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Productivity and quality of hospitals that joined the Medicare Shared Savings Accountable Care Organization Program

Abstract The productivity and quality of the first hospitals to join the Medicare Shared Savings Accountable Care Organization (ACO) Program are evaluated in this study. These ACO hospitals are compared to similar hospitals in a two-part analysis. Part one compares the productivity of ACO hospitals between 2008 and 2012 to similar hospitals using data envelopment analysis. Productivity is decomposed into technical efficiency and innovation changes. Part two analyzes how hospitals compare on quality indicators from the 2012 Hospital Compare survey. Hospitals that joined Medicare's ACO Program were found to be more productive than non-ACO hospitals between 2008 and 2012, driven entirely by gains in technical efficiency. All hospitals saw a decline in innovation during the time period. ACO hospitals were also more likely to be high performers in both productivity and quality measures. These results suggest hospitals that joined the ACO Program were those most likely to succeed in a program that rewards efficiency and quality. Thus, attributing successes in efficiency or quality improvement solely to the practices and characteristics of the ACO model may be misleading.