ACOs were promoted in the 2010 Patient Protection and Affordable Care Act (ACA) to incentivize integrated care and cost control. Because they involve vertical and horizontal collaboration, ACOs also have the potential to harm competition. In this paper, we analyze ACO entry and formation patterns with the use of a unique, proprietary database that includes public (Medicare) and private ACOs. We estimate an empirical model that explains county-level ACO entry as a function of: physician, hospital, and insurance market structure; demographics; and other economic and regulatory factors. We find that physician concentration by organization has little effect. In contrast, physician concentration by geographic site-which is a new measure of locational concentration of physicians-discourages ACO entry. Hospital concentration generally has a negative effect. HMO penetration is a strong predictor of ACO entry, while physician-hospital organizations have little effect. Small markets discourage entry, which suggests economies of scale for ACOs. Predictors of public and private ACO entry are different. State regulations of nursing and the corporate practice of medicine have little effect.

In 2012, the share of California's Gross State Product consumed by healthcare was 15.4%, and approximately 50% of healthcare spending went to care for 5% of the population. To address such cost challenges as well as to improve quality of care and patient outcomes, a group of California's private and public sector healthcare leaders, with academic and analytical expertise provided by the University of California, Berkeley's School of Public Health, came together in a collaboration known as the Berkeley Forum for Improving California's Healthcare Delivery System. This Report lays out the Forum's Vision: A rapid shift towards risk-adjusted global payments and coordinated care provided in large, integrated systems. Furthermore, the Forum supports the implementation of seven initiatives, such as the greater use of patient-centered medical homes and palliative care, as well as increased physical activity. Together, these initiatives are estimated to reduce healthcare spending in the state by $110 billion (or $800 per household per year) between 2013 and 2022. These savings would bend the cost curve, reducing the expected share of Gross State Product consumed by healthcare, from the estimated 17.1% to 16.5% in 2022.

In 2012, the share of California's Gross State Product consumed by healthcare was 15.4%, and approximately 50% of healthcare spending went to care for 5% of the population. To address such cost challenges as well as to improve quality of care and patient outcomes, a group of California's private and public sector healthcare leaders, with academic and analytical expertise provided by the University of California, Berkeley's School of Public Health, came together in a collaboration known as the Berkeley Forum for Improving California's Healthcare Delivery System. This Report lays out the Forum's Vision: A rapid shift towards risk-adjusted global payments and coordinated care provided in large, integrated systems. Furthermore, the Forum supports the implementation of seven initiatives, such as the greater use of patient-centered medical homes and palliative care, as well as increased physical activity. Together, these initiatives are estimated to reduce healthcare spending in the state by $110 billion (or $800 per household per year) between 2013 and 2022. These savings would bend the cost curve, reducing the expected share of Gross State Product consumed by healthcare, from the estimated 17.1% to 16.5% in 2022.

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