U.S. health insurer Aetna Inc. (AET) has agreed to form an Accountable Care Organization (“ACO”) with Brown & Toland Physicians (“BTP”). This is in sync with the company’s effort to improve the safety and quality of patient care and make health care more affordable.
The newly formed ACO will serve Aetna’s members who are enrolled in preferred provider organization (“PPO”) and Managed Choice (“MC”) plan. It will also cover those who receive care from Brown & Toland primary care doctors.
Brown & Toland doctors will receive remuneration based on their performance in reducing patient health care costs while providing them best service.
An ACO is a collaboration of health care providers who voluntarily form alliances to provide coordinated high quality care to patients. An ACO is accountable for the quality, cost, and overall care offered to members. By focusing on the needs of patients and linking payments to outcomes, the model is intended to improve the health of individuals and communities and curb rising health care costs.
ACOs or collaborative accountable care is one of the several ways by which President Obama wants to improve the quality of health of all Americans. It is viewed as a tool that would deliver seamless, high quality care for the overall population.
The Health Care Reform called for such an arrangement in order to trim unnecessary expenses associated with the absence of coordination between multiple physicians and other providers. Most Americans with multiple chronic conditions receive care from multiple physicians, and it has been observed that few patients were not taken care of to the fullest extent possible by some physicians. A large percentage of the sick population ended up being victims of medical errors and faced hospital readmissions within days of their discharge. Thus, ACOs were formed to reduce the exorbitant amounts spent due to lack of managed care.
Other health insuring giants like UnitedHealth Group Inc. (UNH) and CIGNA Corp. (CI) are also aggressively forming ACOs. Going forward, we expect such patient-centered collaborations to rapidly grow in numbers.
Aetna currently retains a Zacks Rank #3 (Hold). We are also maintaining our long-term Neutral recommendation on the shares.