Integrated Delivery System

Organizational Form

Integrated health care systems now come in many varieties, from common ownership of health plan, physician practices, hospitals, nursing homes, and other providers to loosely linked networks of providers who agree to exchange patient information and contract for referrals and other services from affiliated groups. See also the entry for Integrated Service Network.

A key element of any integrated delivery system is a primary care provider network incorporating the physicians who practice at the affiliated hospitals but covering sufficient geographic area to generate the needed work for the system’s specialists, hospitals, and other units. Geographic dispersion is also necessary so that fewer patients have to change their primary physician to participate in the plan. A second key element is an incentive system such that these primary care “gatekeepers” are motivated to contain the use of specialists and hospitals to situations of true medical necessity.

A variety of governance arrangements have been implemented to integrate systems. Many are a natural outgrowth of preferred provider organizations (PPOs), networks established by insurers to serve patients in areas with high enrollee concentrations. There is a wide variety of less formal arrangements available such as provider service organizations (PSOs), which can also achieve some of benefits of integration without the problems of conflicts between professional autonomy and corporate governance. Other networks have been funded by independent practice associations (IPAs), groups of physicians who undertake some insurance risks and then want to achieve more control over markets and costs. Hospitals may also be drivers in integration by expanding the networks that they have developed, to recruit and support the physicians who feed patients into their facility. In the 1990s many hospitals purchased physician practices to assure a steady supply of patients and to dominate their markets. A decade or so later many of these same hospitals are divesting themselves of those practices because they have been unable to maintain sufficient physician productivity. Where competition is already limited, attempts at integration have also run afoul of state and federal antitrust constraints.

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