NCPA - National Center for Policy Analysis

Accountable Care Organizations Won't Deliver Better Health Care

April 26, 2011

The Patient Protection and Affordable Care Act (PPACA) creates federal "accountable care organizations" (ACOs).  In theory, ACOs provide financial incentives to health care organizations to reduce costs and improve quality.  In reality, given the complexity of the existing system, ACOs will not only fail; they will most likely exacerbate the very problems they set out to fix, says Rita E. Numerof, president and cofounder of the strategy consulting firm Numerof & Associates, Inc.

  • ACOs will concentrate more and more power in fewer and fewer organizations, allowing them to become "too large to fail."
  • Such a system undermines competition and entrepreneurship -- the bedrock of innovation and job growth in this country.
  • There is no evidence that supports the use of untested, complex organizational structures to improve quality of care and reduce costs.
  • Creating incentives that focus on achieving higher quality of care, not quantity of medical procedures; providing choices to patients; and allowing real competition among health insurance providers is what will truly transform the health care system.

Only by systematically changing the underlying payment model, enabling competition and introducing transparency in cost and outcomes will the goals of health care reform be achieved.  Repealing the PPACA and creating incentives that focus on achieving quality outcomes, providing choice and allowing real competition are what will transform health care delivery to a system that provides higher quality health care at lower costs, says Numerof.

Source: Rita E. Numerof, "Why Accountable Care Organizations Won't Deliver Better Health Care -- and Market Innovation Will," Heritage Foundation, April 18, 2011.

For text:


Browse more articles on Health Issues