ACOs: Why Companies Are Taking Notice

In October 2014, approximately 30,000 Boeing employees and retirees had the option to sign up for health care from either UW Accountable Care Network or Providence-Swedish Health Alliance, two new accountable care organizations (ACOs). This arrangement signaled a seismic shift in how major area purchasers are looking to boost health care quality for employees.

For decades, the traditional approach to offering health benefits to employees involved health plans and the carrier’s contracted provider networks. Fees were paid for each visit, test, procedure, etc. Since the implementation of the Affordable Care Act, ACOs have emerged as a way to offer higher quality care at lower costs. This was done primarily by reimbursing health care providers for value of care rather than volume of care.

In response, national insurance companies such as Humana and UnitedHealthcare, are entering into scores of agreements with regional providers across the country to form localized ACOs. Aetna announced arrangements with Providence-Swedish Health Alliance, The Polyclinic, Rainier Health Network, and Pacific Medical Centers to offer health care to Puget Sound companies.

Caution: Look carefully before you leap into an ACO contract

There are a number of ways through which employers can make ACOs available to their covered populations.

  • Employers can gain access to an ACO through their health plan. For instance, with a network of doctors and emphasis on cost savings through primary care, Group Health medical clinics (now Kaiser Permanente medical offices) have been functioning like an ACO in Washington state for a number of years.
  • Employers can jointly develop an ACO with a health plan. Typically, self-funded employers like Boeing work with their health plans to create an ACO. Such an arrangement will include specific health care designs, a tailored network of providers, cost-saving goals, and quality benchmarks. Costs are shared, as well as any savings.
  • Employers can contract directly with an ACO. By way of example, in the Spokane area Group Health (now Kaiser Permanente) has partnered with Providence Health to form an ACO. Called CareUnity, it’s available to companies directly. Employers can choose either total health care services or specific ones, such as chronic disease.

However, what companies considering such ACOs need to be careful. Most ACOs are new organizations, bringing together provider groups and hospitals, often meshing disparate cultures and computer systems.

As such, they’re learning as they go and dealing with growing pains along the way. No doubt, many of them will succeed in their endeavors. But your company’s employees may be serving as beta test subjects—systemwide guinea pigs if you will.

Your Checklist: What Every ACO Should Have

Broadly defined, an ACO is a network of doctors and hospitals. They share financial and medical responsibility for providing coordinated care to patients in hopes of limiting unnecessary spending. Effective ACOs contain three key components.

  • Groups of providers form an organization based on the Primary Care Medical Home (PCMH) model. This approach organizes primary care to meet patient needs by using the entire patient care team to coordinate and integrate services.
  • A primary care physician provides a central point for the patient’s medical information, coordinating care with other physicians, specialists, labs, imaging, pharmacists, and more.
  • Patients are involved in the discussion surrounding their care, having input rather than being told their course of treatment.

Furthermore, health care providers accept responsibility for the cost and quality of care provided to a defined population, pursuing a triple aim of improving quality of care, increasing patient satisfaction, and lowering costs.

Various payment models exist. For example, Boeing will pay its ACOs a base amount that’s calculated to cover all of the health care expenses that the company’s Seattle employees might need next year.

If that pool runs dry, the doctors and hospitals are required to make up the balance. This encourages physicians to keep track of patients and ensure they’re healthy, up to date on vaccines, and choosing healthy lifestyles so they stay out of the emergency room.

Kaiser Permanente medical offices: A ready-made ACO

As already mentioned, Kaiser Permanente medical offices have operated like an ACO for years. They were an early adopter of the Primary Care Medical Home Model. And one of the first medical practices to pilot the approach, study its impact, and implement it across a large primary care system. A number of health care organizations from around the country—and the world—have inquired about how Kaiser Permanente (as Group Health) has implemented clinic programs that support the ACO concept.

At the hub: Primary care.

Primary care doctors serve as the hub of a patient’s care team. Electronic records give team members up-to-the-minute access to a patient’s care status. Physicians are salaried, with an emphasis on quality, not quantity, of care. The primary care team is even being expanded to include behavioral health providers for routine mental health issues, and care managers to help patients with complex needs.

Shared decision making helps bring down costs.

Shared decision making helps to reduce costs and increase patient satisfaction. Patients who clearly know all their options regarding treatment or surgery feel more in control of their care. And they don’t necessarily choose the most expensive option.

Patients receiving care at Kaiser Permanente medical offices have 29 percent fewer emergency room visits and 11 percent fewer preventable hospitalizations.1 In addition, the clinics themselves have received the highest recognition status for Patient-Centered Medical Home™ from the National Committee for Quality Assurance (NCQA).


  1. Health Affairs, September 2012, no. 9, 2094–2104.
(800) 542-6312 
601 Union St., Ste. 3100 Seattle, WA 98101-1374 

linkedin   Twitter   YouTube

© Kaiser Foundation Health Plan of Washington

All plans offered and underwritten by Kaiser Foundation Health Plan of Washington or Kaiser Foundation Health Plan of Washington Options, Inc.