Whereof what’s past is prologue, what to come, in yours and my discharge.
William Shakespeare
The Tempest
While the concept of accountable care has existed for some time, it was given new life and renewed
vigor by the March 23, 2010 passage of the Patient Protection and Affordable Care Act (ACA),
which established the Medicare Shared Savings Program (MSSP) and drove the continued evolu-
tion of the Accountable Care Organization (ACO) from its early inceptions, e.g., the Medicare
Healthcare Quality Demonstration (2003), the Medicare Physician Group Practice Demonstration
(2005), and similar models adapted by provider organizations, such as Kaiser Permanente and
Healthcare Partners Medical Group. The promise of lower healthcare costs and higher quality of
care has precipitated a national fascination with ACOs throughout every level of healthcare, from
government agencies, academic research institutes, and large provider delivery systems to indi-
vidual physicians. As the nature and structure of both federal and commercial ACOs continue to
be dened and distinguished, the question remains: Do ACOs, as a model, provide a sustainable
solution to the nations rising healthcare spending or will these emerging healthcare organizations
follow the ascendency and ultimate demise of previous managed care models of the 1990s?
The term managed care generally refers to a collaborative effort between health services delivery
and benet design utilizing management and nancing to inuence cost, quality, or other specic
Similarly, an ACO is an organized network of providers that coordinates care in order to
lower costs and increase quality to achieve nancial incentives established through a contract with
an associated payor. Just as a square is a rectangle, but a rectangle is not a square, ACOs are a form
of managed care, but the two concepts are not interchangeable.
Managed care took off in the 1990s through the advent of the health maintenance organization
(HMO), a prepaid health plan model that used designated provider networks to increase efciency
of care for enrolled members. Distinctions between HMOs and ACOs are illustrated below, in
The widespread acceptance of managed care led to a consumer backlash. Providers and insurers
were accused of lowering costs in an effort to enrich themselves, resulting in poor quality care and
little to no impact on the continual rise in premiums for coverage.
Even though some of the man-
aged care initiatives were considered notorious by the end of the decade, the model evolved and still
exists in, perhaps, a different form in numerous markets. In line with that historical path, ACOs are
now being touted as the means to address a seemingly intractable healthcare budget, quality, and
access/ coverage issues.
It may be that now, at this present point in time, the U.S. healthcare system has reached a tipping
point where either costs will continue to increase until healthcare is unmistakable as a luxury good,
available only to those that can afford adequate quality and access or, the triple aim of healthcare
reform (i.e., access, cost, and quality) and some stability will be attained through the promotion
of evidence-based medicine and value-based purchasing—both key concepts of ACOs. That this
essential healthcare debate has polarized political parties and permeated every level of our society
is self-evident to anyone who reads a daily paper, watches television, listens to the radio, or follows a
blog. The Clinton-era attempt at universal employer healthcare showed that, without public demand
and alignment of stakeholder interests, change is not likely to be adopted.
As healthcare industry
spending nears 18% of the U.S. gross domestic product (GDP) and the prevalence of the uninsured

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