accountable care organization (ACO)

ACOs offer financial incentives for healthcare providers to band together to better coordinate services for groups of patients and thereby improve the quality of care, all while lowering costs. Another focus of ACOs is to promote a reduction in hospital readmission rates for certain conditions, such as heart attack/heart failure and pneumonia.

ACOs can include primary care physicians, specialist physicians, hospitals, or other types of healthcare providers. Under the provisions of the PPACA that created ACOs, if an ACO achieves certain quality targets, the resulting savings are divided between the various providers who are part of the ACO.