July 10, 2007
Health Affairs
, Web Exclusive
Hoangmai H. Pham, Paul B. Ginsburg, Kelly L. McKenzie, Arnold Milstein
This article examines how an integrated delivery system responded to threatened exclusion from an insurer’s high-performance network by attempting to reduce costs through fundamental redesign of care processes. Some factors facilitating this transformation, such as its structure as a large salaried medical group exclusively affiliated with a hospital, might be specific to the organization and its market. Other essential elements could be replicated. But in a fee-for-service payment system, cost reduction from reducing the number of services or changing their mix can reduce profitability. Making the business case for sustaining desirable provider behavior may require that purchasers and plans make equally fundamental changes in payment policy
Free access to this Health Affairs article is available via the California HealthCare Foundation (CHCF) Web site. The CHCF funded this research, as well as the accompanying Issue Brief No. 112.