Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

How to Profit from the Transformation of Medicare

By Michael Douglass and Dave Williamson - Mar 16, 2014 at 6:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Accountable Care Organizations could fundamentally change how Medicare does business.

One of the most game-changing new strategies in health care promoted by the Affordable Care Act, better known as Obamacare, is the introduction of value-based health care. This marks a critical shift from the current fee-for-service system, in which providers are paid for each test and procedure, toward a system that rewards providers based on patient health outcomes.

The law's architects hope that this shift will both improve the quality of care and reduce ballooning Medicare costs. With the Office of the Inspector General for the Department of Health and Human Services reporting that medical errors and general "bad care" contributed to over 180,000 Medicare deaths in 2010, pressure has been building to produce a fix.

Accountable Care Organizations, or ACOs, are the centerpiece of Obamacare's strategy for bending the Medicare cost curve and hopefully improving patient health outcomes. The Centers for Medicare & Medicaid Services, or CMS, recently released data from the first year of the ACO program. Given Medicare's size and pricing power, the results of the Medicare experiment with ACOs may fundamentally transform the U.S. health care system.. On this Friday's episode of Market Checkup, Motley Fool health care analysts David Williamson and Michael Douglass discuss the results and how investors can best profit from this health care megatrend.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
UNH
$468.86 (0.89%) $4.13
Aetna Inc. Stock Quote
Aetna Inc.
AET
Tenet Healthcare Corp. Stock Quote
Tenet Healthcare Corp.
THC
$75.90 (0.72%) $0.54

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
652%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/09/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.