Financial performance in value-based care depends on proactively managing ACO cost drivers to protect shared savings. Successful ACOs spot cost leaks early and address them with targeted interventions. Preventable admissions, duplicate tests, and workflow inefficiencies directly impact your shared savings.
Value-based reimbursement means ACOs can’t afford reactive cost management anymore. Hospital utilization alone takes 40-70% of total spending, yet most of these costs are preventable with proper data and strategy. From care management expenses to engagement gaps, knowing where money goes separates financial success from failure. Here are seven ACO cost drivers every healthcare leader must address in 2026.
1. Hospital and Facility Utilization
Hospital costs consume 40-70% of ACO budgets. The problem isn’t admissions themselves, it’s the preventable ones. Readmissions spike when patients leave without follow-up, medication checks, or PCP appointments scheduled.
Why Readmissions Keep Rising
Poor discharge planning creates a revolving door. Care coordination breakdowns turn manageable conditions into ER visits. Without proper transitions, patients return within 30 days, doubling costs.
Control strategies:
- Build 48-hour follow-up call programs
- Schedule PCP visits before discharge
- Track readmission patterns for systemic gaps
- Use predictive analytics for high-risk identification
2. Care Management Program Expenses
Care management programs cost significant money. Personnel, coordinators, patient education, and monitoring require ongoing operational investment that ACOs must balance against the savings generated.
The ROI Challenge
Not every patient needs intensive management. ACOs winning in value-based care use data to separate high-risk patients from stable ones, allocating resources where they generate real savings.
Efficient approach:
- Stratify populations by risk using predictive analytics
- Focus intensive resources on the top 5-10% highest-risk patients
- Deploy automated tools and portals for lower-risk groups
- Reduce care coordinator time on stable patients by 40%
3. Data and Analytics Infrastructure
Health IT infrastructure determines whether ACOs act proactively or reactively. Without integrated data, utilization trends, care gaps, and performance issues remain invisible.
Build or Buy Decision
For ACOs covering fewer than 50,000 patients, licensed data platforms often deliver better ROI than custom-built solutions, providing tested interoperability, prebuilt value-based workflows, and faster implementation.
4. Provider Compensation Models
Misaligned compensation systems that reward volume over value drive unnecessary utilization and higher costs. Tie provider incentives to quality metrics, readmission rates, preventive care completion, and team performance for better outcomes.
Alignment Strategy
Tie compensation to quality metrics, readmission rates, preventive care completion, and team performance. Start with upside-only incentives, then move toward downside risk as providers show results.
Implementation steps:
- Link incentives to shared savings goals
- Track quality metrics with utilization data
- Create performance benchmark transparency
- Reward coordination and prevention
- Phase in downside risk progressively
5. Unnecessary and Duplicative Services
Disjointed coordination results in unnecessary tests, processes, and medications that bloat the budget and endanger patients. In the absence of real-time data sharing, providers do not know when diagnostics and treatment have been done, and they make a repeat visit.
The Information Gap
Disconnected systems force each provider to operate with incomplete records. One patient visits three specialists, gets the same blood work three times, and nobody knows until the claims arrive.
Prevention approach:
- Give providers access to complete longitudinal records
- Eliminate information silos with unified platforms
- Enable real-time visibility into recent tests and medications
- Cut duplicate services by 20-30% through transparency
6. Patient Behavior and Engagement
Low patient engagement increases preventable ER visits, complications, and hospitalizations. Chronic disease mismanagement, missed appointments, and medication non-adherence drive costs up. Manual approvals and disconnected systems waste staff time without improving care.
Engagement Tactics That Work
Deploy automated reminders via text and email. Provide portals with medication lists and lab results. Track metrics to flag at-risk patients early. Address social determinants through community partnerships.
7. Administrative Overhead
Paperwork and a lack of system integration waste time on the personnel without enhancements. Redundant approvals, data entry, and divided platforms add unnecessary costs to the operation.
Quick Efficiency Wins
Automate prior authorizations, claims processing, and scheduling. Consolidate multiple platforms into integrated systems. Train staff on full capabilities to eliminate workarounds and manual processes.
Streamlining benefits:
- Redirect resources from paperwork to patient care
- Reduce administrative costs by 25-35%
- Improve staff satisfaction and productivity
- Enable focus on value-based care delivery
Takeaway
Controlling ACO cost drivers requires visibility, prediction, and action. Organizations succeeding in value-based care aren’t tracking last month’s data. In fact, they’re preventing next week’s cost spikes through integrated analytics and targeted interventions. Each cost driver requires targeted strategies informed by real-time data to control costs and improve outcomes.
About Persivia
Persivia offers CareSpace®, a unified AI-powered digital health platform built on two decades of value-based care deployments. The system incorporates EHRs, claims data, clinical systems, social determinants, and interconnected devices into a single longitudinal patient record. The analytics engine simultaneously runs predictive and real-time insights to identify the high-risk patients before the costs grow out of control and suggest interventions based on the abilities of your ACO.
Leading ACOs use Persivia CareSpace® to control total cost of care, maximize shared savings, and improve outcomes without adding administrative burden.
FAQs
What are the biggest cost drivers for ACOs in 2026?
The seven major cost drivers are hospital and facility utilization (40-70% of costs), care management program expenses, data infrastructure investments, provider compensation structures, unnecessary duplicate services, patient engagement levels, and administrative overhead.
What percentage of patients need intensive care management?
Focus intensive care management resources on the top 5-10% highest-risk patients. Use automated tools and patient portals for lower-risk populations to maximize efficiency and control program costs.
What’s the best way to align provider compensation with value-based care?
Start with upside-only incentives tied to quality metrics, readmission rates, and preventive care completion. Progress toward downside risk as providers demonstrate success with team-based performance goals.
