Study finds ACOs reduce hospitalizations, spending

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A new study adds to evidence showing ACOs lead to better utilization and lower spending.

A recent study found an association between participation in an accountable care organization (ACO) and reduced rates of hospitalizations, as well as Medicare spending.

Using a combination of health system and Medicare data provided by a large Pioneer ACO in the Partners HealthCare System, the study, published in Health Affairs, sought to flesh out some of the details around previous findings that ACOs generate lower medical spending levels. Those findings have sparked interest in the ACO model, but the study’s authors indicate there has been little detailed analysis focused on the functional changes to utilization and spending generated by ACOs.

“Our major overall finding is that participating in an ACO and a care management program lowered utilization and spending,” the authors reported, adding that the reductions occurred across participants and over time.

The ACO in the study quickly saw significant reductions to visits to its emergency department, especially for those who could be treated in an outpatient setting. The program also produced an 8% drop in hospitalization rates, but in contrast these reductions correlated with longer exposure to the program. Based on this information, the authors suggest it’s important to give the program time to show the results of changes, which may take some a while to take root.

In terms of spending, the study found a modest, 2% reduction for ACO participants in the study.

The findings suggest targeting high-risk beneficiaries with “modifiable” conditions may produce better spending reductions than strategies targeting populations more broadly, the authors wrote. Encouraging patients to seek care in an outpatient setting rather than the emergency department also appears to be a viable cost-reduction strategy, per the study.

Beyond proving the basic efficacy of ACOs, the authors see enough evidence in their findings to support scaling care management programs that show evidence of success. They note that scalability will be crucial as the shift to value-based payment models spurs growth of ACOs and similar alternatives.