Integrated Health Systems: Promise and Performance

Summary Today's “virtually” and vertically integrated health systems increasingly are much better positioned than the multihospital systems of the 1980s to respond to the healthcare challenges of the twenty‐first century. The authors argue that the control of the health services “value chain” will devolve naturally to those market players who have the comparative advantage in coordinating the flows of information, human, and physical resources along the continuum of services required to improve and maintain the health of populations. Available evidence does not render a clear verdict on whether superior performance is generated by the virtual integration of strategic alliances and affiliations or the vertical integration represented by unified single ownership of all system components. While inertia, acute care‐based “mental models,” weak incentives, and insufficiently developed information systems represent important barriers to the creation and sustainability of integrated systems, the authors argue that system evolution is occurring and offers promise of enhanced efficiency and patient benefit. However, the full potential of these systems will only be realized as they accept explicit accountability for meeting the health needs of their local communities. The transition from “covered lives” to accountability for the community population is crucial.