At Infosys, our focus on Healthcare is aimed at radical progress in affordability, wellness, and patient-centricity. We believe technology is a catalyst for game-changing healthcare solutions. In this blog, we discuss challenges, ideas, innovations, and solutions for the healthcare economy.

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ACOs - Why they could fail?

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.

Administrative Efficiency - ACOs would need to provide financial incentives to providers for improving quality and performance. There could be huge administrative burden on ACOs to monitor provider's performance & reward appropriately. Apart from the initial set-up cost, there would be ongoing cost for maintaining quality metrics, calculating healthcare costs, tracking patient-provider interactions, reporting clinical outcomes, etc.
ACOs should implement optimal processes & systems and avoid the additional administrative cost from overshadowing the cost savings.
Physician Habits - Physicians will need to change their approach in providing care. They will have to change their prescribing pattern from "best possible" or "most desirable" to "most effective" and "most appropriate". They would need to rely on evidence based guidelines and not on their own judgment or patient preferences. They would need to adapt to moving care delivery from hospitals to lower cost care settings.
ACOs would need to motivate & educate physicians to change their prescribing patterns and habits. Changing mindset may take time, but it is necessary.

Patient Behaviors - Most of the healthcare plans (like PPO, POS) have given significant freedom and choice to patients. They can obtain services from several disconnected providers. The fragmented care due to patient's choice has led to excessive utilization and poor outcomes.
ACOs and Insurers would need to educate and steer the patients toward most cost effective & high quality providers.

Accountability - In an ACO, everyone is accountable for care, especially physicians. Physicians recognize that the health outcome is partially under patient's control, so they can be reluctant to assume accountability. If the ACO's incentive program is not clearly outlined, it may not motivate the physicians to improve quality and performance.

It is essential for ACOs to have a well defined & transparent incentive program. Also, physicians should educate the patients on self management, and build a trustworthy relationship.

There are definitely more challenges and I may have over simplified them. But, I hope that ACOs are well-prepared to handle these challenges and risks, and will be successful.


This clearly outlines some of the key factors to focus on to avoid failure. Very easy to understand piece. Walking away with a very good understanding of the content.

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