The importance of understanding and measuring health system structural, functional, and clinical integration.

OBJECTIVE: We explore if there are ways to characterize health systems-not already revealed by secondary data-that could provide new insights into differences in health system performance. We sought to collect rich qualitative data to reveal whether and to what extent health systems vary in important ways across dimensions of structural, functional, and clinical integration. DATA SOURCES: Interviews with 162 c-suite executives of 24 health systems in four states conducted through "virtual" site visits between 2017 and 2019. STUDY DESIGN: Exploratory study using thematic comparative analysis to describe factors that may lead to high performance. DATA COLLECTION: We used maximum variation sampling to achieve diversity in size and performance. We conducted, transcribed, coded, and analyzed in-depth, semi-structured interviews with system executives, covering such topics as market context, health system origin, organizational structure, governance features, and relationship of health system to affiliated hospitals and POs. PRINCIPAL FINDINGS: Health systems vary widely in size and ownership type, complexity of organization and governance arrangements, and ability to take on risk. Structural, functional, and clinical integration vary across systems, with considerable activity around centralizing business functions, aligning financial incentives with physicians, establishing enterprise-wide EHR, and moving toward single signatory contracting. Executives describe clinical integration as more difficult to achieve, but essential. Studies that treat "health system" as a binary variable may be inappropriately aggregating for analysis health systems of very different types, at different degrees of maturity, and at different stages of structural, functional, and clinical integration. As a result, a "signal" indicating performance may be distorted by the "noise." CONCLUSIONS: Developing ways to account for the complex structures of today's health systems can enhance future efforts to study systems as complex organizations, to assess their performance, and to better understand the effects of payment innovation, care redesign, and other reforms.

The Impact of Hospital Acquisition of Physician Practices on Referral Patterns.

Multiple parties influence the choice of facility for hospital-based inpatient and outpatient services. The patient is the central figure, but their choice of facility is guided by their physician and influenced by hospital characteristics. This study estimated changes in referral patterns for inpatient admissions and outpatient diagnostic imaging associated with changes in ownership of three multispecialty clinic systems headquartered in Minneapolis-St. Paul, MN. These clinic systems were acquired by two hospital-owned integrated delivery systems (IDSs) in 2007, increasing the probability that hospital preferences influenced physician guidance on facility choice. We used a longitudinal dataset that allowed us to predict changes in referral patterns, controlling for health plan enrollee, coverage, and clinic system characteristics. The results are an important empirical contribution to the literature examining the impact of hospital ownership on location of service. When this change in ownership forged new relationships, there was a significant reduction in the use of facilities historically selected for inpatient admissions and outpatient imaging and an increase in the use of the acquiring IDS's facilities. These changes were weaker in the IDS acquiring two clinic systems, suggesting that management of multiple acquisitions simultaneously may impact the ability of the IDS to build strong referral relationships.

MACRA likely to accelerate consolidation; will the regulatory framework support it?

It took 17 years and more than a dozen acts of Congress before the Medicare sustainable growth-rate formula was replaced by the Medicare Access and CHIP Reauthorization Act in April 2015.

Addressing Pricing Power in Integrated Delivery: The Limits of Antitrust.

Prices are the major driver of why the United States spends so much more on health care than other countries do. The pricing power that hospitals have garnered recently has resulted from consolidated delivery systems and concentrated markets, leading to enhanced negotiating leverage. But consolidation may be the wrong frame for viewing the problem of high and highly variable prices; many "must-have" hospitals achieve their pricing power from sources other than consolidation, for example, reputation. Further, the frame of consolidation leads to unrealistic expectations for what antitrust's role in addressing pricing power should be, especially because in the wake of two periods of merger "manias" and "frenzies" many markets already lack effective competition. It is particularly challenging for antitrust to address extant monopolies lawfully attained. New payment and delivery models being pioneered in Medicare, especially those built around accountable care organizations (ACOs), offer an opportunity to reduce pricing power, but only if they are implemented with a clear eye on the impact on prices in commercial insurance markets. This article proposes approaches that public and private payers should consider to complement the role of antitrust to assure that ACOs will actually help control costs in commercial markets as well as in Medicare and Medicaid.

The dynamics of community health care consolidation: acquisition of physician practices.

CONTEXT: Health care delivery systems are becoming increasingly consolidated in urban areas of the United States. While this consolidation could increase efficiency and improve quality, it also could raise the cost of health care for payers. This article traces the consolidation trajectory in a single community, focusing on factors influencing recent acquisitions of physician practices by integrated delivery systems. METHODS: We used key informant interviews, supplemented by document analysis. FINDINGS: The acquisition of physician practices is a process that will be difficult to reverse in the current health care environment. Provider revenue uncertainty is a key factor driving consolidation, with public and private attempts to control health care costs contributing to that uncertainty. As these efforts will likely continue, and possibly intensify, community health care systems now are less consolidated than they will be in the future. Acquisitions of multispecialty and primary care practices by integrated delivery systems follow a common process, with relatively predictable issues relating to purchase agreements, employment contracts, and compensation. Acquisitions of single-specialty practices are less common, with motivations for acquisitions likely to vary by specialty type, group size, and market structure. Total cost of care contracting could be an important catalyst for practice acquisitions in the future. CONCLUSIONS: In the past, market and regulatory forces aimed at controlling costs have both encouraged and rewarded the consolidation of providers, with important new developments likely to create momentum for further consolidation, including acquisitions of physician practices.

The integration aspiration.

Integration is a common goal when health systems acquire medical practices, but may take various forms and continue to evolve beyond the classic model. Characteristics of the classic model of integration include strong and committed physician leadership, an emphasis on care coordination, easy access to primary care, integrated IT and business intelligence, and a willingness to accept financial risk. Leaders of integrated delivery systems continue to strive for greater levels of coordination and leveraging of collected talents and resources.

After the flood: surviving Hurricane Juan.

Capital Health is the largest integrated academic health district in Atlantic Canada. It provides tertiary health services to Atlantic Canadians and to 40 per cent of Nova Scotia's population. Capital Health consists of nine facilities, one of which is the Queen Elizabeth II Health Sciences Centre. The QEII is the largest adult academic health centre in Atlantic Canada, occupying 10 buildings on two sites. It employs 8500 staff and has 1075 beds. The QEII was created in 1996 with the merger of the Victoria General (VG), Halifax Infirmary (HI), Abbie J. Lane Memorial, Camp Hill Veterans' Memorial, Nova Scotia Rehabilitation Centre and the Nova Scotia Cancer Centre. There are 33 operating rooms at the HI and VG sites; together about 29,000 operations are performed there each year. The two hospitals are located about five city blocks away from each other. This article discusses how the two facilities coped after the devastation of Hurricane Juan in September 2003.

Eliminating fixed costs: Part II--A pathway to reduced health expenditures.

The second half of this two-part article examines some potential solutions to offset the rise in health care expenditures that currently afflicts the United States. Among the ideas proposed by the author is an emphasis on changing reimbursement processes. In addition, he argues, eliminating one-half million bureaucratic jobs could reduce health expenditures by billions of dollars.

Governance as an instrument of successful organizational integration.

In July 1997 the Health Services Restructuring Commission (HSRC) issued a formal direction to the Wellesley Central Hospital to relinquish the operation and management of its programs and services to St. Michael's Hospital. This event propelled staff and volunteers into four years of unrelenting efforts to bring together the mission, vision, values, human resources, clinical programs and broad communities of these two very unique and long-standing organizations. Looking back, the result was arguably one of the most successful hospital mergers in the province at that time. A number of factors were responsible for this outcome. The tremendous value of a strong and integrated governance team clearly stands out as one of the most pivotal success factors. This article examines the principles and structures that guided the governance team and St. Michael's Hospital to a stronger and more vibrant future.

Merger failure: a five-year journey examined.

In 1994, Catholic Medical Center and Elliot Hospital in Manchester, New Hampshire, merged to form Optima Health, a full-ownership, not-for-profit IDS. Initially, Optima Health was an economic success. A number of strategic miscalculations, however, led to the IDS's demise. First, Optima Health's leaders failed to fully consider the divergent cultures of the two hospitals, particularly with respect to their religious differences. Second, Optima Health's leaders did not anticipate the public's response to the organization's consolidation plan. And third, the consolidation was found to have changed the charitable missions of the two tax-exempt hospitals in violation of Federal laws regarding charitable trusts. The issues combined to undermine the commitment of the organization's leaders to the consolidation strategy, and Optima Health was dissolved.

Merging, de-merging, and emerging at Deaconess Billings Clinic.

Complexity theory offers a powerful model for effective mergers of health care organizations that differs substantially from customary approaches. Exploring how Deaconess Billings Clinic in Montana evolved from two separate and very different cultures provides insight into how organizations can apply a complex adaptive system (CAS) model of mergers to create more truly integrated health care systems. DBC's merger illustrates the phenomenon of emergence in complex systems, whereby structures arise that are not a synthesis of the pre-existing cultures or the result of a new culture being imposed. Instead, the merger is understood as an ongoing, self-organizing process appropriately characterized by fits and starts, feelings of uncertainty, and other natural challenges of change and growth. By squarely surfacing the distinct cultures of the organizations through abundant interaction, relationship building, and information flow, differences can be creatively transformed, resulting in deep-seated change and the emergence of a genuine, shared health care system culture.

Management of integrated delivery systems in the next decade.

In an attempt to find some remedies within what is already a highly competitive and politically charged environment, this article's purpose is to specify some major steps that the management of integrated delivery systems might heed in the next decade to curtail their expenditures and better position themselves for the future.