What’s So New about ACOs? Not Much

by Published On: Dec 13, 2011

Accountable Care Organizations (ACO) have captured the imagination of acute and post-acute care providers since the Affordable Care Act (ACA) authorized public support for these local health collaboratives. 

However, according to Growth and Dispersion of Accountable Care Organizationsa new report from Leavitt Partners, ACOs are not a new phenomenon by any means. The Utah consulting firm identified 164 “ACO entities” that are already operating around the country, many of them with support from private payers.

The Leavitt report loosely defines ACOs as organizations seeking to be “financially accountable for the health care needs of a population, manage the care of that population and bear that responsibility at an organizational level.” 

The report maintains that some health care organizations have been bearing risk and coordinating care for decades, but just haven’t called themselves ACOs. Now, in the wake of the ACA, these organizations are adopting the ACO nomenclature while making only modest changes to their care process.

Summary of Results 

The 164 ACOs identified by Leavitt were located in 41 states. Ninety-nine were sponsored by hospital systems, 38 by physician groups and 27 by insurers. Among other findings from the report: 

  • Wide geographic variations: The report could not identify any hard-and-fast geographic trends in ACO development. Regions that are poor and rural tend to have few ACOs, but that’s not always the case. For example, rural Montana has 3 ACOs, the same number as Illinois and Georgia. In addition, the urban Washington, DC metropolitan area has few ACOs while Boston is home to a growing number of these organizations. ACOs are rare in both urban and rural areas of the South and Midwest.
  • Response to competition: ACO growth seems to occur in response to competition in the marketplace. When one institution forms an ACO, its competitors often follow suit. ACO development is less robust in communities that have one dominant health system.
  • Hospital-based: Nearly two-thirds of ACOs were started by hospitals or hospital systems. However, this trend is changing as insurers and physician groups begin to join and back ACOs. In fact, the growing variety of ACO sponsors indicates the wide range of business models that will ultimately provide accountable care, says the report.

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