Accountable Care Organizations (ACO) are healthcare organizations which are accountable for quality and cost of healthcare services. These are group of physicians, hospitals & other healthcare provider who provide coordinated high quality care to patients. ACOs would share financial responsibility with government and private healthcare insurers. Their payment models are quality-based, which differ from traditional quantity-based models. ACOs have the potential to reduce healthcare expenditure and improve quality of care. However, they face certain challenges which they need to overcome and avoid failure.