High Quality Health Care at the Lowest Possible Cost – Can It Really Happen?


This blog post is the fourth in the Supply, Demand and Medicine series on health care reform.

If you’ve been casually following the roll out of health care reform over the past few years, you are probably already familiar with the acronym ACA, or Affordable Care Act (a.k.a. Obamacare).

If you’ve been intensely following the law’s implementation, you also may already be familiar with the acronym ACO. If you haven’t heard the term ACO, or Accountable Care Organization yet, you might start hearing it soon.

Here’s what you need to know about ACOs.

What is an Accountable Care Organization or ACO?

While the term “Accountable Care Organization” was coined in the ACA, the concept of ACOs predates health care reform by several years.

An ACO is a health care organization consisting of physicians, hospitals and other care providers that have joined together through a partnership or other collaboration to offer integrated, more seamless care to patients.

The exact mission of ACOs may vary slightly, but usually, they are similar to the mission of Baylor Quality Alliance, Texas’ largest ACO, which is to offer the highest quality care at the lowest possible cost through clinical integration.

How and why are ACOs such an important part of health care reform?

ACOs play an important role in three of the main objectives of health care reform efforts:

  • lowering costs
  • improving care
  • increasing access to care

The ACA authorized Medicare to contract with ACOs and offer a Shared Savings Program.

What does this mean?

Essentially, Medicare budgets a certain amount of money for a group of Medicare patients cared for by an ACO over a given year.

At the end of that year, if the care for that group of patients comes in under budget, the ACO and Medicare split the amount of money saved, hence the term “shared savings.”

However, it’s not just about spending less or achieving savings by not providing care.

In order to receive shared savings incentives, an ACO must meet strict, nationally recognized quality measures, such as promptness of follow-up care after hospitalization or providing effective care for patients with diabetes.

How do patients benefit from an ACO?

There are numerous benefits for patients.

Commitment to Quality/Evidence-based Medicine

ACOs must meet strict criteria when it comes to quality of care. This means using the latest evidence-based care protocols for treating common conditions, from diabetes to heart disease.

For example, Baylor Quality Alliance has created 80 evidence-based care protocols for certain conditions that have been shown to lead to quality outcomes.


Because an ACO is made up of many different types of health care providers that are connected through an integrated Health Information Exchange technology system, a patient’s information will be available at the click of a button even if that patient must visit multiple physicians or facilities that are part of the ACO.

This eliminates having to give the same information over and over again, prevents duplicate testing, and communicates vital clinical information so that errors or omissions can be significantly reduced.


The focus on costs means that ACOs try to eliminate waste and look for savings where it makes sense.

For instance, by being up-to-date on the latest, low-cost generic drugs as they become available and prescribing them whenever possible or not ordering expensive, unnecessary tests, ACOs can save patients’ out-of-pocket costs.


By being clinically integrated, ACOs often offer expanded hours and “after-hours” access, which may help a patient avoid a trip to the emergency room.

New Level of Care Coordination

Being accountable for care doesn’t stop when a patient leaves the hospital or doctor’s office. In some cases, ACOs can follow the status and receive updates on patients who are discharged from the hospital to a nursing home or receive care from a home health service.

In the case of Baylor Quality Alliance, we also assign nurses to reach out on a regular basis to some of our sickest patients to actively monitor their health and intervene early when necessary.

What is the future of ACOs in the American health care system?

Since 2011, the number of ACOs around the country has exploded from a few dozen to around 600. More are surely on the way.

ACOs not only contract with Medicare. They are also contracting with commercial insurance carriers who, just like every other segment of the health care industry, are focused on increased efficiency and better care for patients during this time of tremendous change.

Large companies who self-insure also are drawn to ACOs. Early trends indicate a decrease in health care costs for companies like Baylor Health Care System, since choosing Baylor Quality Alliance as its preferred network.

A Key Piece of the Puzzle

Although ACOs play an important role in the ACA, their importance to the future of health care in this country is not defined by the law.

That’s because Baylor Quality Alliance and other ACOs are critical to creating the capacity for providing quality health care for large populations of patients regardless of future uncertainties and changing payment models.

In a time of unprecedented change in the health care industry, ACOs are leading the charge to offer unprecedented value.

About the author

Dr. Carl Couch
More articles

Dr. Couch currently serves as President of the Baylor Scott & White Quality Alliance, an integrated network of more than 3,700 physicians, 43 hospitals, 31 surgery centers, 29 skilled nursing facilities, 10 home health agencies, three hospices and additional points of care aligned with Baylor Scott & White Health.

Leave a Reply

High Quality Health Care at the Lowest Possible Cost – Can It Really Happen?