACO)
The premise behind an ACO is that providing evidence-based, quality care will decrease costs and improve patient health status. While there is no single, well-accepted definition of an Accountable Care Organization (ACO), there is a general agreement that it creates a closer working relationship among hospitals, physicians/groups, insurers, employers, and individuals, where all players share the risk and assume accountability for health status outcomes. This white paper, Accountable Care Organizations 101, is the first in a series of eight. It includes such information as:
What is an Accountable Care Organization (ACO)?
- How Did We Get Here?
- Where is the Accountable Care Organization (ACO) Headed?
- Target of Cost Containment
- What’s the Market Place Saying about Accountable Care Organizations?
The successful ACO will require substantial changes in organizational goals, management, information platforms, operating activities, and staffing compared to today’s typical hospital system or physician practice. As in healthcare generally, the ability to appropriately staff, educate, motivate, and manage people will be critical. And, as with all new opportunities, success will not come without numerous challenges. It remains to be seen whether or not ACOs will become economically sustainable healthcare delivery systems that truly improve quality and reduce costs.
Download the white paper.