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Physician Practices Joining Early ACOs Were Large and Capable, but Performance Was Modest

The Issue

By 2020, a projected 68 million people will be enrolled in an accountable care organization (ACO), a care model in which groups of doctors, hospitals, and other health care providers work together to coordinate care for patients. While ACOs seek to address rising health care costs and inconsistent quality of care, evidence of savings achieved is limited, and ACOs’ performance has varied widely. In the American Journal of Managed Care, Commonwealth Fund–supported researchers explore the characteristics of physician practices that intended to join Medicare ACO programs in 2012. With new Medicare-sponsored payment models expected to launch in 2019 — like the Merit-Based Incentive Payment System (MIPS) — such information can help physician leaders as they assess their practices’ readiness to take on financial risk and meet performance goals.

Even top-performing physician groups used only


of recommended care management, quality improvement, and health IT processes.


What the Study Found

  • Physician practices that intended to join a Medicare ACO program were more likely to have better care management capabilities, quality improvement processes, and health information technology functionality than those that did not.
  • ACO practices were more likely to have had experience with pay-for-performance models. They also tended to be hospital-owned, have a greater number of Medicare beneficiaries, and have more than 100 physicians.
  • There were no differences between practices intending to participate in an ACO and those not intending to participate with regard to patient demographic characteristics, illness severity, baseline Medicare spending per beneficiary, ambulatory care–sensitive admission rates, or 30-day unplanned hospital readmissions.

The Big Picture

Physician practices opting to join Medicare ACO programs in 2012 tended to be larger and more confident in their ability to manage their patients’ care effectively, contain costs, and improve quality. Even these early intending to join ACO participants, however, often failed to implement key challenges that can drive success — using no more than half of recommended processes for care management, health information technology, and quality improvement. With new Medicare payment models launching, many physician practices entering ACO contracts will likely need technical assistance to help catch up. Practices also may need to consider consolidating to gain greater access to resources and seeking partnerships with organizations that provide management and infrastructure support.

The Bottom Line

Physician practices that intended to join Medicare ACO programs in 2012 had greater capabilities to manage risk and succeed under a value-based payment model than practices that did not, but the performance of these ACOs has been modest.

Publication Details

Publication Date: October 24, 2018
Author: Stephen M. Shortell, Lawrence P. Casalino, Patricia P. Ramsay, Laurence C. Baker, Michael F. Pesko
Contact: Mary Mahon, Former Vice President, Public Information, The Commonwealth Fund

Stephen M. Shortell et al., “The Characteristics of Physician Practices Joining the Early ACOs: Looking Back to Look Forward,” American Journal of Managed Care 24, no. 10 (Oct. 2018): 294–99.


Blue Cross of California Distinguished Professor of Health Policy and Management, University of California, Berkeley, School of Public Health
Lawrence Casalino
Livingston Farrand Professor, Department of Healthcare Policy and Research, Weill Cornell Medical College