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Integrated Delivery Systems In Managed Care

What Are Integrated Delivery Systems?

Part I: Definitions


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?


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