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Leavitt Partners Releases “No Evidence That ACO-Affiliated Hospitals Are Narrowing Their PAC Networks” White Paper

Salt Lake City, May 22, 2019—Today, Leavitt Partners released a white paper titled “No Evidence That ACO-Affiliated Hospitals are Narrowing Their PAC Networks.” This white paper details the findings from an analysis of Medicare claims data that was compared with Accountable Care Organization (ACO) affiliation data from Torch Insight™, a proprietary analytics platform and compendium of health care data. Hospitals affiliated with or owned by an ACO are financially incentivized to manage the health and health care costs of their defined populations. One potential means of reducing unnecessary costs is by referring patients to fewer, higher-quality post-acute care (PAC) facilities following hospitalization.

To understand whether existing market trends exhibit the implementation of this strategy for cost savings within risk-bearing arrangements, Leavitt Partners researchers examined whether hospitals narrowed their post-acute care networks following affiliation with an accountable care organization. Researchers hypothesized that hospitals affiliated with ACOs would narrow their PAC networks in order to decrease the variation in patient outcomes potentially attributable to the PAC. Three primary takeaways were extracted from the study:

  1. An analysis of 2012 – 2016 Medicare claims data from hospitals with ACO affiliations compared to hospitals without ACO affiliations showed no evidence that hospitals participating in accountable care organizations narrowed their post-acute care networks.
  2. Contrarily, researchers found that hospitals expanded their post-acute care networks and discharged patients more equally among post-acute care providers, suggesting that post-acute care optimization has not occurred.
  3. Despite the similar trends in network competition over time, ACO-affiliated hospitals did have larger and more competitive networks overall and evidence showed that non affiliated hospitals discharged to lower percentages of skilled nursing facilities over time.

Researchers identified various factors that may play a role in trends around PAC network expansion, including the growing demand for PAC services with an aging population and a potential scarcity of organizational resources that are needed to identify high-value providers and optimize referral processes. More focused alternative payment models such as BPCI or hospitals taking on downside risk may show different results.

According to David Muhlestein, chief research officer for Leavitt Partners, “Despite significant discussion around ACOs creating narrow optimized post acute care networks, these findings suggest that this has not comprehensively been done.”

Based on these study results, ACO leaders, hospital decision-makers, and other stakeholders should still recognize that identifying and referring to high-value post-acute care providers may still be a strong opportunity for accountable care organizations to improve outcomes and lower costs.

The white paper can be viewed here.


About Leavitt Partners:

Leavitt Partners is a health care intelligence business. The firm helps clients successfully navigate the evolving role of value in health care by informing, advising, and convening industry leaders on value market analytics, alternative payment models, federal strategies, insurance market insights, and alliances. Through its family of businesses, the firm provides investment support, data and analytics, member-based alliances, and direct services to clients to support decision-making strategies in the value economy. For more information please visit www.LeavittPartners.com.


About Leavitt Partners Insight
Leavitt Partners Insight is a SaaS health care data and analytics company founded and incubated at Leavitt Partners. The Torch Insight platform is the culmination of years spent splicing siloed data sets together, during which our team invested thousands of hours cleaning and validating data in preparation for analysis, and integration with business intelligence platforms. We excel at blending population health data with quality, financial, and performance metrics from stakeholders across key industries. We use that blended data to develop analytical models that reveal trends and truths, enabling our clients to make more intelligent decisions. We also offer our raw data and curated insights to clients. For more information, please visit https://torchinsight.com/.