The Impact of Accountable Care Hospital Involvement with Accountable Care Organizations

EXECUTIVE SUMMARY Accountable care organizations (ACOs) require providers to bear financial responsibility for the cost and quality of a defined population. Hospitals and health care systems throughout the U.S. are increasingly forming ACOs or partnering with other providers to create ACOs. Most hospitals entering into accountable care arrangements use shared savings arrangements while others are accepting fully capitated payments for the populations they serve. Several hospitals are directly offering health insurance products. Hospitals operating as ACOs will face challenges that include a potential decrease in inpatient volumes as care is moved toward the outpatient setting. Other issues they must address include further alignment with physicians, choosing and adopting advanced health information technology, and focusing on quality reporting and quality improvement. Successfully managing a population will require significant administrative investments, strong leadership, close work with physicians and the development of new skill sets to manage risk at the organizational and individual levels. Large health care systems, stand-alone hospitals and integrated delivery systems all have entered into ACO contracts and have seen promising results. Adoption of an ACO model requires substantive changes for hospitals but also represents an opportunity to improve the delivery of care.