Examining Network Entry Decisions in Healthcare: Competition, Collaboration, and Organizational Characteristics

Accountable Care Organizations (ACOs) are healthcare collaboration networks comprised of hospitals and other healthcare providers. The motivation behind the formation of ACOs is to improve the quality of care while reducing healthcare costs. Despite these commendable goals, hospitals’ participation in ACOs remains low. Our research tackles this timely and potentially impactful topic by exploring factors that facilitate hospitals' ACO entry decisions. Specifically, we examine hospitals' competition network embeddedness and collaboration network affiliation, as well as types of organizational slack that jointly influence hospitals' ACO entry decisions. Our findings suggest that hospitals with experience joining other collaborative healthcare networks, such as Regional Healthcare Information Organizations, or belonging to a large parent group, are prone to enter into an ACO. In addition, hospitals that are positioned in the center of a competitive network, yet with a low level of competitive tie diversity, are prone to ACO entry. Lastly, hospitals with a high level of unabsorbed slack are prone to ACO participation. Our study contributes to theory development in network evolution by attending to the antecedents of collaboration network entry decisions. Given that knowledge on hospitals’ participation in ACOs is lacking, this is relevant research for practitioners in the U.S. healthcare field. Our findings provide practical guidance to healthcare policymakers on how to profile, target, and efficiently promote ACO participation among hospitals. The study also provides insights to hospital administrators on organizational-level factors that need to be strengthened before joining an ACO.