Perhaps because they don’t hang a sign out front, they aren’t located in one place, and they are (in a sense) virtual, accountable-care organizations (ACOs) have quietly blanketed nearly half the nation, according to a report¹ from the management-consulting company Oliver Wyman. In an attempt to identify all ACOs currently operating today, the authors found, to their surprise, that more than 40% of the US population lives in primary-care service areas with at least one ACO (following the announcement in January 2013 by the DHHS of 106 new ACOs, the authors recalculated the percentage of the population living in markets with at least one ACO to be 52%). For the purposes of the census, an ACO was defined as a group of providers participating in a value-based care-delivery and reimbursement model. Providers participating in bundled pilots were not included because they are not population oriented; neither were providers simply receiving pay for performance or care-coordination payments (because they were considered insufficiently value based). Only providers with value-based shared-savings or -risk arrangements for the total cost of care for one or more sets of patients were counted. In the report, the authors estimated that 25 to 31 million US residents (or about 10%) received care through ACOs. Following the recent announcement, that number was revised upward to between 37 and 43 million (or about 13%) and includes four million patients in 260 Medicare ACOs: six Physician Group Practice Transition Demonstration organizations, 32 Pioneer ACOs, 27 initial applicants for the Medicare Shared Savings Program (MSSP) announced in April 2012, 89 second-round MSSP participants announced in July, and 106 new MSSP participants (half of them physician-led organizations) added in January 2013. At least 15 million more non-Medicare patients were being treated by the 154 ACOs counted in 2012, and an additional eight to 14 million patients of non-Medicare ACOs were contracting with private payors. The authors estimated that there were approximately 150 non-Medicare ACOs providing care. The authors remark on the speed with which ACOs have reached this milestone, but their bigger point is this: 13% of the population is just a fraction of those potentially affected by these multiprovider-network ACOs. They discovered that 52% of the population lives in primary-care service areas having at least one ACO (see figure), including the 106 announced in January, and 28% of it lives in areas served by two or more ACOs.

Figure. More than half of the US population lives in primary-care service areas with at least one accountable-care organization.¹

The past is littered, however, with unfulfilled potential, and it remains to be seen whether ACOs can improve quality and reduce the cost of care in the United States. The authors point out that just 89 of the government-approved ACOs are assuming upside and downside risk for the cost and quality of services provided to patients under their care. Early standouts in this experiment (as cited by the authors) are the Blue Cross Blue Shield of Massachusetts Alternative Quality contract (which achieved 1.9% savings in its first year) and the ACO developed by Blue Shield of California, Dignity Health, and Hill Physicians (which delivered no premium increase to members of the California Public Employees’ Retirement System in the ACO’s first year). It is the contention of the authors that the standout ACOs are the game changers, the models to watch, and the ones to emulate. “They will change the rules of the game in the regions where they operate, leading purchasers to expect lower costs, higher quality, and greater patient satisfaction,” they write. “As that happens, there will be a race to adopt the best models. Providers that fail to do so—or that commit half-heartedly to real change—will stand no chance.” What are the factors that will differentiate the game changers from the also-rans? The authors offer these characteristics: • clinical transformation is treated as an organizational priority; • the accountable care is more important than the organization, as the organization puts aside parochial interest and shifts care to settings of less-acute care; • patients are at the center in the shift away from body-part medicine and toward a focus on overall health needs; and • physicians and other caregivers are engaged and compensated in a new way that supports patient-centered (not physician-centered) care. The advantage lies with those first to the party, as early adopters will have the opportunity to partner with payors—and, therefore, to shape the model. Payors, the authors strongly suggest, will need to step up to the plate and help with capital and other partnership responsibilities.