Impact of Formal and Informal Networks on Collaboration–An Econometric Study of ACOs in MSSP

Abstract

Despite a consensus that both formal and informal networks play a critical role in the design and delivery of services, empirical evidence linking their interrelationships and collaborative outcomes at the network level remains scarce. Using the social network lens, this study collects longitudinal data (2014-2015) from 240 Accountable Care Organizations (ACOs) in the United States Medicare Shared Saving Program (MSSP) to study their relationships. ACOs are networks of hospitals, physicians, and other healthcare providers voluntarily coming together and jointly responsible for the cost and quality of care for a defined patient population. Formal networks among ACO participants allows explicit knowledge exchange sharing while informal networks allows tacit knowledge exchanges through physician sharing. Results from our analyses suggest that the participating in MSSP ACOs does benefits hospital’ s performance, measured as experiential quality and readmission rates. On the network level, we further find that formal networks are associated with reduced readmission rates and informal networks are associated with improved experiential quality of ACO assigned beneficiaries. Our findings suggest an important implication for ACO managers on how to leverage different forms of networks to achieve improvement along different performance dimensions.