What is an accountable care organization (ACO)?

An accountable care organization (ACO) is fundamentally characterized by a group of healthcare providers—such as hospitals, physicians, and other clinicians—that collaborates to deliver coordinated care to a patient population. The primary goal of an ACO is to improve the quality of care while simultaneously reducing unnecessary costs. This model emphasizes accountability among providers, who are incentivized to work together to provide comprehensive care that keeps patients healthy, thus avoiding expensive hospitalizations and procedures.

The focus on both coordinated care and financial accountability is crucial because it aligns the incentives of healthcare providers with the health outcomes of the patients they serve. In an ACO, providers share both the financial risks and rewards of patient care, which drives them to maintain efficient operations and effective communication across different care settings.

The other options do not describe the ACO accurately. A federal regulatory body for healthcare implies a governmental organization overseeing compliance and standards, while a private insurance company model focuses on profit-based care rather than collaborative patient outcomes. An initiative to increase hospital funding does not encapsulate the core function of ACOs, which is more about improving care quality and cost-efficiency through provider collaboration rather than merely securing funding for hospitals.