Trends in market share among hospitals participating in ACOs and nonparticipants.

Objectives:  To assess trends in market share (MS) over time among hospitals participating in Medicare accountable care organizations (ACOs) and non-ACO participants, and evaluate correlates of differences.

Study design: Longitudinal study of US hospital and ACO data for 3534 short-term acute care hospitals ever participating in Medicare ACOs or not across hospital referral regions (HRRs) from Milliman Torch Insight (2011-2020).

Methods: Using HRR as the local market, we calculated 3 hospital MS measures using annual net patient revenue, discharges, and beds, and we calculated market concentration using a modified Herfindahl-Hirschman Index. We compared hospital characteristics by Medicare ACO participation. In longitudinal, multivariable ordinary least squares regressions, we examined the association among hospital MS, ACO participation, and market concentration.

Results:  Thirty percent of hospitals (n = 1048) reported ever participating in ACOs. Across MS measures, ACO participants had larger MS, with a mean MS of 11.5 (vs 8.5 for nonparticipants) for net patient revenue, 11.4 (vs 8.4) for discharges, and 10.9 (vs 8.6) for beds. The difference in MS between ACO participants and nonparticipants was larger in more concentrated markets relative to less concentrated markets. ACO participation was associated with increases in mean MS of 1.7 percentage points (PP) for net patient revenue, 2.0 PP for discharges, and 1.6 PP for beds. ACO participation was associated with additional MS gains in more (vs less) concentrated markets. More importantly, baseline (2011) MS emerged as the most important predictor of MS growth.

Conclusions: Hospitals participating in ACOs still surpass nonparticipants on MS. Our finding that baseline MS is most predictive of future MS growth suggests that competition should be managed prior to ACO entry and participation should be closely monitored in concentrated markets. With competition fostering quality and improving patient welfare, MS gains associated with hospital ACO participation may suggest the need for future assessments to ensure that quality and patient welfare do not decrease over time.