Financial Performance of Hospitals Participating in Accountable Care Organizations

Abstract

The study examines the influence of accountable care organizations ACO participation on hospital financial performance. It poses two research questions: 1) how does ACO participation influence hospital financial performance? 2) How do organizational factors- hospital size, electronic health records (EHR) utilization, and ambulatory services- moderate the relationship between hospital ACO participation and financial performance? The study used longitudinal sample of general and surgical hospitals operating in United States from 2009 to 2017. The data were obtained from several sources including American Hospital Association (AHA), AHA survey of care system and payment, hospital cost reports, AHA information technology and Area Health Resource File (AHRF). Inverse probability weights (IPW)-adjusted difference-in-differences estimator with year and hospital fixed effects was used to analyze the first research question, while random effect models were used to examine the moderating effects. The difference-in differences results showed that ACO hospitals experienced significant change in operating margins and excess margins but did not experience any changes in operating revenue or operating cost. The random effect results showed that, compared to non-ACO hospitals, smaller ACO hospitals and ACO hospitals with higher EHR utilization experienced better financial performance than other ACO hospitals. In Summary, the results showed no evidence of harm on . hospitals’ bottom line