The accountable care organization is loosely defined as a collection of doctors, hospitals and other providers who agree to take financial responsibility for the quality of care.
Proponents argue they have great potential to improve healthcare value. But despite the consensus that healthcare needs to shift from fee-for-service into value-based models, no one has figured out the perfect model, including for ACOs. The more than 800 ACOs that now exist across the U.S. take on varying levels of financial risk and set different benchmarks for costs and different measures for patient outcomes.
“What makes a successful ACO? As an industry, we don't know,” said Micky Tripathi, founding president and CEO of the Massachusetts eHealth Collaborative, a not-for- profit that works directly with three ACOs and also serves as a data warehouse for Aledade, a company that helps physicians form ACOs.
Although the results from ACOs are inconsistent, these organizations are proliferating. At the beginning of 2011, the U.S. had 64 ACOs. That number climbed to 838 among public and private payers by the end of January 2016, according to the consulting group Leavitt Partners. This year, the Medicare's Shared Savings Program for ACOs has 480 participants in all 50 states, Washington, D.C., and Puerto Rico.
But the fate of the ACO as a model is up in the air, and not just because of the political upheaval underway in the nation's capital. The latest data released by Medicare show that ACOs in its various programs, which include Pioneer and Next Generation in addition to Shared Savings, generated $466 million in savings in 2015—a fraction of Medicare's $646.2 billion total spend.
Financial performances varied significantly. Among the 12 Pioneer ACOs, a program from which numerous ACOs have dropped out, eight generated savings and four incurred losses in 2015. “I think some people have hyped it as a silver bullet for healthcare spending problems,” said Dr. Ashish Jha, a professor at the Harvard School of Public Health. “This is an experiment where we don't expect everybody to succeed.”
What follows is a tale of two ACOs—one that survived a Medicare testing program and one that dropped out. Their stories reveal both the potential and pitfalls of an experiment that, given the level of investment made by hospital systems and physician practices over the past several years, will live on no matter the fate of the Affordable Care Act.