Exploring Accountable Care in Canada: Integrating Financial and Quality Incentives for Physicians and Hospitals

Recommendations of the Report

ACOs are promising vehicles for aligning physician and hospital interests in improving quality and reducing cost. However, successful implementation and realization of the ACO mission requires that attention be paid to supporting capacity building within the ACOs, development of a culture of learning and improvement, as well as rigorous monitoring and evaluation. While the jury is still out on success of ACO implementation efforts in the United States, the results presented here suggest that further exploration of their potential in Canada is warranted, and that distinct characteristics of the Canadian system might require a slightly different approach.


  • Using existing administrative data, it is possible to construct networks involving natural linkages among patients, physicians, and hospitals based on existing patient flow patterns; in Ontario, our data revealed the existence of 78 such networks, where the patient populations are relatively self-contained, in that individual residents receive most of their care from providers within their respective networks
  • Performance indicators show substantial variation in quality across the networks, suggesting opportunities for quality improvement at the network level 
  • Using existing utilization data and costing methodologies, it is possible to create per-person cost profiles for each network, as well spending benchmarks on a prospective basis 
  • Potential early adopters of ACO-like models in Ontario – individuals currently involved in initiatives aimed at cost-quality improvement – indicated a willingness toward hospitals and physicians jointly assuming accountability for the cost and quality of care of persons in their network, including arrangements to share the gains (or losses) with the province, when spending falls below (or above) the benchmark, on the condition that quality targets are met 
  • Financial models constructed using rules similar to those governing the ACO Shared Savings Program in the US suggest that net savings of approximately $200 million per year are possible for the province of Ontario 
  • In establishing ACO-like vehicles, two potential models might be considered: ownership/membership model in which a single corporation controls all of the affairs of the network, or a contract model in which autonomous provider organizations within the network unite through a risk-bearing corporate entity; our legal review indicates that the contract model could be implemented in Ontario with little to no regulatory change 
  • Regardless of which vehicle is used, for-profit, not-for-profit or charitable corporation status could be pursued, with varying implications on board powers, ability to retain and distribute surplus revenues, taxation and other important issues.