Accountable Care Organization


Assignment Guidelines:   

  1. Healthcare Trend/Issue Analysis & Synthesis Paper

 Topic – Accountable Care Organizations

  • Investigate ‘Accountable Care Organizations’ through print and electronic media.

 Review data that would help describe and substantiate the context of the trend/issue and the variables that affect the trend/issue. Project what you believe will occur in the coming years regarding the chosen trend/issue. Analyze the trend/issue with specific focus on the following levers of change impact the trend/issue:

  • historical background of the trend
    • contextual  – socio/economic/financial/political environments
    • technology and scientific advancements
    • health care providers/ health care delivery; regulatory as applicable

Be specific and use current web, blog, and/or traditional print material (newspapers, academic journals; magazines such as Time or US News and World Report) to support your position. The criteria are as follows:

  • Lever Overviews – Description of the trend/issue and contextual issues as related to the levers. Supporting evidence is provided to substantiate your assertions. Use a minimum of five sources for each lever overview section.
    • The entire lever overviews section should total 6 pages minimum.
    •  Historical 
    • Contextual (socio/economic/financial/political environments)
    • Technology/scientific
    • Health care providers/health care delivery; regulatory as applicable
    • Synthesis Section – The purpose of this section is to synthesize a position to ACOs (which influence my role as a nurse leader. The synthesis section should total 4pages  
    • Based on the overviews you developed, analyze how levers of change affect the selected trend/issue.  
    • Based on the overviews you developed, predict/project and discuss three scenarios your trend/issue will take. Use terminology from Health and Healthcare 2010: The forecast, the challenge “Stormy Weather, The Long and Winding Road, and Sunny Side of the Street.”   
    • Discuss how this trend impacts you or will impact you as a nurse leader; AND vice versa – how you as a nurse leader can impact this trend. Include consideration of this trend/issue from a Christian/Ethical worldview.
    • The paper is to be written in APA format and your writing should be of high professional quality.
    • Length: 10 pages (exclusive of cover page and reference page; see above for recommended length of each section).


Name of Student:

Institutional Affiliation:


Introduction. 2

Historical Background of ACOs. 2

Contextual Factors: Socioeconomic, Financial, and Political Environments. 4

Technology and Scientific Advancements. 6

Health Care Providers / Health Care Delivery and Regulatory Aspects. 7

Synthesis of How My Role as a Nurse Leader can be Influenced by (and Influence) ACOs. 8

Conclusion. 11

References. 12


            The idea of accountable care organization (ACO) was first used by Elliot Fisher in 006 as part of a wide-reaching national debate on how to improve the cost and quality of care in the United States. Subsequently, the idea was included in the Affordable Care Act of 2010, thereby triggering a process of reorienting healthcare delivery. The aim of this paper is to analyze the various levers of change that impact ACOs. On this basis, the paper projects on what will happen in the coming years regarding ACOs. Finally, the paper synthesizes the discussion on the levers of change to determine how my role as a nurse leader will change. Conversely, a discussion is presented on how I can use my position as a leader as well as my ethical and Christian values to impact this trend.


Historical Background of ACOs

            The concept of accountable care organizations (ACOs) was coined in 2006 during a public discussion on Medicare payments (Fuchs & Schaeffer, 2012). The coinage of the term is attributed to Dr. Elliot Fisher, a director at Dartmouth Medical School. The concept appeared for the first time in seminal articles in December of that year. Since then, the term has been used in many discussions on healthcare reforms. In 2009, it was used in draft healthcare reform bills that culminated in the Affordable Care Act that President Obama signed into law in 2010. This law contains a provision for the establishment of an ACO not more than two years after enactment. This means that the first ACOs are going to be those that have been authorized by the Affordable Care Act, which requires the establishment of ACOs by Medicare.

            In terms of definition, ACO is defined in a manner that closely resembles that of HMO (health maintenance organization), which was coined in 1970 (, 2010). Like HMO, ACO emphasizes on cost-cutting. Similarly, the ACO concept is as vague as HMO, and definitions vary from person to person. Nevertheless, a common definition is that the ACO is an entity that is held accountable for the provision of comprehensive health services to a specified population. Under this concept, accountability for cost is being pursued by shifting some of the insurance risk to healthcare providers while accountability for quality is being promoted by subjecting healthcare providers to report cards (Addicott & Shortell, 2014).

            Because of the vagueness of the ACO concept, it has been difficult to explain it, even by its pioneer proponents such as Elliot Fisher (Mehta & Macklis, 2013). In a 2010 article that Fisher co-authored, ACO is defined as an entity consisting of providers who will be jointly held accountable for the achievement of measured quality improvements and reductions in the growth rate of healthcare spending (Fisher & Shortell, 2010). This definition emphasizes improvements in cost and quality, and that ACOs must at least have limited accountability for the achievement of these improvements during the process of caring for a specific population of patients.

            The process of experimenting with ACO is underway. The arguments that have been made by proponents of ACO are not new; they are rooted in a decades-long process of building an effective managed care system. For instance, some of the arguments underpinning the idea were still raised during the establishment of the HMO concept four decades ago. After Fisher coined the term in 2006, Robert Berenson, chairman of the commission for payment issues at Medicare, supported its use in discourse on how to improve healthcare value by addressing on cost and quality issues. In the discussion that necessitated the use of the term ACO, Fisher had been mandated by a legal provision to suggest to Congress an alternative method through which doctors could be paid under Medicare as a replacement to the SGR (Sustainable Growth Rate). Consequently, five criteria were suggested, and they include good practice, type of service, physician outliers, service type, and geographical coverage. The idea was that imposing spending caps on small groups of doctors would bring about a higher level of efficiency than the SGR approach. In other words, Fisher proposed the integration of the healthcare system in such a way that patients would be assigned to doctors and doctors would in turn be assigned to hospitals.

Questions have been raised regarding the usefulness or integrity of such a healthcare system (Lowell & Bertko, 2010). This is because his testimony to Congress left some questions unanswered. For example, he did not explain the rationale for holding ACOs accountable for cost and quality when they lacked the power to force patients to stick by their respective ACO providers. He also failed to explain how the ACO concept would work if a substantial number of Medicare beneficiaries opted not to join the CO Fisher’s algorithm had assigned them. To solve these problems, a version of ACO that focuses on primary care as opposed to the hospital-oriented version was developed for adoption in the Affordable Care Act in 2009. The idea was supported because it provided prospects for getting rid of silos that had led to numerous care transitions, whereby patients were being churned from hospitals to acute care to nursing homes and back to hospitals. If a patient stuck to the ACO assigned to him, his doctor would never make a mistake of subjecting a patient to the same medical test twice because the patients’ history would be accessible to all doctors operating within an ACO. At the same time, there is also the underlying question of controversy that surrounded the passing in 2010 of the law that contains a provision on the formation of ACOs (, August 19, 2013).

Contextual Factors: Socioeconomic, Financial, and Political Environments

The socioeconomic environment in which the idea of ACO was mooted was one in which concerns were raised regarding equitability in access to healthcare regardless of one’s socioeconomic status. Many hospitals have opted out of ACOs because they are under growing pressure in regards to the issue of filling beds. Similarly, many ambulatory healthcare providers that were at the forefront of forming ACOs were reluctant to accept membership by hospitals based on the argument that they have historically been playing a critical role in widening the social-class divide (Pollack & Armstrong, 2011). Consequently, more than a half of the accountable care organizations in existence today do not include hospital participants. Similarly, few for-profit hospitals have started to participate in ACO programs. One way to explain this puzzling situation is that many hospital participants are cautious, and they want to see how early entrants fare before committing to the programs themselves.


As ACOs continue to take hold, a lot of focus is on efforts to track their medium- and long-term performance to determine whether adequate benefits will accrue to all patients regardless of their economic backgrounds (Fisher & Shortell, 2010). This is an important issue considering that people from poorer backgrounds tend to be more vulnerable to health care of poorer quality than their richer counterparts (Hester, Lewis & McKethan, 2010). On the face of it, patients from different walks of life seem to be getting better care under ACOs. The New York Times gives the example of Fannie Cline, a 69-year-old pensioner who explains how ACOs have enabled her to receive extra medical attention to address her condition: Type 2 diabetes. Prior to the introduction of ACOs, Cline’s condition could worsen to the point where it was necessary for her to be admitted in the hospital emergency rom.

As ACOs began to take effect, Cline started receiving calls from a nurse working with Advocate Health Care, a newly formed ACO. The nurse would enquire about her health, order meals to be delivered, schedule appointments, and provide advice on exercise and diet. This led to a drastic improvement in Cline’s health. That extra attention marks a departure from the traditional approach that was characterized by fee-for-service medicine. However, a major concern among experts is that the model is untested, and one cause of pessimism is that doctors’ practices may go out of business due to their inability to manage financial risks. The risk of bankruptcy cannot be overlooked because the model of care is both expensive and complicated, particularly in light of the requirement for ACOs to provide all the care that patients need in return for a monthly fixed fees and the hope of remaining with a profit. Many healthcare providers are also concerned about bureaucracy and high administrative costs.

Technology and Scientific Advancements

            For ACOs to succeed, they need to be anchored in the right technological and scientific advancements. The new approach comes at a time when healthcare has shifted towards technologically-connected collaboration. Healthcare providers operating under the ACO approach are increasingly facing the need to improve their technological tools to enable them to succeed in offering patient-centered care while at the same time delivering the best outcomes in terms of cost and quality (Fuchs & Schaeffer, 2012). The success of ACOs will depend on healthcare providers’ ability to install sophisticated technological and scientific tools to enable them to exchange complex medical information as well as advanced scientific advancements that can facilitate the effective measurement of cost and quality. Fortunately, data standardization has become the norm, meaning that a fairly high degree of interoperability can be achieved through health information exchanges and electronic health records (Lowell & Bertko, 2010).

            The use of EHRs (electronic health records) is particularly increasing at a rapid pace. It seems that within the next five years, it will be difficult to find a healthcare provider who does not participate in health information exchanges and use EHRs (Fisher, McClellan, Bertko & Lieberman, 2009). It will be easier to install and implement these technological processes due to the advent of internet technology and its various applications such as cloud computing and social media. This means that financial and clinical data is increasingly becoming readily available. Consequently, it will be easier for providers to achieve full clinical integration, conduct transparent analyses of cost drivers, and identify the appropriateness of specific disease management strategies to different patients. Despite these advances, stakeholders in the healthcare industry are yet to put in place the technological and scientific infrastructure that the ACO movement needs to be successful (Fisher & Shortell, 2010). For instance, some real clarity needs to be imparted to enhance the process of measuring quality and tying it to reimbursement (Devers & Berenson, 2009). Technological and scientific adjustments will also need to be made to accommodate payment reform such as the move towards bundled payments in which a group of healthcare providers split fees depending on the different episodes of care provided.

Health Care Providers / Health Care Delivery and Regulatory Aspects

            ACOs have already started having an impact on healthcare delivery across the United States. By November 2011, 10 percent of Americans had gained access to ACOs as more providers continued to embrace the concept as stipulated in the Affordable Care Act. This rapid uptake of the healthcare model constitutes an attempt by providers to reap the benefits that the Act promises them for working together to achieve improvement in quality. According to Time (May 31, 2011), ACO will take many forms, but will ultimately transform specific groups of hospitals, specialists, and primary care doctors an integral part of the same team.

            Many regulatory issues are likely to emerge as ACOs enter the implementation stage (Abramson, Berger & Brant-Zawadzki, 2012; Allen et al., 2011; MacKinney, Mueller & McBride, 2011). One of them is the change of tact in which ACOs will measure processes rather than outcomes. Whereas measures such as doctors who are using electronic records and subscriptions capture important aspects of quality in the provision of medical care, they do not measure which patients actually got healthier. Another regulatory handicap is that independent medical practices serving poor communities are likely to be left out in the rush to benefit from cost savings being provided by Medicare. In the contrary, the ACO model, with its complexity and multiplicity of regulations, may increase their financial obligations, thereby putting them at a competitive disadvantage compared to their counterparts that serve wealthier patients (The New York Times, March 12, 2012). Nonetheless, ACOs seem poised to address the fundamental problem that has traditionally been neglected by the fee-for-service system: providing financial incentives for hospitals to keep patients from falling ill again.

Synthesis of How My Role as a Nurse Leader can be Influenced by (and Influence) ACOs

The aforementioned levers of change affect ACOs in numerous ways. To begin with, the historical background of ACOs will have a significant influence on the process of experimenting with ACOs. Their association with HMOs is likely to trigger negative perceptions, although this situation may be remedied by the understanding that ACOs are here to provide solutions to the problems that hindered the effectiveness of HMOs for decades. The ACO movement is in essence the new HMO as far as managed care is concerned. It somewhat helps matters to note that many Americans think that their health issues are still being addressed within the HMO framework, only that they have started seeing some improvements in the way doctors follow up on the progress of their health conditions. Once they begin noticing some positive changes, it becomes easier to explain to them that those improvements have occurred because their providers are now operating under a specified accountable care organization. Moreover, it is fortunate that people who believe in managed care still insist that the current healthcare crisis in the United States can best be addressed through a HMO-like program.

In terms of socioeconomic, financial, and political contexts, a major challenge relates to the bridging of the social-class divide in the delivery of healthcare services. Individuals from poor background may be locked out of ACO benefits if hospitals that give them access to affordable care are not given financial incentives to join ACOs. This is likely to create a situation in which ACO programs are the reserve of for-profit hospitals, which in most cases target richer members of society. Some providers are likely to remain cautious of the whole of committing to programs involving complex regulatory procedures. Additionally, some hospitals may lack the financial strength needed to ensure smooth integration into an ACO. Moreover, hospitals situations in areas where political dynamics have triggered opposition to the implementation of the Affordable Care Act may opt out of ACOs.

Regarding technology and scientific advancements, the fairly high degree of interoperability of EHRs and health information exchanges will greatly contribute to the success of ACOs. Hospitals that are yet to embrace these systems are expected to face few hurdles in carrying out the upgrade process. However, providers will encounter greater challenges in their attempts to put in place the technological and scientific infrastructure required for successful measuring of quality and tying it to reimbursement. Specifically, the issue of bundled payments requires new technological and scientific applications that are yet to be adopted in most healthcare facilities.

In terms of the last lever of change, which encompasses healthcare providers, healthcare delivery, and regulatory aspects, the most notable force is the fact that ACOs measure processes rather than outcomes. This means that many hospitals especially isolated/independent ones that lack financial and regulatory capacity are reluctant to join an ACO. Another problem is that some providers are opposed to the argument that the healthcare crisis in the United States is as a result of the fee-for-service system. By extension, they oppose the idea of shifting insurance risk to medical professionals.

Based on this analysis, three scenarios will unfold. The first one is the widening of the social-class divide in regards to access to healthcare. Second, a realignment of the delivery of care by providers will occur, with financial and regulatory requirements pushing many of them out of business. Regulatory efficiency by the federal government may prevent the occurrence of a situation where hospitals serving richer citizens have an edge over independent/isolated hospitals in terms of access to benefits accruing due to ACO membership. Thirdly, many Americans will embrace ACOs because they address the issues that HMOs never resolved during their four-decade existence. The only difference is that this time round, focus will be on how to bridge the social-gap divide such that all Americans, both rich and poor, derive the same benefits from the ACO movement.


As a nurse leader, the adoption of ACOs will affect the way I perform my day-to-day professional duties and responsibilities. For example, the requirement that doctors operating within an ACO share patients’ medical information will translate into a change of approach in the way I discuss health issues with my patients. Specifically, I expect that many of them will be surprised that I already have access to their medical history. In this case, I will be compelled to revisit issues of confidentiality and privacy quite often in order to address concerns about the degree of accessibility of medical information by different providers. My work as a nurse leader will also be affected by the shift towards measuring processes and providing no avenues for measuring outcomes will also affect my mode of operation. For example, like other nurses, I will be interacting with patients more often in order to keep track of their health conditions and offer appropriate medical advice whenever appropriate. From an ethical and Christian viewpoint, it will be my responsibility to record the outcomes of those processes even if no regulatory requirement has been imposed under the Affordable Care Act. Based on the same argument, I intend to forego the financial incentives of working in for-profit hospitals that target affluent communities and instead seek employment in isolated/independent hospitals working to help poor communities. In this exciting era of ACOs, I view this as an excellent way of contributing to the bridging of the social-class divide in terms of access to healthcare.


            The idea of innovative care organization (ACO) continues to be widely viewed as a revolutionary idea aimed at addressing cost and quality issues that are at the heart of the healthcare crisis in the United States. ACO programs were provided for in the Affordable Care Act 2010 with a view to address the shortcomings of HMO programs. This paper has examined four major levers of change for ACOs: historical background; contextual factors; technological and scientific advancements; and healthcare providers and delivery. These levers of change will have far-reaching consequences for the implementation of ACOs in future. For example, contextual factors such as the economic environment will lead to a social-class divide, which the federal government must address through regulatory measures or subsequent legislative efforts.


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