Health System Integration: A Means to an End

Abstract

The creation of integrated firms and contractual networks in health care often is a precondition for other forms of integration that could actually lower costs and improve quality of care. Although different types of integration activities are leading to innovations in the production of services and the care of populations, the continued influence of the "old" indemnity insurance/fee-for-service system creates important obstacles to those integration activities. If creation of integrated firms and contractual networks races ahead of other forms of integration, it could produce uncompetitive markets that reduce pressures to integrate in ways that can cut costs and improve quality of care. Purchasers' actions could play a major role in determining the future of various integration activities.