Assume you are the chief executive officer (CEO) of a large technology-intensive hospital in a community of 200,000 people that includes two other smaller community hospitals and a wide range of physicians and other providers working in private practice. Currently, you are paid by Medicare—the federal insurance program for the elderly—a fixed amount for every admission to your hospital, based on the severity of the patient’s needs.

Physicians and other providers in your community are paid fee-for-service. The federal government has just made an offer to your community that it form an ACO that could accept a capitated annual payment for each person eligible for Medicare.

Case Study Discussion

1. How would you go about deciding whether to accept that offer?

2. Would you want to lead that ACO or just be a part of it?

3. Would you argue against accepting the federal offer?

4. If you did want to proceed and even lead the effort to form an ACO, how would you coordinate with the other local hospitals and providers?

5. How might you change the way care currently is organized in your community, given the new financial incentives embedded in a capitated rate?