Although much has been written about the potential merits of accountable care organizations (ACOs), little information exists to help providers understand the capabilities needed to create and participate in an effective model that can constrain health care costs while improving quality. In concept, an ACO is a shared savings arrangement under which a set of health care providers—principally physicians and hospitals—assume some financial risk for the cost and quality of care delivered to a defined population of patients. If, collectively, an ACO's participating providers are able to improve quality, enhance patients' care experience, and limit per capita costs, they are rewarded with a share of the savings.
Currently, there is a lack of data evaluating the "readiness" of providers to implement this complex delivery and payment model. To address this problem, a team led by Premier, a member-owned health care alliance, defined the requirements for a model ACO and on the basis of the model's requirements, developed a "capabilities framework" tool, designed to assess an organization's progress toward meeting the ACO model requirements. The model includes six core components: a patient-centered foundation (focused on greater patient involvement in clinical decisions), a health home (focused on essentially a primary care medical home), a high-value network (focused on a set of providers that deliver quality care at an efficient price), payer partner-ship (focused on ACO providers working with health care payers to create financial incentives consistent with providing high-value care), population health data management (focused on collecting, analyzing, and reporting health services data covering the ACO's patient population), and ACO leadership (focused on systematic ACO governance and administration). Under the team-developed assessment framework, a set of "capabilities" consisting of "operating activities" is defined for each core component to measure an organization's progress toward the component's full implementation.
Premier used the capabilities framework to evaluate 59 organizations operating 88 distinct hospitals of various sizes, characteristics, and regional locations between August 2010 and June 2011. All assessed organizations were members of the Premier Partnership for Care Transformation (PACT) Readiness Collaborative, which was launched in June of 2010 to help organizations transition to accountable care. The assessments provided insight into the overall state of ACO readiness. Given that these 59 organizations were predisposed to becoming ACOs by virtue of their joining the collaborative, it was surprising to find at the outset of the collaborative that the level of readiness was modest. No organization achieved full implementation of any core component, and it was common to find organiza-tions that had not undertaken any of the activities associated with one or more of the framework's prescribed capabilities.
Among the assessed organizations, those that appeared most ready to form an ACO were strongly patient-centered and had a focus on building the capacity to deliver advanced primary care. Characteristics associated with greater ACO maturity included full or partial ownership of a health plan, an existing collaboration with other health systems in the community, and positive relationships with providers in the market.
Organizations that were further along the development of the accountable care model generally had existing risk-based contracts with payers, including bundled payments or pay-for-performance arrangements. Outside these forays into shared, risk-based contracting, few assessed organizations had developed any sort of partnerships with commercial or government payers, and most reported poorly developed relation-ships with their payers.
Based on our analysis of qualitative data collected from on-site interviews, we found ACO readiness to be associated with the availability of capital for investment in requisite infrastructure and financial confidence to shift to a new reimbursement model, the strength of clinical integration, the sophistication of the primary care base, and the relationship between providers, including the hospital and community physicians. In addition, "softer" elements relating to organizational culture, change management, and leadership appeared to be important to ACO readiness.
Development of underlying information technology was found to be another element necessary for accountable care. This technology goes beyond electronic health records and health information exchanges and enables the integration of disparate data, analysis of data across a patient population, stratification of financial and clinical risk in the population, and measurement of the impact of targeted interventions.
The varying patterns of developed capabilities revealed in the assessments suggest that no one path toward ACO development is definitive or is a guarantee of success. Additional study of organizations further along in ACO development is needed.