Accountable Care Organization (ACO)
A network of physicians, hospitals, and other providers that jointly accept responsibility for the cost and quality of care for a defined patient population, sharing in savings when they hit spending and quality targets.
What is an Accountable Care Organization (ACO)?
An Accountable Care Organization (ACO) is a group of physicians, hospitals, and other providers that voluntarily join together to take collective responsibility for the cost and quality of care delivered to a defined population of patients. The arrangement is built around coordinating care across settings rather than treating each encounter in isolation.
When an ACO meets agreed-upon quality benchmarks and keeps total spending below a financial target, it can share in the resulting savings; some models also expose the organization to losses if spending exceeds the target. This shared accountability is what distinguishes the model from traditional fee-for-service payment.
Why are Accountable Care Organizations important?
ACOs are a central vehicle for shifting healthcare away from paying for volume and toward paying for value, with incentives that reward keeping patients healthy and avoiding unnecessary utilization. Medicare, Medicaid, and commercial payers all sponsor ACO arrangements of varying intensity.
For procedural and revenue-cycle stakeholders, ACOs influence where care is steered, since the organizations have a financial reason to direct appropriate cases to lower-cost, high-quality sites such as ambulatory surgery centers. That dynamic can shape referral patterns and the contract terms surgical providers negotiate.
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