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Delivery system characteristics and their association with quality and costs of care: Implications for accountable care organizations

Chukmaitov, Askar; Harless, David W.; Bazzoli, Gloria J.; Carretta, Henry J.; Siangphoe, Umaporn

doi: 10.1097/HMR.0000000000000014

Background: Implementation of accountable care organizations (ACOs) is currently underway, but there is limited empirical evidence on the merits of the ACO model.

Purpose: The aim was to study the associations between delivery system characteristics and ACO competencies, including centralization strategies to manage organizations, hospital integration with physicians and outpatient facilities, health information technology, infrastructure to monitor community health and report quality, and risk-adjusted 30-day all-cause mortality and case-mixed-adjusted inpatient costs for the Medicare population.

Methodology: Panel data (2006–2009) were assembled from Florida and multiple sources: inpatient hospital discharge, vital statistics, the American Hospital Association, the Healthcare Information and Management Systems Society, and other databases. We applied a panel study design, controlling for hospital and market characteristics.

Principal Findings: Hospitals that were in centralized health systems or became more centralized over the study period had significantly larger reductions in mortality compared with hospitals that remained freestanding. Surprisingly, tightly integrated hospital–physician arrangements were associated with increased mortality; as such, hospitals may wish to proceed cautiously when developing specific types of alignment with local physician organizations. We observed no statistically significant differences in the growth rate of costs across hospitals in any of the health systems studied relative to freestanding hospitals. Although we observed quality improvement in some organizational types, these outcome improvements were not coupled with the additional desired objective of lower cost growth. This implies that additional changes not present during our study period, potentially changes in provider payment approaches, are essential for achieving the ACO objectives of higher quality of care at lower costs.

Practice Implications: Provider organizations implementing ACOs should consider centralizing service delivery as a viable strategy to improve quality of care, although the strategy did not result in lower cost growth.

Askar Chukmaitov, MD, PhD, is Assistant Professor, Department of Healthcare Policy and Research, Virginia Commonwealth University, PO Box 980430, Richmond, Virginia. E-mail:

David W. Harless, PhD, is Professor, Department of Economics, Virginia Commonwealth University, PO Box 844000, Richmond, Virginia. E-mail:

Gloria J. Bazzoli, PhD, is Bon Secours Professor of Health Administration Department of Health Administration, Virginia Commonwealth University, PO Box 980203, Richmond, Virginia. E-mail:

Henry J. Carretta, PhD, is Assistant Professor, Division of Health Affairs, Florida State University, Tallahassee, Florida. E-mail:

Umaporn Siangphoe, MS, is Research Associate, Department of Healthcare Policy and Research, Virginia Commonwealth University, PO Box 980430, Richmond, Virginia. E-mail:

The authors have disclosed that they have no significant relationship with, or financial interest in, any commercial companies pertaining to this article.

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