Private Sector Accountable Care Organization Development: A Qualitative Study

Private sector accountable care organization development has been motivated by perceived opportunities to improve quality, efficiency, and population health, and the belief that payment reform is inevitable.
Published Online: March 17, 2017
Ann Scheck McAlearney, ScD; Brian Hilligoss, PhD; and Paula H. Song, PhD

Objectives: To explore accountable care organizations (ACOs) as they develop in the private sector, including their motivation for development, perspectives from consumers regarding these emerging ACOs, and the critical success factors associated with ACO development.

Study Design: Comprehensive organizational case studies of 4 full-risk private sector ACOs that included in-person interviews with providers and administrators and focus groups with local consumers.

Methods: Sixty-eight key informant interviews conducted during site visits, supplemented by document collection and telephone interviews, and 5 focus groups were held with 52 consumers associated with the study ACOs.  

Results: We found 3 main motivators for private sector ACO development: 1) opportunity to improve quality and efficiency, 2) potential to improve population health, and 3) belief that payment reform is inevitable. With respect to consumer perspectives, consumers were unaware they received care from an ACO. From the perspectives of ACO stakeholders, these ACOs noted that they prefer to focus on patients’ relationships with providers and typically do not emphasize the ACO name or entity. Critical success factors for private sector ACO development included provider engagement, strategic buy-in, prior experience managing risk, IT infrastructure, and leadership, all meant to shift the culture to a focus on value instead of volume. 

Conclusions: These organizations perceived that pursuing an accountable care strategy allowed them to respond to policy changes anticipated to impact the way healthcare is delivered and reimbursed. Increased understanding of factors that have been important for more mature private sector ACOs may help other healthcare organizations as they strive to enhance value and advance in their ACO journeys.

Am J Manag Care. 2017;23(3):151-158
Improving the understanding of factors that have been important for more mature accountable care organizations (ACOs) can help organizations that are developing and continuing to evolve as ACOs. Our study is among the first to explore private sector ACO development, and we found the following: 
  • An adequate information technology infrastructure enabling timely access to meaningful data was essential for ACOs to manage and monitor quality and outcomes. 
  • Consumers generally lacked knowledge of ACOs and were unaware they were part of an ACO. 
  • Physician engagement and strong organizational leadership to shift culture from a volume focus to a value focus were crucial to ACO development.
The introduction of the accountable care organization (ACO) as a form of healthcare delivery and payment system reform supported by the Affordable Care Act is hoped to improve quality of care and reduce healthcare costs by aligning the incentives of physicians, hospitals, and other clinicians and healthcare organizations.1-4 Coined in 2006 by Fisher et al,5 the ACO label has been defined as “groups of providers who are willing and able to take responsibility for improving the overall health status, care efficiency, and healthcare experience for a defined population.”6 

Although early adopters of the ACO model commonly operated under the CMS Medicare Shared Savings Program (MSSP) or the Pioneer ACO Program,7,8 recent market entrants have included ACOs in the private market.8 These private sector ACOs have goals similar to those of the MSSP and Pioneer models in that the contracts with payers include both cost and quality targets; however, they have more flexibility with respect to contract terms relative to Medicare ACOs.9 For example, private sector ACOs are able to develop multiple contracts with multiple payers to extend coverage across broader, commercially insured populations and those including children. In addition, private sector ACOs can have very different quality reporting requirements and financial relationships with, and incentives for, providers—within the boundaries of antitrust considerations—relative to Medicare ACOs.9-14

Early reports have suggested that provider groups decide to become ACOs for a variety of reasons, including the desire to save money and improve care,15-19 and due to a sense of inevitability about the direction of health reform.16,20,21 However, few studies to date have focused on private sector ACOs9,22—particularly those that bear downside risk—and none have asked both ACO stakeholders and consumers affiliated with these organizations about their perspectives. Because private sector ACOs are not bound by the federal regulations and reporting requirements of Medicare ACOs, they have the potential to develop quickly and for different reasons and in different environments than Medicare ACOs. We undertook this study to improve our understanding of ACO development and implementation in the private sector, which is one of the most rapidly growing sectors of the ACO market.23 Our research objective was to explore the rationale for private sector ACO development, the perspectives consumers had about these emerging ACOs, and the critical success factors interviewees associated with private sector ACO development.


Study Design

We conducted 4 comprehensive case studies of private sector ACOs that assumed full risk from different geographic regions of the United States. Unlike most studies that focus only on the perspectives of ACO providers and leaders, we also focused on the consumer perspective. We elected to use a multiple case study design24 because of the exploratory nature of our study and our desire to learn from multiple stakeholders to improve our understanding of a relatively new organizational form.25

Site Selection

We selected ACOs for study that both operated in the private sector and assumed financial risk for substantial portions of the populations they served. Organizations had to self-identify as an ACO and, consistent with common definitions of ACOs,13,26,27 they had to involve groups or networks of providers that assume responsibility for the cost and quality of care for defined populations, including some level of downside financial risk. We also maximized the variability of our sample to include ACOs that differed along several important dimensions, including structure (ie, physician-owned vs physician-hospital organizations), size, geography, and population (ie, pediatric vs general). Summary information about our 4 ACOs is included in Table 1.

Data Collection

We collected data through site visits during the spring and summer of 2013. Across the 4 sites, we held a total of 68 in-person or telephone key informant interviews. In addition, we held 5 focus groups comprising 52 consumers (Table 2). Our data collection process included a concomitant assessment of interview and focus group transcripts and discussion of preliminary findings to permit probing for new concepts and to ensure that we reached saturation in data collection consistent with standards for rigorous qualitative research.28

Site visits and key informant interviews. During 2- to 3-day visits, we conducted semi-structured interviews with ACO stakeholders from 4 main areas: 1) organizational leaders (eg, chief executive officer [CEO], chief operations officer, chief marketing officer); 2) administrators and staff members who could provide insight about the ACO decision making and development process (eg, informants from business development, strategic planning, finance, contracting, marketing, external affairs, information systems, quality and performance improvement); 3) administrators, staff members, and clinicians involved in ACO operations (eg, ACO administrator, contracts manager, practice manager, medical director); and 4) physicians affiliated with the ACO.

Interview guides and interview process. To ensure consistency in our data collection, we used 2 standard interview guides: 1 tailored for providers and 1 for administrators and staff. The interview guides consisted of multiple-question domains, including: 1) History and Context; 2) ACO Implementation; 3) Consumer Involvement; and 4) Critical Success Factors. These interview guides were tested in a pilot study of a different ACO to improve question clarity and refine the guides prior to our study site visits. Most interviews were conducted in person and lasted 30 to 60 minutes. All interviews were recorded and transcribed verbatim. 

Focus groups. Each focus group was conducted using a standard guide that included open-ended questions exploring consumers’ perspectives about ACOs and their own healthcare. A study investigator moderated each of the focus groups, with an additional investigator present as a co-moderator. One focus group was conducted at 3 of the ACO sites and 2 were conducted at the fourth site to capture consumer perspectives from both the urban and rural markets this ACO served. Each focus group comprised 7 to 16 participants who lived in the ACO market and interacted with the ACO as patients or parents of patients of ACO providers. Sessions lasted 90 minutes and participants were given a $50 gift card as a token of appreciation for their time. All sessions were recorded and transcribed verbatim.

Document collection and review. For each participating ACO, we also requested key documents related to ACO development. Examples of these documents included the ACO strategic plan, communication vehicles, ACO progress reports, board presentations, and annual reports. 

Data Analysis 

Our analytic approach included using both inductive and deductive methods to analyze the 1158 pages of transcripts from our interviews and focus groups in an iterative process. After each site visit, the research team first compiled a “Site Visit Summary” that included summary impressions. This initial analysis was helpful for conceptualizing findings and themes and provided insight into more focused inquiry.29

Our second analytic step involved coding the interview transcripts to break this qualitative data into smaller, meaningful segments for analysis.29 We developed an initial set of codes based on our interview guides and emergent themes from the site visit summaries; we then summarized these codes in a “coding dictionary” that included detailed definitions to ensure consistent application of the codes.29 This preliminary coding dictionary was further refined as themes and patterns emerged in the data. Three members of the research team then coded the data and, throughout the coding process, conducted cross-checks of the coded data to ensure that codes were consistently applied.28 Data were coded and managed using a qualitative software program, Atlas.ti (Scientific Software Development GmbH; Berlin, Germany).

The third step of analysis we conducted for this paper involved examining the codes of “motivations” and “critical success factors” to inform our understanding of private sector ACO development. We used an inductive approach to identify themes and patterns in the coded data, first focusing on patterns within cases (ie, study sites) and then evaluating whether these were replicated across cases, paying particular attention to any differences in the contrasting cases (eg, in pediatric ACOs vs others).25 At each stage of this coding and analysis process, we also sought and considered disconfirming evidence25,28,29 to ensure the robustness of our findings. 


Motivation for ACO Development

When asked about their motivation for developing a private sector ACO, interviewees across the study sites noted 3 reasons, explained here and with supporting evidence presented in Table 3.

PDF is available on the last page.
Clinical Pathways Compendium
COPD Compendium
Diabetes Compendium
GI Compendium
Lipids Compendium
MACRA Compendium
Oncology Compendium
Rare Disease Compendium
Reimbursement Compendium
Know Your News
HF Compendium