Yup, me too! I had no idea what an ACO was, or why I should care. After doing a little research I thought I would share with you why they may become very important in a Macro kind of way. Firstly A.C.O stands for ” Accountable Care Organizations” , which usually ends up the antithesis of it’s name. Years from now they may call them W.S.O. or “Wallet Siphon Organizations”. Essentially the purpose of these A.C.O.’s is to coordinate care for people undergoing certain treatments. Want a typical government text book definition, click here for Definition of Accountable Healthcare Organizations provided by Healthcare.gov.
Essentially the idea is that by coordinating care for Medicare , if we can reduce costs below a certain benchmark the savings that result will be shared by Medicare to the A.C.O. ( in theory). The reality may be that hospitals and doctors are setting up these new ” Accountable Healthcare Organization entities with the intent to create ideal situations for more efficient health care, but may in fact ultimately drive costs higher by reducing supply. The fear critics have is that Hospitals will merge, and create ever larger pools of hospital doctor coalitions which would in turn leverage their size to garnish higher fees and wages. Funny how we see this time and time again, remember Enron, and electricity deregulation that was supposed to create private market competition and drive prices lower? Yeah we know how that story ended.
This new quirk in the healthcare law bares watching for a myriad of reasons, higher health care cost with diminutive services for starters. Know what A.C.O.’s are, and watch their impact in your local market. For all our sake I hope the geniuses who drafted this are correct; that this will lower our already burdensome Medicare costs, which is a signifiant burden both at the federal and state level especially. We shall see…….