An accountable care organization (ACO) is a group of doctors, hospitals, and other healthcare providers who voluntarily come together to deliver coordinated, high-quality care to a defined patient population. ACOs are designed to reduce fragmentation in healthcare delivery by holding the participating providers collectively accountable for the cost and quality of care their patients receive.
ACOs operate under shared savings contracts with payers, most commonly Medicare through the Medicare Shared Savings Program (MSSP). When an ACO meets quality benchmarks and keeps total spending below a predetermined target, the savings are shared between the ACO and the payer. Some ACO arrangements also include downside risk, meaning the ACO must repay a portion of excess spending if costs exceed the benchmark. Quality measures typically span preventive care, chronic disease management, patient safety, and patient experience.
The ACO model has grown significantly since the Affordable Care Act authorized the MSSP in 2012. As of 2025, more than 13 million Medicare beneficiaries are attributed to ACOs nationwide. Successful ACOs invest in care management infrastructure, health information exchange, and physician alignment strategies to coordinate care across settings. The model has demonstrated modest savings at the national level, though performance varies widely based on organizational maturity, payer mix, and local market conditions.