The new frontier of strategic alliances in health care: New partnerships under accountable care organizations

Accountable care organizations (ACOs) and similar reforms aim to improve coordination between health care providers; however, due to the fragmented nature of the US health care system, successful coordination will hinge in large part on the ability of health care organizations to successfully partner across organizational boundaries. Little is known about new partnerships formed under the ACO model. We use mixed methods data from the National Survey of ACOs, Medicare ACO performance data and interviews with executive leaders across 31 ACOs to examine the prevalence, characteristics, and capabilities of partnership ACOs and why and how ACO partnerships form. We find that a striking percentage of ACOs – 81% – involve new partnerships between independent health care organizations. These “partnership ACOs” generally report lower capabilities on care management, care coordination, and health information technology. Additionally, under Medicare ACO programs partnership ACO achieved somewhat lower quality performance. Qualitative interviews revealed that providers are motivated to partner for resource complementarity, risk reduction, and legislative requirements, and are using a variety of formal and informal accountability mechanisms. Most partnership ACOs were formed out of existing, positive relationships, but a minority of ACOs formed out of previously competitive or conflictual relationships. Our findings suggests that the success of the ACO model will hinge in large part upon the success of new partnerships, with important implications for understanding ACO readiness and capabilities, the relatively small savings achieved to date by ACO programs, and the path to providers bearing more risk for population health management. In addition, ACO partnerships may provide an important window to monitor a potential wave of health care consolidation or, in contrast, a new model of independent providers successfully coordinating patient care.