Factors that Influence ACO Formation

The prevalence of Accountable Care Organizations (ACOs) varies widely across the country, but research reveals they’re more likely to be in markets with greater consolidation.

The study from Rand Corp. and Harvard University ran in Health Affairs and found that regional factors are predictive of ACO formation.

For instance, the Northwest was essentially empty of ACOs. Meanwhile, the Northeast and the Midwest were far denser with the organizations. The study associated regional factors — like a greater fraction of hospital risk sharing, larger integrated hospital systems and primary care physicians practicing in large groups — with ACO formation.

Factors that proved not to be associated with ACO development were area income, Medicare per capita spending, Medicare Advantage enrollment rates and physicians density. As a result, the researchers determined that underlying provider integration in a region helps to drive ACO formation.

“We found that increased provider integration appears to be a key marker of where ACOs are forming,” wrote authors David Auerbach, Hangsheng Liu, Peter Hussey, Christopher Lau and Ateev Mehrotra.

According to RAND, these findings could help policymakers craft new policies to accelerate the growth of ACOs, after all they are a key cost control strategy that has been promoted under the Affordable Care Act.

“Consumers probably don't know whether their doctors and other health providers belong to an accountable care organization or not,” said Auerbach, the study's lead author and a policy analyst at RAND. “But these organizations are becoming more common and are a key to transforming health care delivery in the United States to a more-coordinated, high-quality and efficient system.”

The research analyzed 148 Medicare ACOs announced in 2012. The 2.3 million patients included in these groups account for 7% of Medicare recipients in fee-for-service programs. Furthermore, 77 private sector entities that resemble ACOs were analyzed.

“There is much policy interest in whether ACOs are forming in high-cost regions of the country,” the authors wrote. “If ACOs succeed in reducing spending, formation in these areas could mitigate geographic variation in Medicare spending. However, we found no strong pattern in the relationship between ACO penetration and Medicare spending or spending growth.”