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Physician-Hospital Integration and Efficiency of Accountable Care Organizations
Driven by the impetus of accountable care organizations (ACOs), physicians are increasingly employed by hospitals, leading to greater physician-hospital integration. However, little is known about whether physician-hospital integration in ACOs is improving the efficiency of healthcare delivery brought about by improved coordination of services across care settings.
Objective
To evaluate the association between physician-hospital integration and improvement in technical and allocative efficiency of ACOs.
Methods
In 2009, a private carrier in Massachusetts launched an ACO-like contract with providers. Under this arrangement, provider organizations are responsible for the full continuum of care received by applicable beneficiaries regardless of where their care is rendered. Organizational structure of these entities vary; some comprise physician groups alone, while others include both physicians and hospitals. The Massachusetts commercial ACOs are an ideal sample for study of the impact of integration on ACO performance because they are subject to similar contract terms and operate in the same state, significantly reducing heterogeneity among provider groups. 16 organizations entered the contract between 2009 and 2013.
Using the Massachusetts All Payers Claims Database, and following prior work, we defined level of integration by the proportion of PCPs in an ACO who exclusively bill outpatient care services in a hospital outpatient department, suggesting employment or practice ownership by a hospital. We identified nonelderly enrollees in health-management-organization or point-of-service plans with the carrier and served by one of the 16 entities. The study sample included 59,698 index admissions between January 1, 2009 and December 31, 2013. Difference-in-difference estimation was used to compare changes in outcomes between low versus high integrated entities, adjusting for patient demographic characteristics, comorbidities, health risk, hospital fixed effects, and secular trend.
Outcomes
We used length of stay (LOS) of the index hospitalization for all causes, excluding admissions for obstetric or psychiatric diagnoses, medical treatment of cancer, and rehabilitation, as a marker of technical efficiency. Regarding allocative efficiency, we adopted socioeconomic disparities in 30-day all-cause unplanned readmission rates as a marker.
Results
Preliminary findings indicate that higher integration was not associated with a reduction in LOS among the overall sample, suggesting physician-hospital integration did not lead to greater technical efficiency in general. However, a significant reduction in LOS was observed among the sickest patients (highest quartile of risk score): -0.4 days [95% CI, -0.81 to -0.03] or -6.4% of the pre-contract unadjusted mean of 6.6 days.
For the second outcome, higher integration was associated with a significant reduction in 30-day readmission rates (differential change, -1.1 percentage points (pp.) [95% CI, -2.09 to -0.09]). Analyses stratified by SES-areas shows the observed decrease mainly occurred in high-socioeconomic areas (-1.3 [95% CI, -2.47 to -0.12] pp. for high-SES zip-codes; -0.5 [95% CI, -2.45 to 1.35] pp. for low-SES zip-codes). However, a combined model indicated no significant difference between low- and high-SES areas.
Conclusions
We found no conclusive evidence that high integration is associated with greater technical or allocative efficiency. Further investigation into the effects of vertical integration on provider behaviors is warranted and will inform the ongoing development of ACOs.