ACOs Gain by Shifting Money Away from Skilled Nursing

Skilled nursing providers have long been wary of accountable care organizations (ACOs), fearing that the models’ emphasis on cost-sharing might drive dollars away from their buildings. And a new study shows that those concerns might be grounded in reality.

For every 1% that a given ACO cut skilled nursing spending, the overall savings rate increased by 0.82%, according to results of a three-year analysis published in the March edition of the American Journal of Accountable Care.

The team, led by David Muhlestein of the consulting firm Leavitt Partners, looked at ACOs that participated in the Medicare Shared Savings Program (MSSP) between 2013 and 2016 and found that most were shifting dollars away from inpatient services. SNF spending in particular declined as a proportion of total spending and on an absolute basis, even while absolute spending on inpatient care rose during that period.

“We also found that although all MSSP ACOs are shifting their expenditures, the ACOs that improved their savings rate most rapidly were those that had shifted SNF and inpatient expenditures more dramatically,” the researchers wrote. “This finding indicates that the degree to which ACOs shift their expenditures matters, and that significant additional savings can be gained by shifting inpatient and SNF spending toward physician services.”

Those results confirm the suspicion in the industry that ACOs could gain from dumping generally higher-cost SNFs for cheaper options. But home health, which is typically identified as a more cost-effective setting for long-term care, also saw lower dollar amounts from ACOs relative to physician and hospice services.

“Increasing care in the physician office setting may reduce hospitalizations and the increased costs associated with inpatient stays, while focusing on well-structured care transitions between the hospital and the PAC setting may reduce unnecessary costs,” the researchers observed.

Read the full paper at the American Journal of Accountable Care.

Written by Alex Spanko

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Alex Spanko
Alex covers the long-term health care industry for Aging Media Network, with a specific interest in the intersection of finance and policy. Outside of work, he reads nonfiction, experiments in the kitchen, yells at Mets games, and enjoys pretty much any type of whiskey or scotch — often all at the same time.

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