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Practice Fusion · Jan 27, 2014

What every small practice provider should know about ACOs

There’s no doubt about it — the accountable care organization (ACO) boom is going strong. An ACO is a group of healthcare providers who agree to take on a shared responsibility for the care of a population of patients while ensuring active management of both the quality and cost of that care. Although growth has slowed a bit over the last year, the Centers for Medicare and Medicaid Services (CMS) recently announced the 2014 class of 123 Medicare Shared Savings Program ACOs, which means more than 360 CMS program ACOs have been established since the Affordable Care Act was passed. While CMS may get credit for kick-starting the ACO trend, private ACO growth has also continued to expand, with more than 500 total ACOs now existing in the United States. Additionally, the ACO trend has already seen its own shifts; physician groups have overtaken large hospital systems and are now the largest backer of ACOs.

With so much discussion about payment reform, the movement from fee-for-service to pay-for-performance, and how ACOs can contribute to lower costs and better outcomes, small practice providers and independent physicians may be wondering how they fit in. The following highlight some key concepts that independent physicians and small practices should know when it comes to getting involved in the ACO movement.

Being in an ACO means you’re part of a team. Accountable care requires multiple providers to function as a virtual single entity or team. Physicians are expected to work seamlessly with other providers to offer care that is more fully coordinated for patients who need it. Independent physicians and small practices may have to adjust some processes and workflows in order to work successfully in an ACO, but it also means being able to offer more coordinated care with providers in your community.

Adopting PCMH principles will make your practice an attractive ACO candidate. Several provider organizations have indicated that the patient-centered medical home (PCMH) model should be adopted by an ACO for building its primary care base. PCMH is a way of organizing primary care that emphasizes care coordination and communication to transform primary care into “what patients want it to be.” 1 The characteristics of a successful PCMH are the same characteristics that can make your practice attractive to an ACO in your community, including using electronic health records, adopting team-based care, employing population-based management of chronic illness, and focusing on delivering evidence-based medicine. The increase in technology solutions, such as cloud-based electronic health records, patient health records, and quality measurement tools can make it more affordable for small practices to implement PCMH principles.

You don’t have to sell out to a hospital. The common element for all ACOs is physicians. While a physician group that is unaffiliated with a hospital can become an ACO, a hospital without affiliated physicians cannot. If you want to participate in an ACO, but don’t want to sell your practice, consider joining or starting an independent practice association (IPA) affiliated with a local ACO program. With a large number of private ACOs being implemented, it’s likely that there are ACOs that don’t have strict limits on patient numbers (as is the case with the CMS shared savings program).

Even if the trend passes, becoming more accountable is still important. There are a number of factors in the market that make it difficult to know for sure whether ACOs are here to stay, but the need to control healthcare costs and improve the overall efficiency and quality of our healthcare system is not likely to change. The current PCMH and ACO models are almost guaranteed to evolve as we learn more about what works and what is sustainable. Independent physicians and small group practices that participate in clinical performance measurement and work towards a more patient-centered approach will be in a position to move forward with the industry while continuing to provide high quality and coordinated care to their patients..

Want to learn more about ACOs and other new payment models? Join Practice Fusion and other healthcare organizations for a Workgroup for Electronic Data Interchange (WEDI) webinar series titled Preparing Your Infrastructure for New Payment Models this week, January 29-31.

For more information on becoming an Accountable Care partner with Practice Fusion, please visit our ACO Partnerships page.


  1. Patient-Centered Medical Home Recognition