Cost of Practice Transformation in Primary Care: Joining an Accountable Care Organization

The purpose of this study is to examine the costs related to practice transformation from the perspective of primary care organizations transitioning to become participants in Accountable Care Organizations (ACOs). We pose two research questions: 1) Will a Rural Health Clinic that participates in an Accountable Care Organization see higher or lower cost per visit, and 2) If the cost per visit is higher or lower, how large will that difference be? We analyze administrative data from a panel of over 800 Rural Health Clinics for the period 2007 - 2013 using a treatment effects approach, where a clinic's participation in an ACO is viewed as a "treatment." Since the first year that an RHC could join an ACO was 2012 and our most recent year of complete data is 2013, we restricted our analysis of the impact of participation in an ACO to include only 2012 and 2013 data. The estimates of the average treatment effect on the treated (ATET) pertain to only those RHCs that joined ACOs. The results show that those 20 sample ACO RHCs experienced an average from $15.00 to $18.61 higher cost per visit than the matching non-ACO RHCs. At this very early stage of ACO development, our results must be considered very preliminary at best. Whatever conclusions we draw from these results are intended to merely suggest what might be found once many more RHCs join ACOs. The conclusions we draw from this early analysis can lay a foundation for more analysis after data are available when more RHCs join ACOs.