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Strength in Numbers
Strength In Numbers

Integrated health care delivery systems reduce costs and boost efficiency.

By Bruce Westbrook


From contract doctors of the 1800s to fee-for-service, group practice and community health centers of the 1900s, health care evolves as it grows more complex. Recent years have added an alphabet soup to the mix: HMOs (health maintenance organizations), PPOs (preferred provider organizations), IPAs (independent practice associations) and IMGs (integrated medical groups).

As health care costs have risen and Medicare has decreased coverage in some areas, such as prescription drug coverage, another acronym has emerged in the past 15 years: IHDS, or integrated health care delivery systems.

These strategic alignments of hospitals, physicians and other care providers can maximize efficiency by providing a user-friendly framework — in effect, one-stop-shopping — to streamline, increase wellness and reduce costs, according to a report to the Agency for Healthcare Research and Quality of the U.S. Department of Health and Human Services.

Around 1,000 such systems provide care on local and regional levels throughout America. But there's no single template. Some integrate horizontally by aligning more with outside institutions, such as Johns Hopkins Medicine in Baltimore. Some integrate vertically by aligning varied components largely within their own systems, such as St. Luke’s Episcopal Hospital in Houston.

The Evolution of IHDS
Founded in 1954, St. Luke's added the Texas Heart Institute to its components when famed heart surgeon Dr. Denton A. Cooley founded it in 1962. Since then the hospital also has aligned vertically with Kelsey-Sebold Clinic, the largest community-based physician group in Houston. The city's Texas Medical Center is the world's largest, with 46 institutions including St. Luke's and 12 other hospitals.

St. Luke's IHDS has evolved gradually, says David Koontz, senior vice president of the hospital. "A number of related entities have helped make us a system," he says. "We've got in-patient rehab in our hospitals. We've got Kelsey-Seybold as a big multi-specialty medical group. I think we've probably become an IHDS sooner than the rest of the metropolitan area."

By contrast, Johns Hopkins has integrated horizontally, aligning Johns Hopkins Hospital, Johns Hopkins Bayview Medical Center and Howard County General Hospital.

"When several hospitals pool together, they can use their collective buying and negotiating powers to, say, get a better deal for supplies and pharmaceuticals than they could on their own," says Kathleen White, director of the master's program for Johns Hopkins University School of Nursing.

An integrated system also can improve quality. "The hospitals can share best practices and learn from one another," White says. "Not everyone has to do everything."

Coordinating Care
Becoming an IHDS involves no formal designation, though there is a group of such entities: American Association of Integrated Healthcare Delivery Systems.

To form an IHDS, a hospital aligns with health care providers offering proximity and a broader range of services, according to the National Directory of Integrated Healthcare Delivery Systems.

In choosing partners, look for strong physician-hospital links, coordinated systems of care, geographic reach, quality management, contractual capabilities, utilization controls, financial strength, organized oversight and economies of scale, says Bonnie Boone of Willis Health Care Practice.

Hospitals should partner "with an array of inpatient and ambulatory-care support services such as home care, hospice, medical transportation companies and wellness centers," says Robin Maley of Maley HealthCare Consulting. She also advises creating a system that provides a "continuum of care, versus treating episodic illnesses."

An IHDS like this allows hospitals to provide a more rationally organized sequence of services to patients. "We can render the appropriate level of service depending on how sick a patient is," Koontz says. "Without such a system, managing that patient’s care is at risk for gaps in communication and lack of coordination of care from one setting to the next."

But an IHDS also can involve trade-offs for patients and may not suit all hospitals.

"There's a temptation to be all things to all people," Koontz says. "That's following the IHDS phenomenon. But when adding more services or scale to your delivery system, you must have a critical mass that not only makes it work financially, in terms of volume, but ensures you have quality care."

Making It Work
Large systems in large cities aren't always easily managed. "Pulling together alliances with other health care providers can be hard to do unless you have shared balance sheets," Koontz says. "We're pioneering a model where we joint-venture with other entities, mostly other physicians."

This, too, might not be easy.

"We're a very regulated business, so when dealing with physicians in our IHDS, there are a series of laws and regulations we have to be mindful of in how we integrate," Koontz says. Yet many hospitals are getting into some form of physician employment.

"It's very tough to look at it in a global sense," says Doug Chaet, founder and chairman of the board of the American Association of Integrated Healthcare Delivery Systems. "You have to look at it from an individual party's perspective — a hospital's, or a group of physicians'. They all have different needs."

One may involve billing.

"If you're a small to mid-size business considering such a system, most likely you're contemplating some sort of direct deal for the provision of health care services in lieu of going through an insurance company," Chaet says. "The hope is then that the level of reimbursement on the provider side would improve."

Those weighing integration also should assess value-added aspects or services of potential partners, he says. Maybe they offer health-risk screenings or certain disease management programs or more of a personal touch — things that other components in the system could then follow.

"Essentially what you're trying to do is offer a comprehensive, collaborative program that isn't cut into pieces. You are trying to speak with one voice."

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