IDN organizations

I am going down a rabbit hole as I am thinking about Integrated Delivery Networks (IDN).  An IDN is an entity that owns an insurer and providers (usually hospitals are the flagship).  I used to work at a large IDN, UPMC Health Plan.

I am trying to wrap my head around the impact of IDNs on competition and I am learning a lot from my last post and the responses on Twitter.

But I am still stuck in this rabbit hole and I want to think through a taxonomy of IDNs based on what their insurance arms and provider arms do with other entities.  I am doing this to structure my own thoughts.

 


At the top left the insurer will contract with basically hospital or doctor who will take standard in-network rates while the hospital will contract with basically any insurer who meets their reservation rate. In this scenario, the IDN is effectively operating the provider arm and the payer arm at arms-length distance. The bottom right corner has the insurance arm only sending money to the provider arm and the provider arm only taking money from the owned payer arm. This gets us in the neighborhood of Kaiser and the Veterans’ Administration where there are fairly high walls around their own gardens.

When a provider contracts with anyone but the insurer only contracts with the owned providers, it is a branded narrow network.  If the payer will contract with anyone but the hospital only contracts with the owned insurer, it is a huge company owned clinic.  And then there are variations past these caricatures.

The two Pittsburgh IDNs have the insurers contracting with some non-owned providers.  The owned hospitals also contract with some non-owned payers.  This is a mixed case.  I am not sure where I am going with this but I need to think through IDN’s and the way that I think is by writing.






3 replies
  1. 1
    Sab says:

    I am very curious about what you find down the rabbit hole.

    I chose my insurance because they are an IDN. I figured they were serving two masters, the hospitals and docs, and the insurance co. Seemed safer than an insurance co that is only serving the insurance co.

    Had no info on which to base my opinion. Just my gut feeling. That’s kind of like letting my stomach do my taxes. Makes no sense, but without more info there I am.

  2. 2
    Fred Fnord says:

    Lower right, not lower left.

  3. 3
    Kent says:

    I’m not sure about the competitive effects. I tend to think that vertical integration is rapidly increasing under both the HMO and PPO approaches to health care so we may soon end up in a place where it is a distinction without a difference.

    That said, I’m a new member of an HMO (Kaiser) after having spent the past 30 years of adult life in a long long string of PPO plans over the decades under various employers. And my wife is also a newish Kaiser doc after a career working for other independent clinics. So I see it from both sides.

    From the patient point of view it is astonishingly nice to just flash your card and never have to worry about in network or out of network or any of the other nonsense. They swipe your card and you know your exact copay instantly and then you swipe your HSA credit card (we have a HD plan with HSA) and done. Almost never an error or issue or hassle. Almost never. I had a new doc miscode an office visit and that took a written appeal to straighten out. But it did get resolved.

    From my wife’s point of view where the model fails medically is when rare accute cases present that should be escalated rapidly to specialists. Apparently the HMO model tries to run too much stuff through the primary care doc and then slowly slowly up the chain to the final specialist. So where in the past in an independent clinic she would have immediately referred certain cases to outside specialists it takes the HMO a lot longer and a lot more steps and visits to get there. So perhaps HMOs are best for chronic conditions and ordinary care whereas PPOs may be superior for more rare and acute problems that require one to shop around for the best specialist.

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