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The ACO model has gained widespread recognition through the rapid acceleration of the Medicare ACO program, which offers financial rewards to health care providers that meet certain cost and quality metrics. Since January 2012, the number of Medicare ACOs grew from 38 to about 260, a 6-fold increase. Now more than 4 million Medicare beneficiaries, about 8% of the program's 50 million enrollees, receive care through ACOs.
Proponents hope that the ACO team approach, in which every player has a financial stake in the patient's health, can improve the quality of care and tamp down skyrocketing costs. The rapid rise of the ACO is reminiscent of another health care institution, the Health Maintenance Organization (HMO), which grew to prominence in the 1990s. While the two models differ fundamentally in their payment and delivery structures, the ACO is helping to redefine the health care landscape just as the HMO once did.
Read more about the business challenges and opportunities facing health care providers in our report, Medicare ACOs and Shared Savings Models .