Capital Senior Living (NYSE: CSU) is finalizing an Accountable Care Organization (ACO) relationship with a major hospital system, with the hopes of driving more seniors into its communities by becoming more integrated into the overall care continuum.

If put into action, the pilot program would launch in Texas, with an official announcement later this year, said CEO Larry Cohen during Oppenheimer’s 28th Annual Healthcare Conference in New York City on March 20.

“I look forward to sharing more details about our affiliation with major hospital systems,” Cohen told Senior Housing News shortly after Tuesday’s presentation. “If finalized, we expect these relationships will result not only in increased occupancy, but also improved coordination of care and overall health status for our residents.”

The term ACO generally refers to a group of health care providers working together to coordinate care to improve quality of care and lower costs. They were established following the Accountable Care Act passage in 2010, and for years senior living providers have argued that the industry offers substantial value to ACOs, because senior living can effectively manage large populations of at-risk older, frail patients, keeping them healthy and out of high-cost settings.

However, senior living has struggled to gain traction with ACOs for several reasons, including that residents typically pay out of pocket, while ACO financial incentives are tied to the Medicare reimbursement system.

In Capital Senior Living’s case, the partnership would include sharing of information among hospitals, doctors and physicians in states where the senior living provider has a sizable footprint.

Capital Senior Living, which is headquartered in Dallas and has 129 senior living communities throughout the U.S., would also look to strike similar partnerships in Ohio and Indiana if the initial pilot in Texas is successful.

One big reason such partnerships could look attractive to large hospital systems is cost of care. While one day in a large hospital could cost thousands of dollars, similar care in an assisted living community might be far less.

“You can see how the assisted living component to this continuum is a very low cost provider,” Cohen said during the conference. “We think this model will really revolutionize and transform the way senior housing plays a role in the whole health care continuum.”

Written by Tim Regan