Hospitals
Hospitals in the United States typically follow either the non-profit or the for-profit model. As Dewar (2017), the debate regarding which system is better is ongoing with an inconclusive result. Each approach has both advantages and issues, both practical and potential. With that said, regardless of their model, hospitals have to compete with each other aggressively. As Phelps (2016) notes, insurers are pressuring them to offer the lowest price in exchange for funneling clients to them. As a result, they are in a continuous process of cost-cutting to stay competitive.
Ambulatory Care
Ambulatory care can be provided by a variety of institutions, including clinics, hospitals, physician offices, and community health centers. However, as Phelps (2016) states, insurers will often include deductibles for patients who seek it, which they do not add for hospital stays. Due to the number of different options for patients, competition takes place in ambulatory care settings. Similar to hospitals, it is expressed via the lowering of prices, ultimately benefiting consumers but lowering the facilities’ revenue.
Home Health Care
Home health care is a lower-priced substitute for inpatient or ambulatory care, achieving this advantage due to the lack of space requirements. It is often used for chronic conditions and for patients who are eligible for Medicare since many such patients will have this variety of illnesses due to age or other factors. As such, home health care services are less concerned about competition, not having to deal with pressure from different insurers. As a result, decision-making is more often oriented toward improving care quality or expanding the scope of services provided.
Long-Term Care
Long-term care is provided in a variety of different settings and institutions, though most of them are characterized by providing a patient with a residence and full service, including meals, cleaning, and care for their conditions. Being intended for seniors and patients with severe chronic diseases, they are also closely associated with Medicare. However, as Hsieh and Sloan (2017) note, most nursing homes in the United States are for-profit. As such, their decision-making will often aim toward maximizing said profit, whether by introducing new services or reducing costs.
Integrated Delivery Systems
Integrated delivery systems incorporate all aspects of care listed above to provide patients with comprehensive care that suits their needs. They represent an alliance of many different healthcare facilities that work together and refer patients to each other exclusively. As Dewar (2017) notes, there are typically few such systems in a given area, resulting in the formation of an oligopoly. Due to the lack of choice on the part of the insurers and patients, they have substantial market power. It enables them to make decisions that represent their self-interest rather than that of the customers.
The Benefits of Integrated Delivery Systems
An integrated delivery system’s primary advantage is the coordination afforded by the close relationships between its members. The members of such an organization can share patient information efficiently and work together despite their different specializations. As a result, the patient’s condition can be assessed more accurately, and an excellent treatment plan can be developed and followed by all members. The outcome is safer care that avoids overtreatment and saves costs for the system and the patient.
The Challenges of Integrated Delivery Systems
As members of an oligopoly, there is little incentive for any integrated delivery system in an area to improve. As long as there is an implicit agreement among the different organizations not to challenge each other, none of them will improve substantially, hurting the customers. Dewar (2017) supports this notion by claiming that there are few financial incentives for integrated delivery systems to enhance their processes and reduce medical error rates. As such, integrated delivery systems are prone to stagnation and price-gouging without meaningful quality improvements.
References
Dewar, D. M. (2017). Essentials of health economics (2nd ed.). Jones & Bartlett Learning.
Hsieh, C., & Sloan, F. A. (2017). Health economics (2nd ed.). MIT Press.
Phelps, C. E. (2016). Health economics (5th ed.). Taylor & Francis.