Business Group Blog

Is an ACO Right for Your Company?


Twenty-one percent of large employers plan to actively promote accountable care organizations (ACOs) in 2018 and another 26% are considering doing so in 2019/2020. ACOs consist of health care providers that are creating a delivery model that ultimately accepts responsibility for the quality and cost of care for a defined population. However, it is not always clear how ACOs differentiate from the market or how they are consistently achieving initial contract goals and reducing costs. A common question employers ask is, “Is an ACO right for my company?”

Employers Have High Hopes for ACOs

For many employers, growth in consumer-directed health plans (CDHP) has led them to turn to the supply side of health care. With fewer plan design levers available in a CDHP environment, employers hope to improve the quality of care and reduce costs for employees by helping—and in some cases, incentivizing—employees to receive care from high-functioning ACO providers practicing evidence-based medicine.  And employers have high hopes for ACOs.  For ACOs that are still in the launching phase, many employers expect the impact on trend to be relatively small. But as ACOs develop, employers expect a more significant impact on medical trend.

Expectations on ACOs’ Impact on Medical Trend

Source: National Business Group on Health. Large Employers’ 2017 Health Plan Design Survey, 2016.


Start by Assessing Market Opportunity

Employers can get started with an ACO strategy by considering their unique culture, demographics, geography and future health care strategy. Next, employers should assess the ACO opportunity in their market(s) and evaluate which ACOs should be prioritized as part of their ACO strategy. From there, employers can consider plan design options (direct contracting or embedded through the health plan), and how to align incentives to engage employees in an ACO.

Members—for more information, check out the following resources in the ACO Toolkit: A Road Map for Employers.


ACO Toolkit: A Roadmap for Employers Step 2