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Accountable Care Organizations (ACOs) - Background

Posted by Health Entrepreneur 02/22/2016

Despite the fact that U.S. provides its citizens the world-class care, with a contribution of 17.2% of its GDP into the healthcare (as per 2014), the outcome of the services provided is not effective. Moreover, the U.S. healthcare expenditure is more than that spent by any country. In an attempt to reduce the cost burden of the patients, and make it more patient-centric, the health-policy experts have recommended the establishment of Accountable care organizations (ACOs). These organizations work on the principle of population health management (PHM), which gives incentives to the providers for keeping them healthy.

What is an ACO?

Accountable care organizations (ACO) are healthcare organizations comprise  a set of healthcare providers such as physicians, specialists, and hospitals that aim to provide quality and cost effective care to the patient.

The approach of Accountable Care Organization (ACOs) came into existence with an intent to decrease the healthcare costs and improve the quality of care, thereby, decreasing the cost burden of the patients. ACOs are liable to render justification for the cost and quality of the healthcare services provided to the patients.

According to the Affordable Care Act, they can be established with the support of any type of provider organization; either with the private payers such as private insurances/ employer-purchased insurance or the government organizations such as Centers for Medicare and Medicaid Services (CMS). The providers offer financial support to the ACOs, and encourage them to mitigate the patients’ concerns while giving them the freedom to select the medical services required.

Despite of the differences in the type of provider organizations, the ACOs are eligible to avail incentives from the providers.

 

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