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Accountable Care Organizations Serve Nearly 10 Percent Of Americans, Are Poised To Present Competitive Challenge To Traditional Medicine

Almost 10 percent of U.S. patients receive their healthcare from an accountable care organization (ACO), and almost half live in areas served by at least one ACO, according to a new study from Oliver Wyman. This means that ACOs, little known in the United States as recently as two years ago, now have a substantial presence and are poised to offer a competitive threat to traditional fee-for-service medicine.

“There’s a common impression that ACOs play a minuscule role in American healthcare,” says Niyum Gandhi, one of the authors of the study. “But when you go out and actually count what’s on the ground, you realize that they’re already achieving critical mass.”

There is no single, universal definition for ACOs. In its census, Oliver Wyman counted not just participants in Medicare’s various ACO programs, but also commercial ACOs and healthcare delivery organizations that apply some other name to themselves but follow the basic elements of the accountable care organization: They are healthcare providers that take responsibility for the full healthcare needs of a defined population, receiving savings payments based on cost savings and quality.

The ACA directed Medicare to create ACO programs – today there are 150 Medicare ACOs, and the number is expected to more than double in January, when Medicare announces the next class of participants in its Shared Savings Program. Because it is difficult to operate a single organization under a fee-for-service and an ACO model at the same time, most participants in Medicare ACO programs eventually shift their non-Medicare patients to ACO models as well.

A total of 25 to 31 million U.S. patients currently receive their care through ACOs. They include:

  • 2.4 million patients in Medicare ACO programs
  • 15 million non-Medicare patients in Medicare-oriented ACOs
  • 8 to 14 million patients in non-Medicare ACOs

Because Medicare’s ACO programs were designed to create a care delivery model that could compete with fee-for-service, the Oliver Wyman study analyzed how many people lived in a locale served by at least one ACO. The astonishing answer: 45 percent of Americans. And there are 19 states in which more than half of the population live in an area served by at least one ACO.

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