Essays on Providers' Behavioral Change in Response to the Adoption of the ACO Model

Abstract

This dissertation research examines how hospitals and providers respond to the Accountable Care Organization (ACO) model. In the first essay, Does ACO Status Influence Patients’ Hospital Charges? Evidence from Inpatient Charges in Florida, I investigate whether and how hospitals increase their inpatient charges after the entry into ACOs. Because the ACO model shifts healthcare resources into upstream care rather than expensive hospital stays, ACO hospitals are expected to lose inpatient admissions. In order to offset the revenue loss from a drop in inpatient admissions, ACO hospitals may adjust their inpatient charges. Using the 2009-2015 American Hospital Association Annual Survey and Healthcare Cost and Utilization Project - State Inpatient Databases in Florida, I estimate difference-in-differences models in an event study design. I find that, compared to non-ACO hospitals, ACO hospitals raise inpatient charges for self-pay patients by between 5.62 to 7.56 percent in the first three years from entry into ACOs. However, I do not find significant changes in inpatient charges for patients with insurance. The results suggest that ACO hospitals squeeze additional revenues and offset the loss by raising inpatient charges for charge-based payers. In the second essay, Do ACO Hospitals Reduce 30-Day All-Cause Readmissions for Medicare Patients? Evidence from Hospitals in Florida, I examine whether ACO hospitals reduce 30-day all-cause readmissions for Medicare patients, in addition to the Hospital Readmissions Reduction Program (HRRP). Whereas Medicare-wide HRRP aims at a limited number of health conditions, the Medicare ACO models include a target for reducing 30-day all-cause readmissions in their quality measures. Therefore, the Medicare ACO model can complement the HRRP in reducing hospital readmissions. Using the 2009-2015 American Hospital Annual Survey and Healthcare Cost and Utilization Project – State Inpatient Databases in Florida, I estimate a difference-in-difference model in an event study design. I find that hospitals reduced 30-day all-cause readmission rates by between 3.13 to 6.25 percent in the first three years from entry into ACOs. Particularly, hospitals focused on reducing readmissions for HRRP conditions in the early years of ACO entry and gradually reduced readmissions for non-HRRP conditions in the later years. In the third essay, Does Providers’ Participation in ACOs Improve the Receipt of Preventive Services?, I investigate whether ACO provider practices increase the use of preventive services for their patients. Under the Accountable Care Organization (ACO) model, the provider’s role in upstream care is critical to curbing overall healthcare costs. Therefore, ACOs are expected to perform better at caring for patients with enhanced outpatient and preventive services than traditional care delivery models. Using the 2015-2016 Medical Expenditure Panel Survey, I estimate a propensity score weighted OLS model. I find that ACO provider practices increase the use of preventive services by between 3.0 to 8.8 percentage points, compared to non-ACO counterparts. Particularly, ACO provider practices perform well in increasing the use of preventive services whose baseline utilization is low.