Performance of Accountable Care Organizations: Health Information Technology and Quality–Efficiency Trade-Offs

Abstract

Under a traditional fee-for-service payment model, healthcare providers typically compromise the quality of care in order to reduce costs. Drawing on data from a national sample of accountable care organizations (ACOs), we study whether financial incentives offered under the Affordable Care Act led to fundamental changes in care delivery. Our research suggests that effective use of health information technology (IT) by ACO providers is critical in balancing competing goals of quality and efficiency. Unlike hospitals that did not participate in value-based care initiatives, ACOs were able to generate better quality outcomes while also improving overall efficiency. Furthermore, ACO providers that used health IT effectively demonstrated better patient health outcomes due to greater information integration with other providers. In other words, ACOs created value by not only reducing the cost of care but also improving patient outcomes simultaneously. Our research provides a roadmap for practitioners to succeed in a value-based healthcare environment and for policy makers to design better incentives to promote interorganizational information sharing across providers. Our findings suggest that healthcare policy needs to incorporate appropriate incentives to foster effective IT use for care coordination between healthcare providers.