This is archived content, for historical reference only.

To highlight variation in affordability, access, and quality of care across the state, CHCF supported a series of market studies in six regions: Fresno, Los Angeles, Riverside/San Bernardino, Sacramento, San Diego, and the San Francisco Bay Area.

One issue examined across all six regions is the advent of the accountable care organization (ACO) — a group of hospitals, physicians, and other providers who share responsibility for the cost and quality of care for a defined patient population.

With the passage of the Affordable Care Act (ACA), more of these arranged partnerships, which include public and private payers, have sprung up. This paper explores the factors that have spurred ACO activity in California since 2008, describes how the state’s commercial insurance market has affected ACO product design, and identifies market conditions in local communities that affect ACO product development and structure. The analysis also considers how market factors are likely to affect the evolution of commercial ACO arrangements in California and the rest of the country.

Key findings include:

• California’s unique market factors — large physician organizations experienced in managing financial risk for patient care, and competitive pressure from the growing dominance of Kaiser Permanente — have helped drive interest in developing ACO agreements in the state.
• Initial California ACO collaborations have combined payment changes with new limited-network ACO insurance products, but they are not developing uniformly across the state. The pace of ACO product development varies according to insurer and provider market structure and competition in each community.
• While significant savings are possible, ACO efforts require intensive collaboration and investment to support care management and exchange of sensitive performance data. These commitments present challenges even in California communities where market conditions, and a long history of capitation, are favorable for ACO development.

The complete issue brief is available under Document Downloads, and the six regional market studies are available under Related CHCF Pages.

All of these issue briefs are published as part of the CHCF California Health Care Almanac, an online clearinghouse for key data and analyses of California’s medical system.