Analysis of ACO Legal Structure and its Implications: A SWOT Analysis

This report provides a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of the legal structure of Accountable Care Organizations (ACOs). It begins by examining the current for-profit, privately-held, informal legal structure of ACOs, highlighting its strengths such as providing a safe environment and government support, while also pointing out weaknesses like potential discrimination and lack of specific laws for transparency. The report then analyzes the recommended formal legal structure, emphasizing the benefits of increased coordination, financial incentives, and commitment to community missions. The report discusses the internal and external environments of the ACO, detailing the potential advantages and disadvantages associated with the recommended legal structure. References are provided from sources that outline the legal and operational considerations of ACOs. The report aims to provide a comprehensive overview of the legal landscape and the implications of different structural choices for ACOs.

Deciding on a Legal Structure 1
SWO Analysis of ACO’s legal structure

Deciding on a Legal Structure 2
Following are the Swot Analysis of Accountable Care Organization (ACO)
Swot Analysis of current legal structure: ‘profit-making privately owned informal
structure’
Accountable Care Organization is a group of, hospitals, and medical care providers who
collaborate to deliver quality Medicare services to the people at low cost in USA. It works as
“For-profit privately-held corporation”.
According to the current informal legal structure of ACO, there is a safe environment for the
patients’ treatment. Also, the organization also gets full support from the government in
carrying out its Medicare operations. However, there exist some issues of discrimination as
the organization is purely formed for making profits. It makes the organization to breach the
service quality standard laws (Fisher et al., 2012). Moreover, there are unspecified laws for
transparency in the inside activities of the organization. Implementation of technology aided
improvements increase the efficiency of ACO’s operations and compliance with the laws
also. There are some tax exemption advantages available to ACO as it works in a network to
support needy patients. However, complications in personal laws affect the US healthcare
laws in unfavourable manner.
Following is the SWOT analysis of existing legal structure of ACO:
Strengths
 a safe and transparent environment
 quality services
 Effective ethics hotline
 Support from the government
Weaknesses
 Less effective patients’ safety
measures
 Issues of discrimination
 No specific laws for disclosure of

Deciding on a Legal Structure 3
confidential activities
Opportunities
 Adoption of technology aided
improvements
 Efficiency in the compliance
with healthcare system
 Less tax
Threats
 Complex Personal laws
affecting the healthcare laws
 Ineffective integration of laws
Swot Analysis of recommended legal structure
The basic direction of US healthcare laws requires ACO to implement a ‘formal legal
structure’ which would allow the organization to collect and allocate payments for shared
savings for increasing compliance of healthcare laws and regulations passed by the
government. The partners will become strongly committed to their Community mission.
The formal legal structure assists the healthcare experts in the matters related to medical
safety compliance. Since present ACO model levels of coordination are informal and
therefore, need more defining. Also, gaps in coordination among ACO partners bring
communication issues which consequently interpret to systemic coordination dilemmas
(Hastings, 2011). However, ACO will have an opportunity to work in effective collaboration
with other medical care service organizations as there will be financial incentives by the US
government. Non-adherence to the defined healthcare standards will cause adverse
percussions on ACO organizational functioning. Following table shows the swot analysis of
the recommended formal legal structure of ACO:

Deciding on a Legal Structure 4
Advantageous to Legal
Structure Objective
Disadvantageous to Legal
Structure Objective
Internal Environment Strengths
 High Quality service
 Cost Effectiveness
 Efficiency in Care
coordination
 Strong Commitment
to Community
Mission
Weaknesses
 Inability to standard
measurement and
reporting
 Unsystematic
coordination level
External Environment Opportunities
 Greater return on
capital employed
 Increased Monetary
incentives
 Innovation and
development
Threats
 Statutory regulations
 Increased tax
obligations

Deciding on a Legal Structure 5
References
Fisher, E. S., Shortell, S. M., Kreindler, S. A., Citters, A. D., & Larson, B. K. (2012).
A Framework For Evaluating The Formation, Implementation, And Performance
Of Accountable Care Organizations. Health Affairs, 31(11), 2368-2378.
Hastings, D. (2011). The Medicare ACO proposed rule: Legal structure, governance,
and regulatory sections. Retrieved from http://healthaffairs.org/blog/2011/04/05/themedicare-
aco-proposed-rule-legal-structure-governance-and-regulatory-sections/