Integrated Health care delivery systems

Running head: INTEGRATED HEALTH CARE DELIVERY SYSTEM 1

Integrated Health Care Delivery System

Kamiar Hashemy

June 27, 2015

INTEGRATED HEALTH CARE DELIVERY SYSTEM 2

United States health care industry is a viable

dynamic system reacts to every change which affects its

critical points of concerns like cost, availability,

optimum operation, delivery and profitability fast.

The initial believe of integration benefits in

healthcare system backed in 1930 by Dr.Ray Lyman Wilbur, The

president of Stanford University. In their first boldface he

recommended “Medical Service should be more largely furnished by

group of physicians and related practitioners, so organized as to

maintain high standards of care and to retain the personnel

relationship between patients and physicians”(Corosson, 2009).

To start from a understandable point, it is better to

start with Integrated Healthcare delivery system definition to

feel and add insight into its nature and meaning, in order to

understand components which will help us analyze this healthcare

system inventory and positive and negative consequences for our

healthcare system and ACA reform later in discussion.

Integration concept as one of the recent innovations

in US health policy has been designed based upon a fundamental

belief that a higher level of integration and arranged system

INTEGRATED HEALTH CARE DELIVERY SYSTEM

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units will yield to a more efficient healthcare delivery system;

theory we all believe.

While we had around six different definitions based on

patient satisfaction, system networking and responsibilities, it

is better to consider WHO definition ("WHO technical brief No.1,"

2008) as the most comprehensive one:

“The Management and

delivery of health services so that the

clients receive a

continuum of prevention and curative services,

according to their needs

over time and across different levels of

health system”

What are the extract forms of this definition?

It contained two major contents, Quality of care and cost

of care. The two component of integration; is drivers of

IDSs, cost savings, competitive edge, improved quality of care,

and wellness promotions indicator.


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One of the simple credible definitions was

written on 2011 publication of Jonas and Kovner, as in

“Healthcare Delivery in the United States” (Kovner &

Kinkman, 2011). In page 206 they defined organized healthcare

delivery as a situation where Care providers have effective

established close relationships and use mechanisms for

communicating and working to coordinate patient care across

health conditions, services, and care settings over time (Hwang,

Chang, Claire, & Paz, 2013).

Similarly to every healthcare significantly

changes in the United States healthcare system, we shall

review history and precedent events caused these

initiations.

In 1990’s and 2000s, a new entity moved our

Healthcare system specially in provider section side,

based on predetermination factors like technology

advancements in past few years of it, reimbursement

strategic changes instructed by Government as Public

providers, introduced and in grown alternative healthcare


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delivery systems and mostly importantly rule of Managed

care systems trend.

In Agency for healthcare Research and Quality data

Archive, subject to Integrated Delivery Systems in Managed Care

situations below explained situation found as exact words:

“In 1995, nearly 70 percent

of all workers in firms of more than 200

workers were enrolled in

some form of managed care based on an

employer survey. In 1995,

about a third of all Medicaid recipients

and 1 in 10 Medicare

beneficiaries were enrolled in managed care

arrangements, more than

double the figures from just a few years


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ago, according to the

Health Care Financing Administration

(HCFA)” ("Agency for

Healthcare Research and Quality”,

Archive, n.d).

So at that point in time, IDS (Integrated Health

Delivery Systems) led many physician groups and hospitals

consolidated through process of mergers and acquisitions (as main

believes of integration) to combated the threat of expanding

force, managed care implicated to their bargaining power. Public

and private payers were also demanding more value for their

health care dollar and health care providers, trying to squeeze

costs out of their systems, while maintaining or improving the

quality of delivered care ("Agency for Healthcare Research and

Quality, Archive,"n.d), so they had to find the solution to

balanced these powerful vectors toward health delivery system,

and lower instructed pressure financially and functionally.


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It was not the end of scenario. On the other side,

powerful extended Managed Care organizations, continued to growth

as more employers narrowed worker's compensations, to managed

care plans. States also enrolled more Medicaid recipients into

managed care plans and the Federal Government agreed to increase

Medicare managed care enrollments.

MCOs included everything from traditional health

maintenance organizations (HMOs) to preferred provider

organizations (PPOs) in their hands, certainly by demanding from

the enthusiastic marketplace, saving measure toward cost

expansion induced from past years. Most plans developed to point-

of-service products, traditional HMOs created provider networks

to gave enrollees more choice of physicians to keep market

attractive as PPO’s, and finally plans merged in order to gain

and keep market clout.("Agency for Healthcare Research and

Quality, Archive,").

At this point in time, expansion of IDS’s reflect the

effectiveness of their positive impact on cost reduction and


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quality improvement while keeping continuum of care for

applicants. Based on SK&A, Healthcare and medical marketing lead

specially in health and medical IT report, in the first quarter

of 2015, we had over 760 Integrated health service system

providers in United States ("Integrated health systems," 2015), a

significant increase from 2010 from around 100 ("Essential

Hospital Institute," 2010).

We shall assume why this system expanded so fast and

changed our healthcare system toward the same direction of

increase quality of care and services and lowering costs?

Integrated healthcare is complex and has been

categorized conceptually in 2 ways: (1) an organized structure

that is managed by a financial entity (a financial group that

manages different facilities within a healthcare system) or (2)

an organized healthcare delivery system that coordinates care and

has synchronized functioning. Up to now, functional integration

was much more significant than merely structural or financial

integration as a determinant of chronic care systems (Hwang et

al., 2013) and we may change it by in hand technologies.


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Health care integration provides higher quality and

more patient-centric care at lower costs and the detailed answer

is the main characteristics of IDS’s ("Washington State Hospitals

Association," n.d):

Single, integrated entity: one organization is

responsible for providing all services,

including delivery of care, payment and risk

management

Seamless continuum of services: consumers are

provided a consistent point of access to all

services and their care is coordinated and managed

Managed fixed resources: risk-adjusted capital

payments to the network create incentives to

avoid duplication, conserve resources and keep

consumers healthy

Community health focus and accountability: networks

may focus on improving the health status of the

entire community in which they serve, not just the

enrolled population


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Now it is better to give more structural information

and thoughts behind this integrated healthcare entity as an

important and valuable associate of our Healthcare system and

Affordable care act.

STRENGTHS OF INTEGRATED DELIVERY SYSTEMS

IDS strengths enabled healthcare systems for more

efficient coordinated activities, in order to meet the

same level of demand with less financial and energy

capacities required by individual facilities in smaller

scales. The end result will be low price for same costly

service in comparison scale by operations that allows

increased productivity, lower staffing requirements and

reduced unit costs through joint activities.

Some these strengths can be ("Washington State Hospitals

Association," n.d):

ACCESS TO CAPITAL

An economic advantage of integrated provider

arrangements is the ability to acquire capital more


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easily, more readily and with more consistent success.

This is due to the larger asset base of the integrated

organization, the stronger revenue and saving.

LOWER COSTS

Better access to capital and financial sources like

Medical/Medicare can lead to reduced operating costs

and lower prices to consumers. By coordinating the

development of programs and services multi-

institutional and provider linkages may also

generate strategic planning at the community or

regional level, rather than solely on an institutional

basis. This leads to ways of avoiding duplication of

facilities and services, improvements in the

allocation of resources, a reduction in excess

capacity and an improvement in community health

status.

PERSONNEL RECRUITMENT AND RETENTION

More effective recruitment and retention of clinical

and administrative personnel is strength.


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Availability of specialists allows for consultation

and expanded patient referral networks, and a

stronger and more integrated clinical organization

can lead to improved quality of care throughout the

system.

We also need to evaluate/measure these

indicator, cost and quality, in order to have touchable

results. Researchers found that integrated medical groups

performed better on Healthcare Effectiveness, Data and

Information Set. Healthcare Effectiveness Data and Information

set (HEDIS) measures delivered care performance related to

preventive and chronic health screenings better than acute

settings. It extracted by the assist of HER system and

Introducing health information technology in operational

efficiencies patient-centered evaluations.

a- Cost:

Level of service utilization per patient extract from Health

records can be use as a proxy measure for cost of care.


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b- Quality:

HEDIS (Healthcare Effectiveness Data and Information Set) is 81

measures in 5 areas of delivered care measures mainly for quality

measures. IDSs were associated with a lower hospital admission

rate per patient, shorter length of stay per hospital admission;

lower rate of adverse health outcomes will achieve appropriate

higher scores, a standardized measured for quality evaluation and

performed healthcare delivered service (Hwang et al., 2013).

IDSs, increased use of evidence based practices by

physicians in various fields are another tool in quality

measurements too. So with these two evaluation tools, the reality

of IDS benefits determine and comparison tables will be available

to see the facts for further interventions.

Based on operable definition of Pan American Health

Organization, joint organization with WHO in North America

(Baracelo et al., 2102), we have two main Integration models

in a systems, Horizontal integration and Vertical integration

Levels.


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- Horizontal integration: a merger of two or more

health organizations that provide services at a similar level,

for example, acute care hospitals or foundations that offer

combined health and social services. It usually involves

consolidating the organizations’ resources to increase efficiency

and utilize economies of scale. It is a multi-hospital approach

with mergers and alliances type network in bigger scale. The

success accompanied and achieved by acquiring and combining

prestigious hospitals will achieving higher reimbursement rates

from payers whom willing to pay more for their services to a

integrated one shop system ("Essential Hospital Institute,"

2010), like Kaiser Permanente and the United States Veterans

Administration (Baracelo et al., 2102).

Kaiser Permanente is the most well-known example of a

fully integrated delivery system in mid west and west. Kaiser

Permanente operates in nine states, including Washington, DC,

Colorado, California, Georgia, Oregon, and other states since

1945. It has almost 9,590,197 million members, 17,425 doctors and

174,415 employees in 38 hospitals and ambulatory centers. Their


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offered medical model is one-stop shopping for most services

including hospital ("Kaiser Permanente," 2014).

-Vertical integration: when two or more organizations

that offer services at different levels join forces, for example,

acute care hospitals with community health services, or tertiary

services working in conjunction with those at the secondary level

(Baracelo et al., 2102). It means in different stages of care or

grouping organizations in healthcare delivery in all level or

care.

Horizontal or vertical integration occur physically,

such as organizational mergers, or virtually through

partnerships, associations and integrated networks. Coverage

of all three stage of healthcare is the optimizing desirable

efforts with additional positive impacts on covering most of

the chronic medical problems, problem of our population aging

and cost conservation too.

In categorizing integrated delivery systems, we have

five basic types of integrated organizational. They

categorized based on integration, market share and


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competitors, Cooperate provider financial ability,

political factors, legal considerations, needs of employers

and community acceptances.

1-THE PHYSICIAN–HOSPITAL ORGANIZATION (PHO’s)

The entity formed by a hospital and a group of

physicians to further their mutual interests and achieve

market objectives. The physicians still own their medical

practices but agree to see managed care patients

according to the terms of a professional services agreement

with the PHO. PHO loosely joins these two groups so that

they can present a united front and exert greater

bargaining leverage than they would alone

A PHO is often the first step on the path to

further integration. Hospitals and physicians in very

competitive environments may set up a PHO to test the

collaboration. So it may be transitional in terms of

contract.

2-THE MANAGEMENT SERVICE ORGANIZATION (MSO’s)


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It is a legal entity that provides

administrative and practice management services to

physicians. Physicians will contract with the MSO for such

services as administrative, management and support

services. Most of the time, MSO is usually a direct

subsidiary of a hospital, owns by hospital but may also be

jointly owned by the hospital and physicians.

The physicians still own their practices and

contract out for management

services. The MSO can provide sophisticated administrative

systems that may beyond the resources available to

individual physicians comprising the professional

corporation

3-THE GROUP PRACTICE WITHOUT WALLS (GPWW)

The group practice without walls is typically a

network of physicians who have merged into one legal

entity but maintain their individual practice locations.

The assets of the individual practices have been

acquired by a larger group, but some autonomy is


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maintained at each site. The group’s central management

owns both the central facility and the equipments and

provides administrative services.

Different sites are linked together and no

longer compete with one another. The group entity makes

equipment purchases and other managerial decisions.

4-THE INTEGRATED PROVIDER

An integrated provider offers a comprehensive

corporate umbrella for the management of a diversified

health care delivery system. The system includes one or

more hospitals, a large group practice, a health plan and

other health care operations. It has the capacity to

provide several levels of health care to patients in

geographically contiguous areas. Physicians practice as

employees of the system or in a tightly affiliated MD

group.

The most important change is the addition of a

health plan. With this addition, the word “integrated”

can be used. Integrated care provider act as provider and


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payer both. The entity enrolls patients in its own health

plan, sets and collects premiums and provides the care by

them.

All services are vertically integrated. Some of

the other health care operations in the integrated system

include nursing homes and pharmacies.

The high degree of integration efforts involved

physicians in strategic planning activities at the

Board level. Other advantages include enhanced

collection and integration of operating statistics,

enhancement of utilization review activities and cost

control capacity. Duplication of services is greatly

minimized at this level of integration.

5- THE HEALTH MAINTENANCE ORGANIZATION (HMO)

An organized system combined the delivery and

financing of health care and provides comprehensive

health services to a voluntary enrolled population, for a

fixed prepaid fee. As a result, HMOs used strong


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utilization controls for hospitalization and specialty

referrals.

IDS’s advantages was not summarized in above

mention items, with using up to date technologies like

EHR and Tele-health and mobile ambulatory systems, new

eras of care showed to public opinions, listed

summarized as below:

- A valuable option for chronic health conditions and

long term care

- Evidence-based practice systematically developed statements

that guide providers and patients in making decisions about

appropriate health care for certain conditions.

- Care protocols, which are generally more specific than care

guidelines, provide more detail about the management and

treatment.

- Using Tele-health and mobile ambulatory clinics,

especially for uninsured patients, area of limited

English language proficiency and rural areas and


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homeless peoples, as a valuable health care service

solution.

Ambulatory clinic units are suitable for immunization,

chronic care support, health education and well-child

care services.

Tele-health for Mental health primary care and

dentistry ("GAO, Report to Congressional Committees,"

2010).

Regarding Tele-health we shall add ability to serve in

“Triple Aim” goals of improving patient care, population health

and overall healthcare costs reduction. It demonstrated its good

collaborative property in IDS’s performance and outcome

evaluation. So it seems the environment Ripe for Tele-health

Adoption in healthcare integrated services ("How Tele-health Can

Provide the Bridge between Patients and Healthcare Providers,"

2011). Especially in high cost expenditures subjects like

hospital readmissions rates, which cost $41.3 Billion in 2011

which $1.8 billion Medicare and $7.6 billion Medicaid and $8.1


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billion private insured and $1.5 billion for uninsured (Shinkman,

2014).

The 2010 Affordable Care Act reform was the most

effective positive effort to comprehensively address cost

reduction, quality improvement and integration. One of main

topics are physicians and hospitals instructed a payment system

method, based on value (quality and cost) rather than volume, to

deliver most likely in the form of advanced payment.

Interestingly advanced payment methods are most feasible in

highly organized, integrated systems of care in contrast to small

firm size.

Without ACA payment reform, physicians and hospitals

have little incentive to integrate and without integrated

systems, advanced payment systems are difficult to test and

implement, chicken and egg Argument ("Essential Hospital

Institute," 2010). Researches shown prospective payment for

physician’s services has been shown to work well at medical group

or health system but not at the individual-physician or small

practice level (Corosson, 2009).


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These data’s clearly pointed on further evaluation in

ACA payments, incentives, observations and using updated

technologies with new generation of Managed care systems, which

we named Accountable Care organizations.

In the ongoing pursuit for cost effectiveness and

quality, recent emphasis has shifted from IDSs to Accountable

care organizations (ACO’s). ACO’s described an integrated group

of providers who are willing and able to take responsibility for

improving the overall health status, care efficiency and consumer

satisfaction with care for a defined population (Shi & Sing,

2015).

While some considered ACO’s “Old wine in new bottle”,

ACA authorized Medicare to establish care delivery and payment

methods involving ACO’s beginning in 2012 (Shi & Sing, 2015). By

using new technologies as Tele-health, it is no wonder the

Centers for Medicare and Medicaid Services (CMS) have encouraged

ACO’s to utilize Tele-health in its recent final rule, included

as part of the final ruling.


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ACO’s are required to define a process to “coordinate

care, such as the use of Tele-health, remote patient monitoring

and other self enabling technologies.

In this part, in accordance to all positive aspects of

integration and affordable care act, having some criticisms, may

show our neutrality as whom willing to add efforts on health care

system improvements.

Christopher Pope, Senior Advisor of Health Policy at

West Health Organization criticized ACA and IDS as below:

“In the absence of competition, highly integrated health

care providers tend to be irresponsive to patient needs, and

reliant on crude bureaucratic instruments to prevent costs

from spiraling out of control. Rather than trusting

monopolies to provide “uncompensated care” as desired,

policymakers should remove the shackles that have been

placed on competition in health care, and transparently

appropriate the necessary funds for the care that they wish

to subsidize.”(Pope, 2014).

He also added some words on ACO’s too:


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“The ACO Factor”; ACOs disburse capitates payments for

integrated organizations to provide all-inclusive packages

to Medicare enrollees, rather than reimbursing them for

services provided—allowing them to keep part of the savings

relative to Medicare fee-for-service. While designed to

encourage the vertical integration of providers and

insurers, it is also likely to encourage horizontal

integration among entities that are supposed to be

competitors.

Rather than checking the revenues of dominant

hospitals, the development of ACOs is likely to reduce their

exposure to competitive threats, limit the number of

independent competing providers [ deleted: , and facilitate

collusion among incumbents]. Hospitals that integrate and

take up insurance services to form the basis for ACOs are

unlikely to push patients towards low-cost outpatient care.”

(Pope, 2014).

While ACOs attempt to control the behavior of doctors by

bringing them under the aegis of hospitals, other public


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policies already provide substantial incentives for doctors

to abandon independent practice. For instance, Medicare

reimburses integrated providers at substantially higher

rates, paying an additional “facility fee” for office visits

undertaken in hospitals. This has led to Medicare paying

twice as much for the same electrocardiograms or diagnostic

colonoscopies if they were performed in hospitals, yielding

reimbursements for hospital-based physicians up to 80

percent greater than those to freestanding practices (Pope,

2014).

While integration, mergers and ACO’s proved the benefit

for consumers, like 7% cost reduction initially (Connor, 1997),

principal effect of the mergers was to reduce price competition

by forcing payers to negotiate with a single entity encompassing

most of the hospitals in a given geographic region. That, in

turn, gave the merged entities greater leverage to extract higher

reimbursement from private and public payers (Pope, 2014).


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Hospitals are in process of consolidating into larger

systems, Process that boosts their ability to demand higher

prices, but does little to generate efficiencies or shed costs.

ACO’s that included public hospitals and non-for-profit

medical centers can dominate a geographic market, reduce

competition, and harm consumers through higher price or lower

quality of care , appropriate for investigation as “Antitrust”

law for not to fixed the prices, discriminate prices, exclusive

contracting arrangements and acquisition and merger s that may

stifle competition (Shi & Sing, 2015).

Finally, to complete healthcare delivery integration

discussion, it is necessary to have some positive parts on future

of integrated healthcare Delivery system too.

Our Health care delivery system will be more digitally

enabled as integration and digitalization and ACA have the same

direction of trends and targets.

Digital technology bridges time, distance and the

expectation gap between consumers and clinicians, it:


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• Help caregivers work more as a team

• Increase patient-clinician interaction

• Put diagnostic testing of basic conditions into the hands

of patients

• Promote self-management of chronic disease using health

apps and gadgets

Tomorrow’s healthcare delivery models success are expected to be

as below ("PWC Health Research Institute," 2014):

Focus on the patient as a consumer. Personalized,

transparent, convenient, and on demand models will

focus on customer experience and understanding patients

in their everyday living. Health systems will use

“customer relationship management technology” to

generate and manage demand.

Predictive and precise

Integrated and transparent


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Team-based: Health systems will shift care from

interaction among the patient and the physician to

patients and clinical team.

Sustainable: reduced administrative costs and most of

other healthcare waste costs

Quality-based and efficient

The self-management tools attitudes regarding the

impact of consumer health apps and do-it-yourself (DIY) home

diagnostics gadgets, toward growing clinician and consumer

interest and interactions. So soon these tools will be here to

stay.

“In the future, patients will expect to see their data,

and this will drive more data standards, which will in turn drive

physicians to exchange more information with each other,” said

Paul Eddy, group vice president and chief information officer of

business services and solutions at Walgreen Co. According to HRI

interviews, one of the most prominent digital approaches during

the next five years will be using analytics software to manage

large volumes of data to predict patterns such as the likelihood


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of acquiring a disease or being admitted or readmitted to a

hospital based on a variety of health, genetic, environmental,

and social factors ("PWC Health Research Institute," 2014).

Integrated health care delivery system and ACA health reform are

our guiding light through better using our country funding

sources and limit our health care system expenses while keeping

and improving quality, by using information technology equipments

and systems for more efficient health care system.


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