ACOs in California: 10 Lessons for the National Debate on Delivery System Reform

The following is an excerpt from a white paper by James C. Robinson and Emma L. Dolan, written for the Integrated Healthcare Association ( To view the complete white paper, click here (pdf).

Accountable Care Organizations that bring together providers and reward them for controlling costs and improving quality are a major platform for delivery system reform ensconced in the Patient Protection and Affordable Care Act. California has 285 physician organizations with many of the characteristics described in the national debate, and its experiences with these organizations over the past thirty years, both positive and negative, offer insight into the challenges that Federal policymakers will face with ACO implementation.

Following are the 10 lessons on ACOs offered in the white paper. For more information and discussion around each lesson, download the complete white paper (pdf).

Lesson One: A variety of organizational structures are effective at delivering high quality coordinated care; at least as important to success as structure are an organization's capabilities, culture and infrastructure, as well as the alignment of goals between the organization and its individual physicians.

Lesson Two: In California, a range of relationships exist between physician organizations and hospitals. Alignment of incentives between physician organizations and hospitals offer important opportunities for performance improvementsacross the entire continuum of care.

Lesson Three: As a method of payment, capitation can be effective at encouraging coordinated care, but payment methods should vary across ACOs depending on an organization's ability to assume risk.

Lesson Four: Health plans acting in concert on payment methods and performance measurement helped facilitate the growth of California's provider organizations, and should also play an integral part in fostering ACO development nationally.

Lesson Five: ACOs are not a panacea for healthcare spending control.

Lesson Six: ACOs must be agnostic to insurance type; most provider organizations in California have focused on commercial, Medicare and Medicaid HMO plans for their patients, but for ACOs to be viable across the country, mechanisms must be found to encourage PPO and traditional Medicare and Medicaid patients to use their services.

Lesson Seven: Balancing patient choice with the desire to decrease costs and effectively coordinate care is difficult. California's experience underscores the challenge of promoting care coordination in an environment of unrestricted provider choice.

Lesson Eight: Regulation of the financial solvency of provider organizations is important to ensure market stability.

Lesson Nine: Consumer protections from capitated provider organizations need to be balanced, not overburdening.

Lesson Ten:
Special attention must be given to establishing ACOs in areas with social and economic challenges.

To view the complete white paper, "Accountable Care Organizations in California: Lessons for the National Debate on Delivery System Reform," click here (pdf).

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