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The American Journal of Managed Care March 2017
Impact of a Pharmacy-Based Transitional Care Program on Hospital Readmissions
Weiyi Ni, PhD; Danielle Colayco, PharmD, MS; Jonathan Hashimoto, PharmD; Kevin Komoto, PharmD, MBA; Chandrakala Gowda, MD, MBA; Bruce Wearda, RPh; and Jeffrey McCombs, PhD
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Private Sector Accountable Care Organization Development: A Qualitative Study
Ann Scheck McAlearney, ScD; Brian Hilligoss, PhD; and Paula H. Song, PhD
Patient Experience Midway Through a Large Primary Care Practice Transformation Initiative
Kaylyn E. Swankoski, MA; Deborah N. Peikes, PhD, MPA; Stacy B. Dale, MPA; Nancy A. Clusen, MS; Nikkilyn Morrison, MPPA; John J. Holland, BS; Timothy J. Day, MSPH; and Randall S. Brown, PhD
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Ajit A. Dhavle, PharmD, MBA; Seth Joseph, MBA; Yuze Yang, PharmD; Chris DiBlasi, MBA; and Ken Whittemore, RPh, MBA
Effects of an Enhanced Primary Care Program on Diabetes Outcomes
Sarah L. Goff, MD; Lorna Murphy, MA, MPH; Alexander B. Knee, MS; Haley Guhn-Knight, BA; Audrey Guhn, MD; and Peter K. Lindenauer, MD, MSc
Consumer-Directed Health Plans: Do Doctors and Nurses Buy In?
Lucinda B. Leung, MD, MPH, and José J. Escarce, MD, PhD
Improvements in Access and Care Through the Affordable Care Act
Julie A. Schmittdiel, PhD; Jennifer C. Barrow, MSPH; Deanne Wiley, BA; Lin Ma, MS; Danny Sam, MD; Christopher V. Chau, MPH; Susan M. Shetterly, MS
Does Paid Versus Unpaid Supplementary Caregiving Matter in Preventable Readmissions?
Hsueh-Fen Chen, PhD; Taiye Oluyomi Popoola, MBBS, MPH; and Sumihiro Suzuki, PhD

Private Sector Accountable Care Organization Development: A Qualitative Study

Ann Scheck McAlearney, ScD; Brian Hilligoss, PhD; and Paula H. Song, PhD
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.
Across the focus groups, none of the consumer participants was familiar with the terms “accountable care organization” or “ACO,” nor were any individuals aware they were part of an ACO. This became apparent during each session when no participants provided answers to the questions, “Prior to coming here [to this focus group session], did you know what an Accountable Care Organization was?” and “Did you know that [this organization] was an ACO?” As a result, participants’ answers to open-ended questions instead reflected their experience with their own physicians or a named hospital and not the ACO entity. Consumers’ lack of familiarity with the ACO model had been predicted by our sites’ key informants, who consistently indicated that their ACO outreach efforts purposely did not include branding the ACO to consumers, nor promoting the ACO as something new and different. 

Critical Success Factors for Private Sector ACO Development

When asked what interviewees believed to be critical success factors for development and implementation of an ACO model in the private sector, responses could be classified into 5 main categories: 1) physician involvement, 2) strategic buy-in to the ACO vision, 3) information technology (IT) infrastructure and data, 4) experience and understanding, and 5) leadership. These factors are explained below, with additional supporting evidence provided in Table 4.

1. Physician involvement. Provider buy-in and engagement were mentioned often and across all 4 sites, and were perceived to be the key factors limiting whether the ACO model could be implemented. As one senior executive explained, “The providers actually have to buy into it…Because if they don’t, you can provide reports and have meetings and do everything that you want to, but if the providers haven’t actually bought into it, it’s an uphill battle.” Engagement and involvement of physicians in ACO governance were also important, with one interviewee summarizing this factor as “absolutely bringing physicians to every point in the table.”

2. Strategic buy-in to the ACO vision. Strategic vision and buy-in at the organizational level (ie, moving beyond provider-level buy-in) involved commitment from and across the organization rather than only individuals (providers) engaging with the ACO concept. One senior executive reflected, “I think you really need that strategic buy-in … the fact that the healthcare system needs to take some responsibility to figuring out how to provide more effective, affordable, and efficient care that still meets the needs of the patients.” Interviewees at other sites made similar comments about the importance of buy-in to help ensure support for required investments and the effort required to support cultural changes for the organization. 

3. IT infrastructure and data. IT was commonly recognized as critical. As summarized by one executive, “Well, an IT infrastructure is key. You can’t control what you can’t measure. You need to define your quality and utilization parameters. … You’ve got to build the structure right. You’ve got to have adequate data from your health plans so that you can figure out what you need to figure out.” Beyond infrastructure, interviewees also recognized the need for the data that the systems supported. As one ACO director noted, “You can have physicians who are bought into it and are engaged in it, but they need to know how they’re doing, and they want to know how they’re doing, right?” 

4. Experience and understanding. At all 4 sites, interviewees explicitly noted that past experience with risk was contributing to their successful implementation of the ACO model. One director commented, “What we find is that with the experience that we’ve had previously, we’re sort of anticipating what’s coming down the road. And I think that’s positioning as well, as we move forward. Otherwise, you’re spending a lot of time scrambling.” This understanding was also valued at another site, as an interviewee explained, “We felt that we could take risk for a population that we knew very well and that we could manage the health of that population within the fiscal constraints.”

5. Leadership. Comments emphasizing leadership as a success factor reflected the importance of the leadership function overall, as well as the need for leadership of the cultural changes required to implement the ACO model. One manager commented, “The cultural shift is pretty huge to move from fee-for-service. And that whole mindset and getting people to really be able to embrace that.” Leadership was noted to be especially important as the ACO model evolved. As one executive explained, “And even when everybody’s on board it’s tough, because there are winners and losers, and people’s roles are going to change, how they’re perceived to perform, their incentives will change. It’s a tough cultural change even when everybody’s on board. So if there’s any hesitation by an important part of the organization, it’s going to be tough.” 


The ACO concept has spread beyond the Medicare ACO initiatives, as provider and payer organizations in the Medicaid and private markets are developing ACOs to serve these populations. Lacking clearly defined models for private sector ACOs, however, payers and providers in these spaces are left to develop their own models. Furthermore, because most research to date has focused on ACOs developed in the MSSP and Pioneer ACO programs, there is little information about how and why ACOs are developing to serve other populations. In this paper, we have begun addressing this gap by providing early insights from the development and implementation of 4 ACOs serving privately insured and Medicaid populations. 

Although private markets and populations may vary from those served by the MSSP and Pioneer programs, our findings suggest that many of the motivators for developing private sector ACOs are similar. The need to control the rising costs of care while simultaneously improving the quality of care, the need to develop capabilities to manage population health, and a sense of the inevitability of healthcare reform were the primary motivations for ACO development espoused by our interviewees. In a sense, providers want to “do the right thing,” and they perceive the ACO model as providing an opportunity to do that. This mix of motivators suggests both push and pull forces at work. The sites we studied are moving away from legacy approaches to healthcare financing and delivery, including fee-for-service and fragmented, siloed care, which they feel are no longer sustainable nor desirable. At the same time, these organizations are moving toward new contractual and organizational arrangements that they perceive both as inevitable and as allowing them to improve the health of populations.27,30 In short, healthcare reform efforts to better align incentives with quality and population health goals for traditional Medicare populations appear to be affecting transformations more broadly. 

Our findings that consumers lacked knowledge of ACOs and were unaware that they were part of an ACO are notable, especially given growing emphasis on the engagement of patients in their own care.31-33 Providers and payers involved in developing ACOs are investing considerable time, money, and effort to transform the healthcare system, and yet the parties with arguably the greatest stake in that transformation are neither informed of nor empowered to shape these efforts. Given the linkage between patient behaviors and many health outcomes, we expect there are numerous opportunities to involve consumers in ways that will improve the abilities of ACOs to accomplish their goals. For example, there may be opportunities to provide incentives, including financial ones, to engage patients or to provide physicians training in patient engagement.34 Other opportunities may be to include patient representatives in governance, as required in the MSSP and Pioneer ACO programs, but not required in any private sector ACO model of which we are aware. 

Implications for Management and Policy

Our findings suggest the importance of having strong leadership and physician engagement as part of ACO development, thus highlighting the importance of physician engagement reported in prior studies.22 Moving beyond physician engagement, however, all of the ACOs in our study had physicians in formal leadership positions and 3 of the ACOs had strong physician representation on their governing boards. The ACOs in our study included employed and community physicians in various aspects of decision making, ranging from compensation and incentive committees to quality improvement initiatives. Our findings about the importance of physician leadership are consistent with a recent national survey of public and private ACOs, which found that more than half of all ACOs are physician-led and that physicians make up the majority of governing boards in over 75% of the ACOs surveyed.23 Strong physician leadership could also help facilitate high levels of communication across providers, thereby improving patient care.35

These findings also underscore the need for adequate IT infrastructure for ACO development. Policies, such as Meaningful Use, helped motivate providers to implement electronic health records, which is a necessary first step. However, ACOs need the ability to access timely and meaningful data to monitor and improve outcomes and efficiency. The ACOs we studied are making significant capital investments in data and reporting capabilities; meanwhile, the ACOs that are unable to make the necessary capital investments in IT infrastructure will likely lag in terms of development. The Medicare Advance Payment Model attempts to address this capital need for smaller or rural Medicare ACOs; however, there do not appear to be similar arrangements in the private sector ACO markets.36 Rather, private sector ACOs either rely on capital infusions from physician groups or health system partners or turn to the credit markets. The limited options for capital support may hinder private sector ACO development, particularly for newer and smaller private sector ACOs. 

The ACOs in this study had all been in risk arrangements well ahead of the emergence of the term “ACO” and had considerable experience (and success) in managing risk. Thus, they were able to reorganize relatively quickly as ACOs and had the confidence that they could take on the associated risk and responsibility successfully. New ACOs may face more challenges ramping up and may need to enter the private sector ACO market with lower-risk arrangements, such as shared savings, as they work to gain experience with contracts and population health management.


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