Since the mid-1990s, health systems and payors have tried various models for “shifting risk” to providers. The Accountable Care Organization term was introduced by the Affordable Care Act, and it now covers 400+ Medicare Shared Savings Plans and numerous entities focused on some form of “aligned” payments with non-governmental payors.
We believe that ACOs are not the end but rather a means to achieving strategic objectives, which in turn means that health systems should view ACOs from a strategic perspective, and not merely as a contracting tool. Thus, a health system should start with its strategy and strategic goals by population segment (commercial; Medicare; Medicaid; other), and then use that thinking to drive its “ACO strategy.” For example, if the health system wants to increase its commercial market share, then its commercial ACOs should be structured in ways that support that strategic objective. However, this relatively straight-forward objective is explicitly not addressed by most ACOs, since they (a) rely on attribution models and (b) lack provider-controlled pre-certification steerage tools, so that these arrangement usually merely serve to preserve current market share among competing health systems.