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Under the Microscope: Exploring Accountable Care Organization (ACO) Structures and Their Differences

Published 6/10/2021

In a recent analysis of Medicare costs by Avalere, physician-led ACOs were able to deliver nearly seven times the savings over those provided by hospital-led ACOs. The savings of $739 million1 was largely driven by financial incentives to reduce hospitalizations2 through coordinated care. And the American Journal of Managed Care also reported that physician-led ACOs were more likely to produce savings because these physicians "are able to focus on eliminating costly hospital admissions without suffering a drop in inpatient revenue."3

This finding also aligns with the American Academy of Family Physicians' claim that clinically integrated ACOs are uniquely designed to improve patient care and value in this way. Rather than directing patients into the hospital setting,4 physician-led ACOs work more efficiently, making better use of electronic medical records, managing care proactively, and providing care in more cost-efficient settings. So, when comparing multiple Accountable Care Organizations (ACOs), you may have to look closely to spot the differences – and to decide which is right for your business. When multiple ACOs are available, it's the purchaser who decides which model they like based on the value delivered.

A Closer Look at Accountable Care

ACOs are designed to offer high-quality, coordinated care across specialties, which results in the elimination of healthcare waste and improved efficiencies, but what makes them different from each other? 

Coordinated care is best accomplished within a group of providers set up to collaborate on patient care. Some hospital-led ACOs may limit referrals to providers within their own system, while physician-led ACOs with the ability to refer to a full spectrum of affiliated specialist providers, who are among the best in their fields, can drive improved outcomes and lower costs.

The American Journal of Managed care also emphasizes the importance of electronic medical records (EMRs) as a factor in "patient care, quality improvement, and cost reduction" because they enable "same-day access, 24/7 access to the care team, urgent care availability after hours, and personalized care plans."3 Some physician-led ACOs, like Kelsey-Seybold, are made up of physicians who are all tightly connected by way of an a single, common EMR, making it easy for them to share information with each other so that they can collaborate. In this setting, any of the ACO's physicians can access complete clinical data to improve quality, efficiencies, and outcomes. This means duplication of diagnostics and other waste can be avoided to deliver a better value.

In other ACOs, physicians may not share a common EMR. When referrals occur between specialties, providers may not have access to (or have limited access to) previous lab tests, X-rays, and other information.  As a result, these tests may be performed again, resulting in increased costs and patient care disruption.

The Facet of Pricing Structure

Many employers make their plan decisions based on costs for a sampling of medical services — they analyze healthcare costs by reviewing the discounts offered on services. What's good to keep in mind is, even with discounted fees, providers compensated with a fee-for-service pricing structure are compensated by volume. ACOs like Kelsey-Seybold Clinic utilize a capitated pricing structure, providing physicians with a set amount each month to keep patients healthy and direct care to cost-effective, clinically appropriate settings including outpatient services.

This may be seen even in the after-hours services offered. With capitated pricing, after-hours nurses at Kelsey-Seybold will leverage the organization's access to clinical data to improve value and care quality by thoroughly screening the patients for true emergencies, directing patients to appropriate care, and scheduling next-day appointments for those who don't need emergency care.


Appraising the Value

With the greater care coordination and access to clinical data found in physician-led ACOs, the industry is seeing a shift in ACO structure. According to the American Journal of Managed Care, the share of physician-led ACOs has grown from 22% in 2010 to 45% in 2018, citing the physician-led organizations' better ability to enhance care quality and manage costs.3

In the end, the ACO that fits best is something for the employer to decide. But when employers can choose between multiple ACOs, they would be well advised to examine an ACO's referral policy, business model, and pricing structure, along with patient satisfaction scores, and quality outcomes. From there, choose what aligns with you, and you're sure to find a real gem for your business and employees.


1 Sullivan, Gabriel; Feore, John, "Physician-Led Accountable Care Organizations Outperform Hospital-Led Counterparts." Avalere, 2019,
2 Lagasse, Jeff. "Physician-led accountable care organizations outperform hospital-led counterparts." Healthcare Finance News, 16 Oct 2020,
3 Muhlestein, David. "Accountable Care Organizations are Increasingly Led by Physician Groups Rather Than Hospital Systems." American Journal of Managed Care, 14 May 2020,
4 "ACO Planning Guide." American Academy of Family Physicians, 2021,


Patrick Carter, MD, MBA, FAAFP

Medical Director for Care Coordination and Quality Improvement and Chairman, Department of Family Medicine

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NOTE: Each employer plan is separately underwritten and results will vary based on the population demographics and other factors.