Understanding Accountable Care Organizations

Understanding Accountable Care Organizations


One of the main goals of the Affordable Care Act (ACA) was to ensure patients value the healthcare services they receive. The act intended to achieve value-based outcomes by incentivizing healthcare workers, hospitals, and doctors to deliver clinically efficient health care (Moy et al., 2022). High-quality clinical outcomes translated to generous financial and other occupationally-based compensation. Accountable Care Organizations are one of the strategies in this act that mitigates high-cost and unnecessary patient services, thus promoting cost-effectiveness.

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Accountable Care Organization and its impact on population health

Accountable care organizations (ACO) is an umbrella term referring to healthcare institutions and providers commonly working towards attaining a similar clinical goal: “efficient, high-quality patient care while utilizing a common clinical pathway that incorporates principles of treatment and therapeutic modalities in a multifaceted provider setting” (Moy et al., 2022). The key principles of the ACO include quality improvement and cost reduction warrants payments, and provider-led organizations offering quality primary care and accounting for costs per capita. Another principle is the integration of reliable and progressively sophisticated performance measurement tools to underscore improvement and boost confidence in quality care provision and cost reduction.

The integration of ACO has significantly impacted the population’s health over the years. The financial responsibility in ACO is solely on healthcare providers to improve patient care and minimize unnecessary healthcare costs while giving patients the freedom to choose their healthcare providers. According to Moy et al. (2022), the ACO model promotes improved clinical outcomes while controlling costs. Several surveys indicate increasingly positive outcomes since the institution of ACO, even though there is a considerable negative impact, such as the high cost of launching the program in several parts of the country. Kaufman et al. (2019) report quality improvement in processes and outcomes. For instance, processes such as “those included in adherence with guidelines for screening for colorectal or breast cancer, and follow-up testing for patients with diabetes or coronary artery disease” (Kaufman et al., 2019). The outcomes include the number of patients with diabetes who achieved their target blood pressure, hemoglobin A levels, or lipid levels. Kaufman et al. (2019) contend that bonuses for ACOs in both populations were significantly contingent on attaining quality healthcare.

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Additionally, studies report improvement in population health markers such as healthcare accessibility. According to Kaufman et al. (2022), some surveys also revealed that Medicare beneficiaries reported improved healthcare access, reduced hospital admissions, and fewer emergency department visits. Also, patients diagnosed with chronic conditions reported higher subjective ratings of overall care quality.

The concept of ‘bundled care and the risks that organizations that participate in bundled payment face

‘Bundled care’ implies that a single payment caters to patient care for a particular condition over a specific period. The bundled payments cover the patient care services during their stay in the hospital. According to Yee et al. (2020), bundled payment programs include post-acute care services. The payments affect post-acute providers, including rehabilitation hospitals, home healthcare, and long-term acute care. Strong evidence suggests that bundle payment is more effective than fee-for-service payments when controlling those for treating certain clinical conditions (Yee et al., 2020).

Reports suggest that organizations run the risk of reductions in spending and utilization by transitioning from fee-for-service to bundled payments (Agency for Healthcare Research and Quality, n.d.). These reports estimate a 10 percent reduction in spending. Also, approximately a 5 to 15 percent reduction in utilization of services is associated with bundled care. These services include a reduction in hospital stay or the use of certain services. Bundled care creates a financial incentive for healthcare providers to minimize the number of unnecessary services and costs of healthcare within the bundle. The act gives providers discretion that describes service allocation that allows patients to be treated effectively for every episode. The flexibility encourages providers to maximize resources to coordinate care for services that are otherwise not compensated in the fee-for-service payment. According to Agency for Healthcare Research and Quality (n.d.), if bundled care includes services offered by several providers in different settings, the providers have to generate a mechanism to manage the shared payment for a specific condition, thus promoting coordination.

Benefits of showing pricing for care

Transparency in healthcare prices has strengthened the healthcare system through its numerous benefits. First, as a form of cost control strategy, it promotes competition among providers for the market as consumers will opt for the most effective and least expensive healthcare. By empowering the consumer through cost transparency, policymakers are able to regulate the cost of healthcare (Nies & McEwen, 2018). Also, it builds trust with patients and increases the quality of customer service. Knowing the expected healthcare cost can help customers make better decisions early instead of delaying care due to the high cost most people believe to be associated with healthcare services.


Agency for Healthcare Research and Quality. (n.d.). Bundled Payments: Effects on healthcare Spending and Quality. Retrieved from https://effectivehealthcare.ahrq.gov/sites/default/files/related_files/bundled-payments-quality-effects_executive.pdf

Kaufman, B. G., Spivack, B. S., Stearns, S. C., Song, P. H., & O’Brien, E. C. (2019). Impact of accountable care organizations on utilization, care, and outcomes: a systematic review. Medical Care Research and Review76(3), 255-290. https://doi.org/10.1177/1077558717745916

Moy HP, Giardino AP, Varacallo M. (2022). Accountable Care Organization. StatPearls. Retrieved from: https://www.ncbi.nlm.nih.gov/books/NBK448136/

Nies, M. A., & McEwen, M. (2018). Community/Public health nursing. Elsevier Health Sciences.

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