PITTSBURGH:
THE YIN &
YANG OF
INTEGRATED
DELIVERY
AND
FINANCING
SYSTEMS
Tom James, MD
P
ittsburgh is a city where
the Monongahela and Al-
legheny Rivers come to-
gether to create one—the Ohio
River. But in the same city two
very large health systems have
created a great rift. This comes as
two dominant systems have each
moved to form distinct “Integrat-
ed Delivery and Financing Systems (IDFS).” This type
of entity includes a vertically integrated health system,
such as a hospital system with contracted or employed
physicians, who are organized into a multi-disciplinary
group practice. Collectively the hospital and physician
group is referred to as an Integrated Delivery Network
(IDN) or Integrated Delivery System (IDS). But when
an insurance arm or a health plan is also owned by
the IDN, then it becomes an Integrated Delivery and
Financing System (IDFS).
In Kentucky, Norton Healthcare and Kentucky One
have both created IDNs. This structure allows the IDN
to contract with the Centre for Medicare and Medicaid
Services (CMS) to develop a risk-bearing Accountable
Care Organization (ACO) under the current CMS pro-
grams of Medicare. Financial rewards can be obtained
by trying to align physician group incentives for the
quality of care measures and cost management with
hospital Medicare incentives. Physicians, hospitals and
other providers could not do this if independent from
each other. Millions of dollars are at stake for the IDN,
participating with incentive plans and with the Medicare
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LOUISVILLE MEDICINE