Changes in physician consolidation with the spread of accountable care organizations

While early evidence suggests that accountable care organizations (ACOs) are associated with higher quality and lower costs, there have been simultaneous concerns that ACOs may incentivize consolidation of physician groups. This is particularly concerning as previous research has shown that consolidation is associated with lower quality and higher prices. Using a difference-in-differences strategy and data from the Medicare Shared Savings Program, which began in 2012, we examined whether physician practices consolidated after ACOs entered health care markets. We observed a 4.0-percentage-point increase in large practices (those with fifty or more physicians) in counties with the greatest ACO penetration, compared to counties with zero ACO penetration, and a 2.7-percentage-point decline in the percentage of small practices (ten or fewer physicians) from 2010 to 2015. The growth of large practices was concentrated in specialty and hospital-owned practices. These findings suggest that ACOs may contribute to the concentration of physician practices.