Relationships between physicians and hospitals have changed considerably over the past decade, as hospitals and physician groups have integrated and new public and private payment policies have created financial interdependence. The extent to which accountable care organizations (ACOs) involve hospitals in their operations may prove to be vitally important, because managing hospital care is a key part of improving health care quality and lowering cost growth. Using primary data on ACO composition and capabilities paired with hospital characteristics, we found that 20 percent of US hospitals were part of an ACO in 2014. Hospitals that were in urban areas, were nonprofit, or had a smaller share of Medicare patients were more likely to participate in ACOs, compared to hospitals that were in more rural areas, were for-profit or government owned, or had a larger share of Medicare patients, respectively. Qualitative data identified the following advantages of including a hospital in an ACO: the availability of start-up capital, advanced data sharing, and engagement of providers across the care continuum. Although the 63 percent of ACOs that included hospitals offered more comprehensive services compared to ACOs without hospitals, we found no differences between the two groups in their ability to manage hospital-related aspects of patient care.
Keywords: Health Reform; Hospitals; Medicare; Organization and Delivery of Care; Physicians.
Project HOPE—The People-to-People Health Foundation, Inc.