At no other point in time in United States history has the government, the healthcare industry, and the information technology industry come together and embarked on such a monumental transformational of the healthcare delivery system. Although the implementation of Electronic Health Records (EHR) that meet Meaningful Use criteria were at the forefront during 2010 and 2011, behind the curtain a synergy was pushing forward and focusing on Accountable Care Organizations (ACO).

This endeavor aims to change the way the system provides health care from reactive to proactive, and the way providers get paid for their services from fee-for-service based to quality outcome (performance) based. One could say that December 19, 2011 was the mega-pilot project kickoff date. Starting on January 1 2012, the 32 selected ACO pioneers, out of 80 applicants and 160 who submitted letters of intent, have been blazing the trail towards a model that has as many skeptics as it does firm and passionate believers.

This paper will introduce ACOs in a straightforward language and also present the opportunities and challenges that healthcare organizations will face if they decide to convert their healthcare delivery organization into a shared savings and paid-performance agile entity. Although an ACO can be formed by private entities other than Medicare (e.g., health insurance companies), and which most likely will emerge independent of the Affordable Care Act, this paper is mainly focused on the Centers for Medicare and Medicaid Services (CMS) regulated ACOs. However, the same principles should apply to private ACOs which we will analyze from section to section and attempt to provide thoughtful and brief comparisons.

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