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Integrated Delivery Systems In Managed Care

What Are Integrated Delivery Systems?

Part I: Definitions

Presenter:

Kelly Devers, Ph.D., Senior Research Fellow, Center for Organization and Delivery Studies, Agency for Health Care Policy and Research (AHCPR), U.S. Department of Health and Human Services (HHS), Rockville, MD.


This session focused on new trends in provider-based integrated delivery systems (IDSs). The session delineated:

  • Why hospitals and physicians form IDSs.
  • Types of hospital-physician arrangements and their prevalence
  • Early evidence on provider-based IDS performance.

Models of market evolution suggest that increasing health maintenance organizations (HMO) penetration is linked with increases in hospital consolidation, vertical integration between hospitals and physicians, and capitated payment arrangements. These models help conceptualize complex market changes and signal their public policy implications (e.g., insurance regulation, purchasing strategies, antitrust), but recent research suggests they should be used with caution.

Specific types of hospital-physician arrangements can be thought of as a continuum, from "loosely" arranged to more "tightly" integrated systems. Approximately one-quarter of community hospitals are engaged in some type of arrangement with physicians.

Finally, Dr. Devers noted that there is relatively little research on the ability of provider-based IDSs to reduce cost or improve access, coordination, and quality of care. Findings on the financial performance of hospitals affiliated with a system suggest some small but positive benefit.

Among the key questions State policymakers will need to address are the following:

  • Should provider-based IDS formation be encouraged?
  • Should provider-based IDSs be regulated? If so, who should regulate new hospital-physician arrangements (e.g., State or Federal government, within States, insurance commissioners, department of health, or other entity)?
  • Which State and/or Federal regulatory areas require change?
  • Who should hold provider-based IDSs accountable and how?

References

Dranove D, Shanley M. "Cost Reductions or Reputation Enhancement As Motives For Mergers: The Logic of Multihospital Systems. Strategic Management Journal 16(1):55-74.

Gillies RR, et al. Conceptualizing and Measuring Integration: Findings From the Health Systems Integration Study. Hospital & Health Services Administration 38(4):467-89.

Ginsburg PB, Fasciano NJ, eds. The Community Snapshots Project: Capturing Health System Change. The Robert Wood Johnson Foundation, 1996, pp. ix-xiii.

Kongstvedt PR, Plocher DW. Integrated Health Care Delivery Systems, Chapter 4 of Essentials of Managed Care, Aspen Publishers Inc., Gaithersburg, Maryland, pp. 35-49.

Mark, T, et al. Hospital-Physician Relations and Hospital Financial Performance, Working Paper, Project HOPE, Center for Health Affairs, Bethesda, MD, 1996.

Miller RH. Health System Integration: A Means to an End. Health Affairs 15(2):92-106.

Morrisey MA, et al. Managed Care and Physician/Hospital Integration. Health Affairs 15(4):62-73.

Shortell SM. The Evolution of Hospital Systems: Unfulfilled Promises and Self-Fulfilling Prophesies. Medical Care Review 45(2):177-214.

Shortell SM, et al. Remaking Health Care In America, San Francisco, Jossey-Bass, 1996.

Shortell SM, Gillies RR, Anderson DA. The New World of Managed Care: Creating Organized Delivery Systems. Health Affairs 13(5):46-64.

Shortell SM, Hull KM. The New Organization of the Health Care Delivery System, in Strategic Choices for a Changing Healthcare System, Stuart Altman and Uwe Reinhardt (eds), Health Administration Press, 1996, pp. 101-148.

Waltson SL, Kimberly JR, and Burns LR. Owned Vertical Integration and Health Care: Promise and Performance. Health Care Management Review 21(1):83-92.


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