7 ACO Cost Drivers That Impact Value-Based Care Performance
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By PAGE Editor
Value-based care financial performance depends on how effectively ACO cost drivers are managed before they erode shared savings. Accountable care organizations have a difficult task that extends beyond patient care, and they need to control the expenditure of healthcare as well as comply with the rigid quality standards. The difference between hitting financial targets and falling short isn't luck. It's knowing exactly where costs are bleeding and stopping them early.
Organizations that succeed in value-based care identify cost drivers early and act faster than their peers. High hospital readmissions, disjointed care coordination, and poor workflows are not merely operational issues. They directly impact your bottom line. Knowing these seven ACO Cost Drivers enables you to have the roadmap to maximize shared savings and improve patient outcomes.
1. Hospital and Facility Utilization
This cost driver consumes 40-70% of total ACO spending. A lot of the admissions would have been avoided through improved communications and proactive care management. Readmissions increase after patients are discharged without a follow-up or medication reconciliation.
Building Effective Care Transitions
Every preventable readmission is a waste of shared savings and care transition failures. Extensive discharge planning should not occur after patients have left facilities, but this should occur in advance.
Effective strategies include:
48-hour follow-up calls to catch complications early
Medication reconciliation to prevent adverse events
Scheduled PCP appointments within 7 days of discharge
Real-time tracking of readmission patterns to identify systemic gaps
Uncontrolled diabetes, heart failure, or COPD are conditions that result in patients visiting the emergency department when they do not monitor their conditions regularly. Proactive outreach and ongoing monitoring of at-risk patients help keep conditions stable and reduce avoidable hospital visits.
2. Care Management Program Expenses
Care management is essential but expensive. Staffing care coordinators, patient educators, and monitoring programs create ongoing operational costs that must deliver measurable ROI. The challenge is balancing program intensity with efficiency. Not every patient needs intensive care management.
Smart Resource Allocation
Resources are distributed more effectively when ACOs stratify populations based on risk. Apply predictive analytics to isolate the 5-10% of patients who are at the highest risk and require intensive care.
Intensive care management can be deployed on the complex and expensive cases, and automated tools and patient portals can be deployed in the lower-risk groups. Track program ROI quarterly to adjust staffing and resource allocation based on actual performance. The right care management platform plays a critical role in determining whether programs generate savings or add operational expense.
3. Data and Analytics Infrastructure
Health IT infrastructure determines whether ACOs operate proactively or reactively. In the case of ACOs with a population of less than 50,000 lives covered, the licensing of an existing population health platform will provide a higher ROI than the development of custom systems. Without integrated data, population-level decision-making becomes incomplete and reactive.
Making Infrastructure Work
The digital health platform you choose should consolidate multiple data sources into one longitudinal patient record.
Key capabilities needed:
Integration with EHRs, claims data, and clinical systems
Predictive analytics for risk stratification
Real-time utilization tracking
Care gap identification
Analytics engines that run predictive and real-time insights simultaneously give ACOs the ability to act before costs escalate. You're not just reviewing what happened last month, you're seeing what's about to happen next week.
4. Provider Compensation and Incentive Structures
Poor compensation models encourage volume over quality. Incentives are not aligned with clinical or financial outcomes. Traditional fee-for-service rewards activity, not outcomes, driving unnecessary utilization. Successful ACOs link provider compensation to quality measures, utilization management, and shared savings performance.
Building Provider Buy-In
Start with upside-only incentives, then progress toward downside risk as providers adapt.
Compensation alignment should include:
Quality metric achievement (HEDIS measures, patient satisfaction)
Readmission reduction targets
Preventive care completion rates
Team-based performance bonuses
Clear disclosure on utilization trends enables the physicians to know their contribution to value-based success without developing adversarial relationships. The providers should be able to see clear data about the effect of their decisions on the overall cost of care.
5. Unnecessary and Duplicative Services
Disjointed care coordination leads to duplication of tests, procedures, and medications. When providers operate in disconnected systems, diagnostics are repeated because prior results are not easily accessible. The cost implication extends beyond wasted money; redundant testing puts the patient at risk and slows down the treatment.
Coordinating Across Care Settings
It is observed that patients who visit different specialists without coordinated communication between them are provided with conflicting instructions regarding medicines and redundant imaging. EDs have to redo the tests that were done days before, as they do not have access to outpatient records.
These duplications are avoided by the availability of complete longitudinal patient records that can be made available to all providers. Instant data connectivity among care environments with automatic notifications of recent tests and procedures will remove unnecessary duplication.
6. Patient Engagement and Behavior Patterns
Low patient interactions lead to preventable emergencies, complications, and hospitalizations. The mismanagement of chronic conditions, absence of visits, and non-compliance with medicine increase expenses very fast. Social determinants of health cause further obstacles, such as food insecurity and transportation issues, which restrict the patient from taking care of their health.
Tracking Engagement Metrics
Early detection of at-risk patients is possible by monitoring engagement patterns. Missed appointments and unfilled prescriptions are common signals that patients require targeted outreach, since they inevitably find themselves in emergency departments.
Engagement strategies that work:
Automated appointment reminders via text and email
Patient portals with easy access to test results and care plans
Mobile apps for medication tracking and symptom monitoring
Transportation assistance for high-risk patients
Engagement tools should be accessible and simple. Complex portals reduce adoption, especially among older patients with limited digital literacy.
7. Administrative Overhead and Workflow Inefficiencies
Paper-based processes, duplicated approvals, and isolated systems waste the time of staff and do not enhance patient outcomes. Administrative waste refers to costs that add no clinical value. These inefficiencies compound over time as staff spend more hours on manual data entry instead of patient-facing work.
Operational Excellence
Most ACOs use only a fraction of their existing technology's capabilities. Before adding new systems, ensure staff understand and use current tools effectively.
Efficiency improvements include:
Workflow audits to identify bottlenecks
Automation of routine administrative tasks
System consolidation to reduce redundant platforms
Staff training on existing tool capabilities
Streamlined workflows free up resources for patient-facing activities. Care coordinators spending less time on paperwork can manage larger panels without sacrificing quality.
Takeaway
Controlling these seven cost drivers requires integrated data, predictive insights, and coordinated action across your entire care network. The ACOs achieving consistent shared savings don't manage costs reactively; they see problems developing and intervene before expenses escalate.
Persivia CareSpace® provides the unified foundation ACOs need to manage all seven cost drivers simultaneously, built on two decades of real-world value-based care experience. Leading ACOs use it to control the total cost of care and maximize shared savings performance. The platform's AI-powered insights help you identify high-risk patients, prevent unnecessary utilization, and optimize resource allocation across your entire population.
Stop managing costs reactively and start predicting problems before they impact your bottom line.
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