Cost and Quality Performance of Accountable Care Organizations: An Empirical Investigation

Abstract

We examine the impact of leadership diversity, care delivery, and experience on cost and quality performance of 255 Accountable Care Organizations (ACOs) - networks of healthcare providers who join voluntarily to provide high-quality coordinated care to patients to reduce medical expenditures. We ope-rationalize care delivery using primary care services and association with community and rural health clinics. Our results suggest that:

(i) having diverse leadership in their governing board helps in better cost performance of ACOs,

(ii) using specialists for providing primary care services increases cost and reduces quality performance,

(iii) ACOs that are associated with community and rural health clinics exhibit better quality and cost performance; specifically, providing majority of care services by primary care providers and nurse practitioners, and having affiliation with hospitals improve cost performance of such ACOs.

While differences across payer types and patient populations exist, our research suggests ample improvement opportunities in the ACO model and provides policy level directives for managing the ACOs.

Keywords: healthcare operations, accountable care organizations, aco