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Accountable care organisations: the future of the NHS?

Robin Miller, senior fellow, and Professor Judith Smith, director, from the Health Services Management Centre at the University of Birmingham, consider the future potential for accountable care organisations in the NHS.

The accountable care organisation (ACO) is often vaunted by US commentators as the ideal way to align the motivations and interests of health funders (commissioners in an NHS context) and providers. The underlying theory is that if you give a population-based budget to a provider organisation or group of organisations and require them to deliver a set of specific health outcomes for their registered population, they will be incentivised to a) keep people as healthy as possible to decrease overall use of healthcare services, and b) minimise the use of high-cost hospital-based care by ensuring effective community-based provision. 

The ACO model was introduced in the US through the Affordable Care Act 2010, with two accompanying programmes for those people accessing government-funded health services through Medicare or Medicaid. The programmes included the US Pioneer Programme in which the ACO was deemed to be accountable for financial losses as well as gains, and the Shared Savings Programme in which ACOs could split savings with the funder, but do not initially have to bear any losses. 

There are various structures to be found under the ACO banner, including group practices (as per UK general practice super-partnerships), networks across acute and primary care providers, and chains of hospitals working with local primary care and nursing homes. Key to the ACO model is a capitated payment system and the opportunity for the partners to retain any savings that they achieve. Such payments are dependent on the ACO achieving a rigorous set of quality and outcomes metrics that incorporate patient experience, patient safety and preventative care. 

New forms of integrated care in the NHS

Given the strong policy interest in bringing about improved integration of care within the English NHS – across mental and physical care, health and social services, and hospital and community – the ACO appears to hold promise. It could in principle provide an organisational form that draws together previously siloed or competing providers into a network or joint venture with a shared sense of purpose and financial interest. Within the New Models of Care Programme established by NHS England, in order to take forward the ideas set out in the Five Year Forward View, there are three ‘Vanguard’ schemes that have stated their intention to explore the potential of the ACO as an organising structure. These Vanguards (Northumbria, Northamptonshire and Salford) plan to bring together the organisations responsible for acute hospital care, general practice, mental health, social care, ambulance services and pharmacies. They hope to achieve better productivity, improved outcomes and (in the case of Northumbria) address health inequalities. 

A further accountable care network for cancer services is being established between the Royal Marsden NHS FT, The Christie NHS FT and University College London Hospitals NHS FT. The possibility of an ACO arrangement is also being explored in other localities outside the Vanguards programme. 

Will ACOs work in the NHS? 

ACOs are still relatively new in the US, and emerging evidence from evaluations has been described as limited, in regards to both cost and quality. All the original US Pioneers reported that they were achieving the required quality targets and most had lower hospital readmission rates than comparator areas. However, whilst just over half of these ACOs have generated savings for their funder, the others had come in with losses. This led Shortell et al 2014 to surmise that there is ‘need for caution in claiming too much for ACOs… progress to date has been mixed and there needs to be realism about the hard work and time it will take for this approach to demonstrate measurable benefits’. 

That said, some ACOs have been able to report impressive improvements in both outcomes and efficiency, and the model does incorporate a number of the components known from research evidence to help achieve service integration at scale. These include a range of professions and services to respond to the diverse needs of a population; an emphasis on quality as well as efficiency; the financial incentive for providers to act holistically and collaboratively; and flexibility to create different organisational forms depending on local circumstances, history and opportunities. 

Is the ACO a development to be welcomed? 

The ACO clearly has attraction as an organisational form that can draw together previously disparate acute, primary and social care providers into a new network or body that can focus on delivering integrated care. There is a need, however, to beware  of placing too much faith in the ability of an organisational form to change actual function or delivery of care. We know from the wider body of research into change that organisational form is just one (and an unreliable one at that) factor in enabling new forms of integrated care. 

The evidence shows that there is no guarantee that it will encourage the clinical leadership, attention to IT and data, development of new clinical processes, establishment of learning culture, and effective patient and community engagement that are key ingredients of positive and sustainable improvement. These ingredients are typically much harder to bring about than the putting in place of a new organisational form, albeit that the new organisation is often what attracts and preoccupies managers. Even if the Vanguard ACOs in the NHS prove successful, it is highly unlikely that such a model would work in areas without previous good experience and understanding of partnership working or careful and dogged attention to the practical aspects of integrated care. 

We also need to be realistic about the scale of the task that would face an ACO holding a sizeable proportion of the NHS and adult social care budget – over the course of a contract lasting, say, seven years, this could amount to billions of pounds, and there must be questions to pose about the current ability of providers to manage and distribute this level of funding. 

Finally, ACOs call into question the future role of local commissioning in the NHS. If ACOs take hold within the new ‘footprints’ of Sustainability and Transformation Plans, which are intended by NHS Improvement to enable effective local NHS planning, it would seem that the current network of CCGs will need to be pruned back to a smaller number of regional funding bodies that hold contracts with ACOs or other provider networks. 

Whereas former health secretary Andrew Lansley intended a competitive NHS market based on clinically-led CCGs contracting with local (or other) providers, we seem to be moving towards a more managed and planned local approach. The challenge for the NHS is to ensure that the excitement of a new organisational form, such as the ACO, does not detract from the tough business of bringing about integrated care on the ground.

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