The Impact of Accountable Care: Hospital Involvement with Accountable Care Organizations

For hospitals to adopt an accountable care organization model of care they must invest in advanced health information systems, ramp up quality reporting and improvement, and further align with physicians on goals.

The Issue

The Affordable Care Act has ushered in numerous payment reform models as alternatives to fee-for-service. Among them is the accountable care organization (ACO) model of care. ACOs require providers to be financially responsible for the cost and quality of care for a defined population. Medicaid, Medicare, and the commercial sector all have adopted various forms of ACOs.

Key Findings

Among the effects of adoption of the ACO model on hospitals:

  • How risk and rewards are shared will vary according to the payment arrangements, which include shared savings, care management/fee bonus, capitation, or bundled payment. Major shifts in payment structure could lead to a diminished need for hospitals’ acute care services, as well as changes to health care workforce composition and the hospital business model.

  • Quality measurement and improvement initiatives require substantial investments of time and effort by clinical and administrative staff to reap the full benefits of ACOs.

  • Leadership and operational challenges for quality improvement involve reassessing the role of the physician, and obtaining a balance between physician autonomy and organizational standardization.


Despite the challenges presented to hospitals by ACOs, the authors write, “the opportunities for evolution and reinvention are many as the field works to find better models that lower costs and improve care while simultaneously improving population health.”

About the Study

This issue brief, one of six in a series called “The Impact of Accountable Care,” was prepared by the American Hospital Association and Leavitt Partners, with funding from RWJF.