Considerations when joining an ACO

Although primary care physicians serve as the fundamental building block of the Accountable Care Organization (ACO) structure, the overall essence of the ACO is to provide a consistent network of care. Providing this level of integrated care will consequently require coordination among various specialists.

Dermatologists can participate in an ACO by:

  • Becoming a member of a large multispecialty or specialty group that contracts with an existing ACO.
  • Gaining employment in a hospital that joins or forms an ACO.
  • Joining a network of individual practices with a primary care physician to form an ACO.

However, before taking the leap into the ACO structure, dermatologists should consider several individual factors. 

The market: Whether a dermatologist should join an ACO is highly dependent on the local marketplace — or the competitive landscape. Talk with the individual physicians in your market to find out what their plans are with regard to ACOs. What percentage of the dermatologists in your neighborhood have joined, or plan on joining a multispecialty group that contracts with an ACO, a network of individual practices forming an ACO, or a hospital ACO? Will you be the only dermatologist in the area who has not joined? 

Also, find out what the local hospitals in your area are doing. If a dermatologist lives in a town where there is only one hospital and most of the physicians in the area are employed by that hospital, then participation in an ACO may be the best option to avoid getting shut out of a referral network.

Essentially, by taking a look at your competition, is it in your practice’s best interest to conform to what other specialists are doing? Or do you have options and the ability to continue functioning individually without the referrals of an ACO?


The financials: It’s important to consider potential incentives for specialists interested in joining an ACO, so dermatologists should review compensation systems for each option carefully. The Centers for Medicare and Medicaid Services (CMS) does not provide rules regarding how income is distributed internally among the individual members of an ACO. If you are considering joining an ACO, it is important to review all contracting provisions.

Dermatologists should also keep in mind that it could take several years before an ACO realizes any savings because of high start-up costs. Moreover, there is no guarantee that savings will be realized or that realized savings can be sustained over the long term. CMS has estimated that startup costs for an ACO could be $1.7 million per organization. If you’re considering joining an ACO, specialists should find out if the organization has enough capital to cover startup costs. Additionally, it is important to find out which members in the ACO are responsible for covering such costs. For example, hospitals may be well-equipped to pay for the ACO’s infrastructure needs; however, an independent physician association (IPA) may not and could require the individual physicians to foot the bill.

Referral patterns: Right now, the potential effect on referral patterns may be dermatologists’ greatest concern with regard to joining an ACO. It is important to note, however, that Medicare beneficiaries who fall within an ACO are not required to see physicians only within the ACOs where their primary care physician is enrolled. Therefore, patients who already have an established relationship with a dermatologist can continue to see that dermatologist. Likewise, private sector ACOs cannot limit their patients to see only those physicians who are within the ACO.

However, for patients who seek referrals for dermatological care, physician participants in ACOs will likely encourage their patients to see dermatologists with whom they have good working relationships and likely those who are within the referring physician’s ACO. Therefore, dermatologists who are not within that ACO may lose out on referrals. 

Practice autonomy and environment: ACOs with high rates of dermatology referrals may want to hire a dermatologist to reduce or control their costs. However, dermatologists may be concerned that by joining an ACO, they could lose some control of their patients’ dermatological care. ACO physicians could initially resist referring patients to dermatologists if they perceive their own dermatologic care to be more cost-effective than dermatologists’ care. Prior to joining an ACO, it is critical for dermatologists to establish good working relationships with referring members of ACOs, and to demonstrate the cost-effective benefits of a dermatologist providing dermatologic care. 

In regard to practicing within the ACO environment, physician participants in ACOs will reward dermatologists who provide prompt access and are perceived as providing cost-effective, quality-based care. ACOs may require dermatologists to do inpatient consults, and be available after hours and on weekends so their patients do not have to use high-cost emergency rooms for care. It will be up to the individual dermatologist to determine whether this practice environment is best for them.

Patient and care base: If you’re considering a Medicare Shared Savings Program (MSSP) ACO model, dermatologists should consider the type of patients that make up their patient base. If Medicare patients make up a small percentage of your total patients, joining an MSSP would require you to change the structure of your practice.

In a hospital setting, value improvement is based on inpatient care. The hospital setting may not be the best choice for dermatologists, however, because dermatologists focus on early diagnosis and skin disease management. For this reason, joining single-specialty ACOs or multispecialty groups that are more likely to value improvement based on prevention and management could be a more appropriate option for dermatologists.

It also is important to note that dermatologists, as specialists, can join multiple ACOs, but should evaluate local circumstances carefully prior to making that decision. Involvement in one ACO could improve the relationship with the ACO’s primary care physician(s), compared to mediocre relationships with multiple ACO PCPs. However, some dermatology patients may be seen across several ACOs, and, in that case, working with multiple ACOs could improve those patients’ care.