The Effects of Accountable Care Organizations Forming Preferred Skilled Nursing Facility Networks on Market Share, Patient Composition, and Outcomes

Background: Through participation in payment reforms such as bundled payment and accountable care organizations (ACOs), hospitals are increasingly financially responsible for health care use and adverse health events occurring after hospital discharge. To improve management and coordination of postdischarge care, ACO hospitals are establishing a closer relationship with skilled nursing facilities (SNFs) through the formation of preferred SNF networks. Research Design: We evaluated the effects of preferred SNF network formation on care patterns and outcomes. We included 10 ACOs that established preferred SNF networks between 2014 and 2015 in the sample. We first investigated whether hospitals "steer" patients to preferred SNFs by examining the percentage of patients sent to preferred SNFs within each hospital before and after network formation. We then used a difference-in-difference model with SNF fixed effects to evaluate the changes in patient composition and outcomes of preferred SNF patients from ACO hospitals after network formation relative to patients from other hospitals. Results: We found that preferred network formation was not associated with higher market share or better outcomes for preferred SNF patients from ACO hospitals. However, we found a small increase in the average number of Elixhauser comorbidities for patients from ACO hospitals after network formation, relative to patients from non-ACO hospitals. Conclusions: After preferred SNF network formation, there is some evidence that ACO hospitals sent more complex patients to preferred SNFs, but there was no change in the volume of patients received by these SNFs. Furthermore, preferred network formation was not associated with improvement in patient outcomes.