Integrated Delivery Systems as a Panacea

In “Curing Fragmentation with Integrated Delivery Systems,” Alain Enthoven, the father of “managed competition,” extols his creation as a cure for what ails America’s fragmented health system.  Indeed, many of Enthoven’s proposals for reducing fragmentation in our health care system, such as regional health insurance exchanges, were incorporated into the Patient Protection and Affordable Care Act (“PPACA”), the health care reform bill signed into law on March 23, 2010.

Although a proliferation of integrated delivery systems competing with each other for business may be a step in the right direction, it will do little or nothing to cut down on the enourmous amount of health care resources spent on compliance with ever-expanding numbers of billing rules.  Even Professor Enthoven acknowledges that a single-payer system could solve many of the same problems as his integrated delivery system proposal, but he believes that Americans do not have the political will to accept such a system.  Professor Enthoven also fails to consider that even less-radical changes to our health care system, such as adopting a system of encrypted medical records that a patient carries with her, like the French “carte vitale,” would greatly cut down on or eliminate poor medical outcomes that are attributable to fragmentation in the system.

A well-managed single-payer system could  satisfy the American appetite for market competition, and achieve more than the integrated delivery systems proposed by Professor Enthoven.  Competition could still take place at the insurer level, much like in Germany, or it could take place amongst providers, such as in Japan (whose system author T.R. Reid cleverly describes as “Bismarck on Rice” in his recent book The Healing of America (Penguin Press 2009)).

Professor Enthoven’s example of the “epitome of integrated delivery system[s]” is Kaiser Permanente (for which Enthoven is also a consultant, according to his Stanford University on-line biography).  His vision is for the American people to have a choice of many Kaiser Permanente-like organizations.  This presumes that people want choices when it comes to picking a health plan, a presumption shared by PPACA.  I believe that is incorrect.  What people want is choice of providers.  Nobody loves their payers; they love their doctors.  They want to make sure they don’t receive numerous bills for every little service they receive, but they don’t really care about who pays those bills.  Only the ultimate integrated delivery system, a single-payer one with a compensation system based on outcomes, not services, will achieve this.

It is true that many of the single-payer systems in use around the world are underfunded and under inflationary pressure.  A single-payer system in the United States would be no exception.  Despite our current economic woes, we remain the richest country in the world.  As Dr. Marcia Angell, former editor-in-chief of the New England Journal of Medicine stated in the 2000 PBS documentary “Healthcare Crisis:  Who’s at Risk?,” the amount of our GDP that we spend on health care is not really important.  What is important is that we get good outcomes and the customer satisfaction that we are paying for.  Managed competition and “integrated delivery systems” although a step in the right direction, will not solve our problems in the long run.

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5 Responses

  1. ParatrooperJJ says:

    The “carte vitale” contains billing information only, not medical information. It’s like a Medicare card.

  2. Vickie Williams says:

    I quote from T.R. Reid – “Embedded in the gold metallic square just left of center is a digital record of every doctor visit, referral, injection, operation, X-ray, diagnostic test, prescription, warning, etc., together with a report on how much the doctor billed for each visit and how much was paid, by the insurance funds and by the patient.”


  3. “They want to make sure they don’t receive numerous bills for every little service they receive, but they don’t really care about who pays those bills.”

    No specific comment; just want to highlight that there are those out there who apparently think that government should cater to this instinct.

    As an aside, do you think maybe we should first try such a system with a service that is much more tied to government…like maybe the legal system? You know, have all the lawyers (including profs) paid by a single payor.

    I’m betting with the success of such a single payor legal care – esp. with the visibly enthusiastic participation of all the legal types who are so anxious to run the health care system – we should have no problem then convincing the gun-clinging public that, indeed, single payor anything is a much better way to run our economy.

  4. Frank says:

    I completely agree with your point that “What people want is choice of providers. Nobody loves their payers; they love their doctors.” I hope that those who are running state exchanges keep that key distinction in mind.

    This issue reminds me of the battle over the “plain vanilla products” option in finance reform. Health insurers argue that people want to be able to, say, trade off certain aspects of coverage in return for lower prices. But just as the numerus clausus principle restricts the number of possible deviations from a certain model of property, good insurance law would keep the variation in insurance to a certain manageable and understandable set of models.

    If we ignore that principle, we risk health insurance contracts modeled on the worse of OTC derivatives or toxic MBS’s….fine on the surfaces, but laden with traps for the unwary. It’s a recipe for “Gotcha Capitalism”‘s infiltration of health finance.

  5. Vickie Williams says:

    I think the question is when does a product that is labelled and marketed as “insurance” no longer serve the traditional function of spreading the risk of losses that are unanticipated by an individual, but can be anticipated to occur in a large enough population? Many of the limited “insurance” products on the market do not really constitute insurance in my opinion, just like many of the financial derivatives that were marketed were not really financial products at all, but pure gambles. I don’t want to gamble with my health care.