Accountable Care Organizations: Early Results and Future Challenges

Within the ACO, a primary challenge is dividing up risks and rewards among constituent providers. How much shared savings are given to the hospital, to primary care physicians, or to specialists? What share should each specialty receive? What about shared losses, should spending exceed the target? In a two-sided ACO contract, these questions are particularly salient as global budgets change the business model for providers. Revenue centers under fee-for-service become cost centers. Organizations are confronted with difficult tradeoffs. The ability of providers across specialties to find common ground will be crucial, and leadership from providers will be key [45].Physicians have established themselves as leaders of the majority of ACOs today [46].It remains to be seen whether these organizations can keep providers together through the tradeoffs.

Patient trust in the ACO model has yet to be established. The managed care backlash of the 1990s suggests that patient buy-in will be crucial for the sustainability of ACOs. ACOs can have similarities to the HMO that traditionally produce negative associations, including downside risk, gatekeeping, or managed care techniques. To earn patients’ trust, ACOs will need to prove their value, such as through delivering better preventive care, less expensive care, more holistic care through stronger teams of providers, or smoother transitions of care across settings. The task of primary care medical homes to provide patient-centered care and coordinate across specialists effectively will be crucial. While today’s ACOs may be better positioned because of risk sharing, quality bonuses, risk adjustment, electronic medical records, or other innovations, the patient’s experience may ultimately be the arbiter.

Broader Challenges

While clinical integration is a central tenet of ACOs, consolidation between providers is simultaneously a chief concern for policymakers. Consolidation generally reduces competition and drives up prices, which is at odds with the goals of cost containment [47,48].Across the nation, physicians are consolidating with hospitals and health systems at an increasing rate, with recent surveys reporting that the proportion of independent physicians has steadily declined to below 50% [49–52].Increasing the number of covered lives is a dominant growth strategy under risk contracts, and more covered lives also increases an ACO’s bargaining power during acquisitions of specialist practices, whose referrals are better protected by inclusion in the provider network. As this trend continues, its effect on commercial prices will likely be scrutinized [53,54].

The ACO paradigm may also have significant effects on the physician labor market. Over the past 4 decades, the rate of physician specialization has grown dramatically [55].Fee-for-service incentives were aligned with specialization, but a rapid transition to alternative payment systems may disrupt the more gradually evolving physician labor market. Most medical school graduates today choose to specialize, as do most graduates of general medicine training programs [56,57],yet it is unclear to what degree the demand for specialists will continue to grow in the accountable care era. Specialty services tend to be of higher cost than generalist services. In some situations, high-cost services are more likely to be of lower value [58–60].Yet having specialists allows an organization to integrate services across the continuum of care, for which they are now financially responsible. As a new generation of specialists prepares to enter practice, whether the health care system will be able to support them and fulfill their expectations about their practice environment may be in question.