Hospitals and physician groups that are adding financing components to get into the insurance business are limited in many areas, a new national study indicates.
More than 200 "integrated delivery and financing systems" surveyed by the national consulting firm Ernst & Young are adding features to make themselves look like HMOs. However, many of these systems have "little infrastructure, unclear commitment from management, and (are) lacking in strategic planning for the future," according to the survey, Navigating through the Changing Currents.
"Although integration is the new buzzword in the healthcare industry, survey results show that many IDFSs cannot deliver a complete continuum of care," Ernst & Young said. "And while, IDFSs are progressing, they still need to make major operational improvements before they can compete effectively with existing managed-care organizations."
Ernst & Young analysts also were concerned with the ownership arrangements of the IDFSs, saying they could be hindered in their ability to make necessary operational changes.
Hospitals dominate the IDFS ownership, with those organizations having 50% or greater ownership in 76% of the systems polled. In about 40% of those surveyed, physicians and hospitals were 50-50 partners in the venture.
Trouble could arise if specialists limit the number of primary-care providers in the system. That's because employers and health plans "view a network with less than 50% primary-care physicians as being less than optimal in its utilization management capabilities," the study said.
While IDFSs are becoming more advanced, they are still very young in their formations. Seventy-one percent of those surveyed were three years old or younger while 26% were one year old or younger.
"Many IDFSs are probably transition organizations that will eventually become provider-controlled HMOs," said Donn Szaro, Ernst & Young's national director of healthcare industry services.
They are accepting a variety of payments including everything from direct payments from employers to "downstream" payments from insurers, the survey said. Just 14% cover 100,000 people or more, while 43% have just 10,000 patients or fewer.
Only 68% of IDFSs reported setting financial goals, although the number of systems with revenues of more than $1 million has more than doubled in the last two years to 58 in 1995 from 29 in 1994.