Have a personal or library account? Click to login
Horizontal and Vertical Integration of Health Care Providers: A Framework for Understanding Various Provider Organizational Structures Cover

Horizontal and Vertical Integration of Health Care Providers: A Framework for Understanding Various Provider Organizational Structures

Open Access
|Jan 2020

Figures & Tables

Table 1

Key features of the horizontally and vertically integrated structures.

Organization typeIncluded health care providers and servicesCare management functionsAdministrative oversight of providers
Horizontally integrated structures
Single specialty group practice
  • Physicians

  • Physician services

  • Varies depending on specialty represented

  • Hospitals, health plans, physicians, and other firms may own or manage single specialty practices, which could influence the degree of administrative oversight over included providers.

Multispecialty group practice
  • Physicians of various specialties

  • Services vary depending on included specialties

  • May facilitate patient referral, improve care coordination, and be better-positioned to manage the costs of care [12, 15]

  • Multispecialty group practices share governance and infrastructure, which can result in tighter management control; however, control can vary depending on factors such as size and whether the practice is physician-owned, owns a hospital, or is owned by hospital/system [12, 15].

Independent practice association
  • Physicians

  • Services vary depending on included specialties

  • Largely serve contracting role and provide administrative and contractual functions [15]

  • May provide infrastructure services to support performance improvement and care management [20, 32]

  • May provide processes and resources to support care management such as disease registries, nurse care managers, etc. [14]

  • Physicians maintain independent ownership and management of practices, while the independent practice association primarily negotiates contracts with health plans [16, 40].

Virtual physician networks
  • Physicians

  • Services vary depending on included specialties

  • Entities that organize these networks, such as medical foundations or state Medicaid agencies, may provide care coordination networks; certain infrastructure resources, such as health information technology and information exchange; and care management services to member physicians, who in turn could use those services in the provision of care [15, 18, 20]

  • These networks tend to be characterized by less formal bureaucratic control [15].

Multihospital systems
  • Two or more hospitals

  • Primarily hospital services, which may include inpatient and ambulatory services

  • Varies depending on included service; in vertically integrated models, multihospital systems may have care functions that a more analogous to integrated delivery systems.

  • As multihospital systems are characterized by shared ownership or management, administration may have more direct control over included hospitals, including care processes, shared organizational missions, and the like. However, they may also maintain separate hospital boards and executives, despite shared asset ownership [24].

Vertically integrated structures
Physician hospital organization
  • Hospitals and their affiliated physicians

  • Hospitals and physician services, which vary depending on included specialties

  • Facilitate managed care contracting, provide administrative services to physicians, facilitate natural referral relationships around one hospital, and manage ambulatory care facilities where physicians work [15, 28]

  • Closed physician-hospital organizations selectively contract with physicians on the basis of quality and cost performance and have exclusive relationships with physicians and close relationships with hospitals, which may facilitate care coordination [28]

  • May provide processes and resources to support care management [14]

  • Physicians maintain independent ownership and management of practices, while practices contract with health plans through the organization [18, 28].

Management services organization
  • Physicians and hospitals if hospitals are the owners of the organization

  • These organizations provide administrative and infrastructure services, which may include care coordination, care management services and health information technology, to physician members [12, 27, 28]

  • Management services organizations provide services to member physicians and contract with payers on behalf of member providers; however, providers largely retain independence.

Clinically integrated network
  • Primarily include physicians but may also include hospitals and other providers such as post-acute care providers.

  • Services vary depending on network composition.

  • Providers seeking to form these networks must demonstrate integration clinically through a number of activities, including implementation of a program to evaluate and modify practice patterns and creation of a high degree of interdependence and cooperation among network physicians to control costs and ensure quality.

  • Example features of programs include:

    • Implementing systems to ensure appropriate utilization of services

    • Deploying evidence-based practice standards and protocols

    • Performance evaluation and feedback to included providers

    • Case management and care coordination [29, 30]

  • Providers are either integrated via ownership or contractual relationships; the clinical integration framework requires physicians to use consistent care protocols and to monitor quality, suggesting greater oversight and management of included providers [29, 30].

Foundation model
  • Varies; primarily limited to physicians; however, in some states with corporate practice of medicine laws, certain hospitals such as nonprofit health corporations or federally qualified health centers, may employ physicians, provided physician autonomy is maintained [33].

  • Physician services are explicitly included, but these structures are often formed to facilitate collaboration between hospitals and physicians [28, 33].

  • Varies; may have functions similar to integrated delivery systems in models where the physician organization and hospital have mutually exclusive contracting relationships [31]

  • A key feature of this model is the salaried employment of physicians by a non-profit entity; while employment may suggest greater management control of included providers, states with corporate practice of medicine laws – where these models are relevant – are explicitly focused on maintaining the clinical independence of physicians [31, 33].

Integrated delivery system
  • Varies; may include hospitals, physicians, and other health care providers such as post-acute care providers, behavioral health, community-based organizations, as well as health plans [15, 31, 39]

  • Comprehensive, full continuum of care [15, 39]

  • Care coordination and information sharing along care continuum [13, 15, 31]

  • Population health and care management [13]

  • Data collection, analysis, and reporting capabilities to inform quality improvement [13, 15, 31]

  • Health information technology capacity [15]

  • Use of evidence-based practices [31]

  • Interdisciplinary, team-based care [31]

  • Providers join systems through ownership or formalized contractual agreements, which typically establish some degree of administrative control. Administrative control may vary depending on the extent to which the system centralizes management activities, engages in physician-system integration, and employs physicians [12, 28].

DOI: https://doi.org/10.5334/ijic.4635 | Journal eISSN: 1568-4156
Language: English
Submitted on: Nov 27, 2018
|
Accepted on: Dec 11, 2019
|
Published on: Jan 20, 2020
Published by: Ubiquity Press
In partnership with: Paradigm Publishing Services
Publication frequency: 4 issues per year

© 2020 Jessica Heeringa, Anne Mutti, Michael F. Furukawa, Amanda Lechner, Kristin A. Maurer, Eugene Rich, published by Ubiquity Press
This work is licensed under the Creative Commons Attribution 4.0 License.