HEALTH CARE NETWORKS: INTEGRATED SYSTEMS LOSE FAVOR
Despite almost a decade of efforts to develop "one-stop"This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
health care shopping, the practice of "seamless medical care is
beginning to unravel," SACRAMENTO BEE reports. While the
purchase of health plans and doctors groups by hospitals and the
purchase of physician networks and medical clinics by health
plans have become routine in order to achieve the "ideal" health
care network, "the cutthroat economics of medical care appear to
be dooming the 'seamless' trend." For example, last week Kaiser
Permanente announced that it will send some of its patients to
other hospitals for care and Foundation Health announced that it
is selling its care centers and physician groups.
BAD FOR BUSINESS?: Brandeis University professor of
management Jon Chilingerian said that while the idea of
"seamless" medical care may sound appealing, "the history of
business has shown that vertical integration is very difficult"
because "economics can change." BEE notes that Kaiser "used to
be the example of a fully integrated system, where the whole
health care product is contained under one roof," and that no
other company has been able "to create the same product" as
successfully as Kaiser. But Kaiser's announcement that it will
contract services with other institutions "is an admission of how
cumbersome it can be to manage a health system and own all the
pieces."
NEW TRENDS: Health care experts say that compared to a few
years ago, "it is much easier and less expensive to contract with
physicians to provide service[s]" to plan members than to own a
physician network. And it is more efficient for HMOs to contract
with hospitals than to own clinics and hospitals. BEE reports
that economic forces appear to be driving the health care market
to a system where "doctors provide basic medical services,
hospitals deliver in-patient services only, and health plans
provide the financing and not the care." Leonard Schaeffer,
chair and CEO of Blue Cross of California and WellPoint Health
Networks, calls it a "virtually integrated system" which consists
of "different organizations with different sets of skills that
are bound by contract to offer health care to third-party payers"
(Chiu, 7/7).