Accountable Care Organization

An ACO is a health care provider organization that is accountable for meeting the health needs of a defined population, including the total cost of care and the quality and effectiveness of services.  The goal of an ACO is to pay providers in a way that encourages them to work together, does not encourage supplier induced demand, and to create an organization that is rewarded for providing high quality care. There are four essential characteristics of an ACO;

• The ability to provide, and manage with patients, the continuum of care across different institutional settings, including ambulatory, inpatient hospital care,  and post acute care;
• Infrastructure to establish performance based bonuses from commercial and Medicaid payers;
• The potential to accept financial responsibility for results
• Sufficient size to support comprehensive valid, and reliable performance measurement

In exchange for investing in this reformed health care provider structure, the ACO members will share in the saving that result from their cooperation and coordination. An effective organization determines the skills and quality standards required to provide outstanding care and then works to match the skills of its staff to these requirements.  In addition, because of the flood of new information is too great to be managed adequately by individual clinicians, the organization needs ways to make this information available to physicians and other caregivers-where and when needed.

This could be a win-win project for the IPA, the physicians and Vanderbilt Children’s Hospital.  To physicians, the ACO concept is a new model that does not require a significant financial investment to explore. To hospitals, the organizations are a chance to align with physicians without the need to buy their practices.  Managed care companies view ACOs as a chance to build business relationships beyond Medicare Advantage. Health technology companies view ACOs as an opportunity to become the integrator of a virtual local health system. All of these offer different vantage points but distinctly promising opportunities.