Physician Behavior in Accountable Care Organizations

This dissertation studies how performance risk-based (i.e., value-based) reimbursement over total costs of care in health insurance contracting affects how providers, specifically physician groups and health systems, determine marginal treatment choice and set the level of care provided to patients. Utilizing the widespread adoption of Accountable Care Organization (ACO) contracts by both commercial payers and Medicare, presented research explores changes in care delivery and health system organization when risks for total costs of care and satisfactory attainment of specific quality metrics (i.e. an ACO contract) are offered to providers. This dissertation proceeds in five parts. First, I review the substantial literatures related to the specific characteristics of ACO contracts in addition to the institutional details of such contracts themselves. Next, leveraging optimal procurement and auction theory, I present a theoretical foundation for considering ACOs as a form of incentive contract auction by Medicare and other insurers. This theoretical foundation motivates three principal empirical analyses of ACO contracts, each briefly explained in the preface, focused on changes in physician behavior following ACO contract adoption