ACO Growth Patterns

More than 324 accountable care organizations have formed since the Patient Protection and Affordable Care Act popularized the care delivery model in 2010.

However, the PPACA has not been the only driver of ACO formation. "This isn't just a public policy movement or a response to the health reform bill of 2010," says Andrew Croshaw, managing director of Leavitt Partners, a healthcare intelligence company. "This is being invigorated by the economic issues facing the country."

Care providers are actively seeking ACO partnerships with payors for those economic reasons. "We think that the providers see their fee-for-service payments coming under jeopardy and recognize that the payment system has to change," Mr. Croshaw explains.

Further, about half of all of the country's ACOs have only private contracts, and are not involved at all with a government payor. "What we found to be compelling is that the private sector is very active here," says Mr. Croshaw. "They are actively trying to cultivate these types of relationships."

A recent report, co-authored by Leavitt Partners and KLAS Research and involving data from more than 300 ACOs and interviews with leaders from 57 of them, provides in-depth information on the formation of ACOs and national trends for the new healthcare delivery model. Here, Mr. Croshaw goes deeper into the formation patterns of ACOs and lays out three categories of the organizations.

Uneven growth

Even though the growth of ACOs has been happening quickly, it has not been happening evenly across the country. For example, out of the country's 306 hospital referral regions, three of them have 10 ACOs. On the other hand, one third of the regions have no ACOs, according to the study.

Areas like southern California, Boston and Minnesota have seen tremendous ACO growth, while New York City and Chicago have not seen as much growth. "[Growth] is not directly correlated with population growth or density," says Mr. Croshaw.

While Leavitt Partners is still figuring out why ACOs have grown faster in some parts of the country than others, Mr. Croshaw does have one theory. "We believe that ACOs beget competition," he says. "It's reasonable to assume that if you're a provider and you see an ACO in your area, it becomes a threat…and stimulates more ACOs in that market."

Three categories

As a result of their research, Leavitt Partners identified three main, broad categories of ACOs: mainstream, forerunners and toe-dippers.

Mainstream. The majority, about 65 percent of ACOs, are what Leavitt and KLAS classified as "mainstream." These ACOs embrace accountable care energetically and are part of Medicare's Shared Savings Program and/or have formal contractual relationships with commercial payors.

Forerunners. These are organizations that functioned as ACOs before the term existed. These ACOs practiced population health management and accountable care earlier than their mainstream counterparts. According to the report, about 15 percent of ACOs can be classified as being forerunners.

Toe-dippers. About 20 percent of ACOs are fall in this category. "These organizations have seen the writing on the wall and want to organize to provide accountable care, but they're early in terms of taking on risk-based contracts," says Mr. Croshaw. This means their clinical information systems are not as developed, and they may not have the primary care providers necessary to fully mange the health of a population. "They are in the movement, just the early stages of it," he says.

These organizations can move into the mainstream category as their practices develop and advance.

More Articles on ACOs:

6 Early ACO Mistakes to Avoid
Survey: 1% of Healthcare Communicators Feel Prepared to Explain ACOs to Patients
Include Your Advancement Director in ACO Planning

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