State of the Industry 2011: Accountable Care Organizations

Provider groups are on task to create accountable care organizations (ACOs), and many observers believe they will change the delivery of healthcare in the next decade-although the degree of ACO impact is still greatly debated.

According to Chet Speed, VP, public policy for the American Medical Group Assn. (AMGA), ACOs' greatest potential is to shift the fragmented delivery system toward integration.

However, properly aligned incentives are essential to the success of ACOs. Ideally, it should ease providers away from fee for service.

However, Speed says that if the reimbursement formula is properly crafted, it will generate participation. In addition, there may be some interested parties who will wait until the ACO program has gone through a cycle of experience before joining.

"Over time, it seems likely that the model will evolve into one that employs alternative reimbursement mechanisms-such as partial capitation and bundled payments-and more completely rewards clinical outcomes successes," he says.

According to Speed, the private industry might determine the pathway to make ACOs work-ahead of Medicare. Payers will take advantage of the opportunities to hold providers more accountable for outcomes and quality, shifting a certain amount of financial risk onto the providers.