Accountable Care Organization’s Case Study

Topic: Business Analysis
Words: 1488 Pages: 5


Over the years, the participation of healthcare providers in accountable care organizations (ACOs) has increased significantly. As a result, there is a high proliferation of ACOs as the healthcare sector seeks to shift to value-based care reimbursement practices. A study by the American Medical Association indicates that the number of healthcare institutions involved in Medicare ACOs has risen from 28.6% in 2014 to 36.7% in 2020 (O’Reilly, 2021). This is because the providers are realizing quality improvement objectives, and decreasing the costs has become integral to the provision of medical services. Thus, focusing on quality over the volume of care has increased the number of patients being served by ACO providers today. The government’s move to establish an ACO for patients eligible for Medicare will enable hospitals and other private providers in the community to share the benefits gained from this program.

The Decision on Whether to Accept the Government’s Offer

As the chief executive officer (CEO), there are various factors that the organization needs to do before deciding whether to accept the federal government’s offer. For example, reading the contract is critical because it can help influence the decision to join this ACO. A contract’s fine print may provide insights into the level of autonomy and methods of sharing financial rewards and incentives. As a leader, it will be imperative to pay careful attention to the contractual language associated with repayment mechanisms (American Medical Association [AMA], 2019). In this case, if the terms are favorable, the organization will consider the government offer. Looking at the obligations that hold the ACO responsible for shared losses will be essential. In addition, it will be crucial to determine if there are clauses that require the hospital to fairly share a huge percentage of liabilities incurred under the program. In this regard, a contract that calls for equal contributions from every participant may not be favorable, especially when the ACO involves several small practices and a single large entity.

For providers, operating under ACOs can contribute to substantial financial rewards. However, assessing the risks associated with accepting the government offer is important. If there is a high possibility of the hospital losing money if the ACO fails to realize cost-savings and quality requirements, the institution may reconsider joining the network. Similarly, evaluating the costs of setting up an ACO is critical because this factor can determine whether an institution, particularly small practices, can join (AMA, 2019). Supposing the hospital does not have enough digital infrastructure, it will analyze whether it has the resources to invest in additional tools to support the ACO.

Whether to Lead the ACO or Just Be Part of It

There are two smaller healthcare institutions, several doctors, and other providers working in private practice in the community. Therefore, being the only large technology-intensive hospital in the area, it will be imperative to lead the ACO rather than just being part of it (Knickman & Kovner, 2015). Research shows inadequate capital to establish effective information technology systems is the main deterrent for small and private practices participating in ACOs (Wilson et al., 2020). Although these entities may qualify to join such programs independently or with other providers, some may not have adequate capital to develop the needed digital infrastructure. This is necessary for coordinating care and is one of the primary goals of this Medicare Shared Savings Program (MSSP) or ACO. Its basic tenet is linking multidisciplinary teams and coordinating their efforts to provide better patient care. In this case, a robust set-up of health information technology facilitates data sharing and communication among all the participants. Since the ACOs will be comprised of small and larger practices, it will be vital to lead them and offer the required technical assistance to restructure their practices to be successful.

The Argument for Accepting the Federal Offer

ACOs will substantially change how healthcare services are offered and how providers in the community are reimbursed. Accepting the offer will be the better option because this will ensure that each patient receives quality care on time while working to eliminate unnecessary service duplication (Li et al., 2021). If all providers in the community operate under an ACO, it will help integrate healthcare services and improve elderly clients’ outcomes. For example, with the emphasis on care coordination, hospitals will easily check to see which tests or services have previously been performed for a patient and only order necessary procedures, thus reducing wastage.

By focusing on the value of the outcome instead of the number of services offered, ACO also will help deliver comprehensive care through an interdisciplinary effort. This is because when the three hospitals in the community join an ACO, it will provide access to more choices through enhanced team-based care and greater benefits, such as care planning liaisons (Li et al., 2021). This coordinated approach will be vital in supporting Medicare patients with multiple conditions in the community.

If all providers in the community operate under an ACO, there will be an improved exchange of data and communication across the care continuum. Since one of the providers is a technology-intensive entity, its infrastructure will facilitate health information exchanges, allowing hospitals in the network to communicate more efficiently. Therefore, joining ACO will enhance data exchange and make care coordination for each patient easier. Thus, the argument for accepting the government offer is that ACO will give the small providers in the community an opportunity to access vast resources and meet specific quality performance benchmarks. In addition, this MSSP will help these providers move away from traditional fee-for-service reimbursement, which often provides very little or no reward for delivering value-based care. In essence, all practitioners will get paid more for keeping their clients healthy and out of the hospital.

How to Coordinate With Other Local Providers When Forming an ACO

Suppose all the parties were to proceed and join an ACO; as the CEO of a large organization, it would be essential to coordinate the effort for all participating clinicians and facilities. This may entail deliberately organizing patient care activities to realize and share various financial incentives based on performance. Additionally, it would be vital to ensure that all those concerned with Medicare patient care adopt information technology automation to provide effective and safer services. Integrating all healthcare organizations under the same network would ensure they reach out to all older adults who need healthcare services. Similarly, the health information system would be crucial in keeping track of this population more efficiently and help in coordinating with other providers. In this case, care synchronization may be vital in making the ACO more successful. When the small providers with less technology-based capability are not provided with the necessary technical assistance, they may not be more efficient partners, and joining ACO may not improve the service they provide.

All three hospitals and other local private providers may have to adjust their established practices to become more focused on quality and cost savings to become part of the ACO. Hence, it would be necessary to organize with ACO participants to change their staffing, clinicians’ workflow, and roles, which may help improve cross-network scheduling and reduce patient cancellations. This is because MSSP is a value-based payment system, rather than traditional payment systems based on the volume of patients attended to daily. Therefore, synchronizing processes and systems are essential because ACO can be challenging for physicians and facilities whose practices are designed around the fee-for-service option.

How to Change the Way Care is Organized in the Community

Changing how care is currently organized in the community will involve shifting to value-based care reimbursement practices. This will stop fee-for-service physicians and care facilities from ordering unnecessary procedures and tests to generate more income, which denies some people basic care. As a result, this will enable all healthcare entities to adopt effective practices by improving care quality and reducing expenses. In addition, it will be crucial to ascertain that all components of patient care are integrated to improve access to the services, leading to fewer avoidable hospitalizations and readmissions. These changes will enable small providers and physicians operating under the ACO to meet the quality performance requirements needed for ACO and benefit from new financial incentives.


The participation of hospitals and physicians in ACOs has risen due to the high demand for value-based care reimbursement services. Consequently, most healthcare providers are focusing on realizing quality improvement objectives and decreasing healthcare costs. However, before institutions decide whether to accept the government’s offer to join an ACO, CEOs must pay attention to contractual details related to repayment mechanisms. On the other hand, leading the ACO will be important because smaller practices may require technical assistance to restructure their practices to be successful under this program. Joining ACO presents various benefits to organizations and patients because reimbursement is determined by quality rather than quantity. For this reason, all providers need to adjust or change their practices to realize the ACO’s main objective.


American Medical Association. (2019). Accountable care organizations: How to perform due diligence and evaluate contractual agreements. Web.

Knickman, J.R., & Kovner, A.R. (Eds.). (2015). Jonas and Kovner’s Health care delivery in the United States. Springer Publishing Company.

Li, M., Arifin, S., Devaraj, S., Madey, G., & Casetti, A. (2021). An exploratory study of the growth of the accountable care organization and its impact on physician groups’ profit: A complex adaptive system approach. Data Science and Management, 2, pp.28-40.

O’Reilly, K.B. (2021). Doctor participation in ACOs, medical homes grows amid pandemic. American Medical Association. Web.

Wilson, M., Guta, A., Waddell, K., Lavis, J., Reid, R., & Evans, C. (2020). The impacts of accountable care organizations on patient experience, health outcomes and costs: A rapid review. Journal of Health Services Research & Policy, 25(2), pp.130-138.

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