Defining Accountable Care Organizations

Facing the most sweeping payment transformation in history, healthcare systems are struggling to figure out how the shift to different types of value-based and shared-risk models will impact their operations and bottom line.  One of the most discussed models is the Accountable Care Organization (ACO).  ACOs are groups of doctors, hospitals, and other healthcare providers who come together voluntarily to give coordinated high quality care to their patients.


Health Catalyst views the term ACO in a broader way beyond the federal definition.  In this context, the term ACO implies very simply the shift in the reimbursement from procedure-based, fee-for-service to fee-for-quality, disease or condition-based reimbursement with capitated payments to healthcare delivery organizations on a per-case and per-capita basis.

In 2012, accountable care started to move from theory and policy to practice.  Hospitals and doctors began grappling to decide which new strategies and investments  would be the most likely to achieve higher quality and lower costs.  A foundational component of that strategy is the IT infrastructure necessary to support the ACO goals.

The Five Critical Information Systems that Drive Accountable Care

aco-gears-simpleHealth Catalyst believes there are five information systems that are indispensable to the success of an ACO.

Those five critical information systems are:

  1. An Electronic Medical Record (EMR)
    used in a consistent and meaningful way across the accountable care enterprise, to document patients’ healthcare status and treatment.
  2. A Health Information Exchange (HIE)
    to enable the sharing of patients’ clinical data across disparate EMRs in the accountable care enterprise.
  3. An Activity Based Costing System (ABC)
    to enable detailed, patient-specific collection of cost data that in turn enables the accountable care organization to precisely understand cost of production and revenue margins in capitated payment models.
  4. A Patient Reported Outcomes System (PRO)
    to enable the complete understanding of clinical outcomes and quality.
  5. An Enterprise Data Warehouse (EDW) is central and indispensable to the analysis of data collected in the information systems described above, and more.

EMR and HIE Systems Have Failed to Meet Expectations


Over the past seven years, the US healthcare industry has experienced an unprecedented $100B investment in the first two IT components, EMR and HIE systems.  However, little attention has been paid to the other three components of ACO IT systems described above

  • ABC systems
  • PRO systems
  • EDW platform

Despite those the massive investments, there is no compelling or defendable evidence of any notable return on investment.  The needle is not moving on the dashboard of US quality of care nor per capita cost per care.  To worsen the bleak picture, physician satisfaction with the products of these investments is 39% and declining—6 out of 10 physicians are dissatisfied with the EMR they must use to support the treatment of their patients.  Seventy-eight percent of public HIEs have failed due to financial insolvency after federal and state grant monies are removed from the model.


An EDW Unlocks your ACO IT Investment 

While it is true that little attention is being paid to the next two systems, ABC systems and PRO systems, it is the fifth component, the EDW platform, that is emerging as the central component in preventing or unlocking the success of the other four data collection systems.  For example, one-third of the organizations in the CMS Pioneer ACO Program are dropping out because, despite their investments in EMRs and HIEs, these organizations are unable to adequately quantify the quality of care and financial risk for managing patients in the ACO.   The inability to integrate and analyze data in an EDW is  cited as “the single most frustrating issue” those organizations face.

The Enterprise Data Warehouse “EDW” then, is the platform that enables the analysis of clinical, financial, and patient reported data in a single database repository.  Unlike the ROI track record of EMRs and HIEs, Enterprise Data Warehouses “EDWs” have consistently shown double and triple digit ROI in healthcare and other industries. And yet, less than 25% of healthcare organizations have any type of EDW and less than 10% of those few organizations are operating consistently at Level 5 of the Healthcare Analytic Adoption Model by using data to measure and manage evidence-based care.

The EDW is the system that unlocks the Return in the ROI of the other four ACO IT systems.

Why 3 of the Top 6 ACOs Have Selected Health Catalyst   

Many of the leading ACOs have already recognized the need for a clinically effective, agile data warehouse platform like the one offered by Health Catalyst.  In fact 3 out of the top 6 ACOs (as measured by Modern Healthcare ACO survey – July 2013) have selected Health Catalyst as their data warehouse provider.  They have recognized that the data warehouse is the central gear that can drive the ACO engine.

Health Catalyst ACO Products and Solutions

Health Catalyst deploys a unique Late-Binding™ Data Warehouse that enables healthcare organizations to automate extraction, aggregation and integration of clinical, financial, administrative, patient experience and other relevant data and apply advanced healthcare analytics to organize and measure clinical, patient safety, cost and patient satisfaction processes and outcomes. Developing this information management capability is crucial to shifting to evidence-based care required to succeed under the new shared accountability models of value-based purchasing and risk payment models such as ACOs.

The Health Catalyst Late-Binding™ Data Warehouse and Analytics Platform


For instance, without an agile, adaptable data warehouse, health systems and their clinicians are unable to integrate clinical data with financial, standard costing and patient satisfaction data located in disparate transactional systems, each of which has its own unique system for identifying patients and providers. That has prevented them from drawing significant conclusions from the insights, which integrated data collocated and linked in a data warehouse could provide to reduce variation in care delivery and thereby improve efficiencies and cut costs without sacrificing the quality or safety of care.

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