Excelling Within Integrated Health Plans

Excelling Within Integrated Health Plans

Integrated health plans and integrated delivery systems seek to care for patients by focusing on prevention, primary care, behavioral health, and proactively managing chronic conditions. Through benefit design and coordination of resources, integrated health plans seek to improve outcomes (quality) and reduce unnecessary care.


The World Health Organization (WHO) defines integrated health services as the organization and management of health services that give people the care they need, when they need it, and in ways that are user-friendly, achieve desired results, and provide value for money.

Integrated health plans and integrated care are more commonplace now because of the healthcare industry's consolidation, which is partially driven by payment reform. The transformation from volume-based reimbursement to value based reimbursement for healthcare has stimulated more integration.   


Horizontal integration in healthcare is when individual physicians or practices merge to form larger practices, or when hospitals combine to form a conglomeration of hospitals or a single large health system. The drivers for horizontal integration are to create economies of scale (efficiency in providing care, consolidation of operations, and less overhead) as well as more external influence (name and brand recognition and enhanced bargaining power). For example, horizontal integration occurs when several nephrology practices of two to eight providers merge to form a single practice with 25 or more providers. Another example is when a five-hospital entity acquires or merges with a three-hospital entity that provides a similar scope of care (i.e., all community hospitals) to form an eight-hospital health system. 

Many perceive horizontal integration in healthcare as beneficial. However, potential downsides include reduction in competition, patient choice of providers and facilities, and increased costs for services rendered.  Lastly, operational efficiency often does not improve as much as anticipated.


Combining health plans, providers, and hospitals into one entity is vertical integration within healthcare. Vertical integration also occurs when substantial contractual alignment is created between payors, providers, and health systems where clinical outcomes and the total cost of care are at risk to each entity.

Vertical integration aligns organizations so they can provide care seamlessly. Within an organization, examples of vertical integration include a system-wide electronic health record, centralized referrals and scheduling, a unified mission, and leadership and seamless care across providers, outpatient facilities, and hospitals. Integrated health plans go beyond a robust provider network. Health plans align incentives to hospitals and providers to stimulate continuous care as well as provide robust care coordination. The desired result is easy access and easy-to-navigate care.

Like horizontal integration, vertical integration may reduce competition and choice for patients. It may also reduce autonomy for those who work within a fully integrated system. 


Fee-for-service Medicare and Medicaid often results in fragmented care because it lacks incentives to provide integrated care. However, Center for Medicare & Medicaid Innovation (CMMI) value based care models have created more integration both horizontally and vertically. Accountable care organizations (ACOs) and bundled payment models allow for providers and health systems to integrate care by aligning payment mechanisms to improve quality and reward participants for reducing wasteful healthcare.

In a Center for Healthcare Strategies brief, Dr. Penny Feldman notes that the most important identifying characteristic of an integrated health plan is a "dynamic person/family-centered plan of care built on significant individual/caregiver involvement and comprehensive assessments and reassessments over time to capture changes in people's circumstances and preferences."1 Based on this article, other high-performing integrated health plan characteristics include:

  • An organizational culture dedicated to integration of services
  • Capacity to "scale up and stretch out" to meet needs while maintaining quality and value
  • Alignment of plan, provider, and member interests
  • Accessible coordinated care to attract and maintain membership

Fresenius Medical Care North America, through its value based care entity, Fresenius Health Partners (FHP), is the convener of integrated care. FHP partners with the payors, Fresenius Kidney Care clinics, nephrologists and vascular access centers, and leverages its own Care Navigation Unit (CNU), to provide late-stage CKD and ESRD patients with integrated care. FHP successfully partners with both horizontally and vertically integrated care programs that involve Medicare, Medicare Advantage, and commercial insurance plans. FHP is an innovator and leader in this segment of healthcare.


  1. Hollander Feldman, Penny. Key Attributes of High-performing Integrated Heath Plans for Medicare-Medicaid Enrollees. Report. Center for Health Care Strategies, Inc. August 2014. https://www.chcs.org/media/PRIDE-Key-Attributes-of-High-Performing-Health-Plans_090514.pdf 

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