LAUSR

Abstract Accountable care organizations (ACOs) are increasing in number and coverage of beneficiaries. In 2016, over 400 ACOs participated in the CMS initiative with contracts covering an estimated 8 million Medicare beneficiaries. However, in 2014, less than one-third of ACOs achieved requirements to earn shared savings. The aim of the study was to determine whether the most technically efficient ACOs realized earned savings. A contingency theory framework helps explain how variation in two factors, use of electronic health records (EHRs) by primary care providers and inclusion of specialists, may affect the operational performance of ACOs. This inaugural study of ACOs using data envelopment analysis found less than one-fifth of ACOs in the Medicare Shared Savings Program efficient with an average efficiency score of 0.803 for results from 2014. The most efficient ACOs are not restricted to those achieving earned savings. Of the 39 ACOs identified as efficient in this analysis, only 12 realized earned savings. The remaining 49 ACOs that earned savings in 2014 were not among the most efficient. Greater adoption of EHRs by primary care providers and expanded participation by specialists are associated with higher levels of operational efficiency.