The Accountable Care Organization

The ambitious Patient Protection and Affordable Care Act (PPACA) is already changing the health care landscape. Beyond increasing access to medical care, the PPACA includes the premise that accountable care organizations (ACOs) can slow the growth of health care costs while improving the quality of care. As coordinated groups of health care providers, ACOs will benefit from Medicare’s new risk-sharing arrangements that reward providers for managing costs and achieving better outcomes. Commercial payers are already following suit, and we expect the trend to continue as payers include ACOs in their new reimbursement programs. Hospital executives and physicians must be listening: the number of recognized ACOs has grown from 32 pioneers in 2011 to more than 200 as of January 2013.

Consumer acceptance is critical to the success of the ACO model, in that the role of the consumer is massively elevated under the reform, particularly given the anticipated growth of individual business from insurance exchanges and Medicare Advantage.

But according to a recent consumer survey by The Boston Consulting Group, gaining this acceptance will be a challenge. For one thing, ACOs are poorly understood: 90 percent of the people we surveyed were completely unfamiliar with the concept. Other hurdles include convincing consumers that lower costs don’t equal lower quality, addressing concerns about privacy, and overcoming reluctance to give up trusted health-care providers.

Although payers and providers are rapidly developing the ACO capabilities and tool kits needed to execute the new model, few industry players have created strategies that will engage consumers and win their business.