Daniel J. Marino
Daniel J. Marino

Clinical integration emerged as a healthcare-delivery strategy in the late 1990s, when the Federal Trade Commission and the Department of Justice put forth guidelines to ensure that healthcare systems, hospitals, and physicians that were affiliated in larger structures could do so in ways that would serve the public interest and not be anti-competitive. The primary tenets of the guidelines are that these affiliative agreements would improve quality of care and control the cost of care. If hospitals and physicians grouped together in large numbers primarily to increase the cost of care (like a cartel), it would not be in the public interest.

Making the guidelines clear helped with an emerging societal problem: As healthcare has become more specialized and differentiated, it has become more fragmented from the patient’s point of view. Many of the poor outcomes for healthcare consumers come from clinicians who do not communicate well with one another because they are housed in separate entities, and, therefore, critical information falls through the cracks. Much of the unnecessary cost of health care arises from the same lack of integration, because expensive tests are often repeated, and care is not effectively coordinated to prevent illness and hospital admission.

The Key to Clinical Integration

Clinical integration has many definitions, including those driven by legal guidelines. The American Medical Association (AMA) describes clinical integration as “the means to facilitate the coordination of patient care across conditions, providers, settings, and time in order to achieve care that is safe, timely, effective, efficient, equitable, and patient-focused.” The FTC describes clinical integration as including “an active and ongoing program to evaluate and modify practice patterns by the network’s physician participants and create a high degree of interdependence and cooperation among the physicians to control costs and ensure quality.”

There is a significant value proposition for physicians, hospitals, payers, and patients in developing a clinical integration (CI) program.

  • Physicians need a legitimate means of joint contracting that rewards better performance, provides access to the technological infrastructure necessary to demonstrate that performance, and realigns the otherwise perverse financial incentives in the fee-for-service healthcare system.
  • Hospitals view physician alignment as a way of mobilizing a loyal “vanguard” within the voluntary medical staff, driving improvements in utilization and length of stay, and providing incentives for the adoption of advanced clinical technologies, thereby competitively positioning the hospital in the market based on quality.
  • Payers (employers or health plans) value a relationship with aligned hospitals and physicians if this collaboration can show an ability to generate cost savings and increase employee productivity via better health.
  • Patients benefit from physician alignment by receiving health care through organized, evidence-based processes that focus on some of the most common, most costly, most treatable, and yet most debilitating illnesses in their communities.

Clinical integration, therefore, must be something you do rather than an abstract concept when it comes to describing the FTC-approved legal structure. Information systems must be created to give clinicians and care managers feedback on their patients and help them identify gaps in care. Physicians need to engage in interdisciplinary governance and oversite structures to ensure that clinical programs designed to improve care are cost-effective and evidence-based. Care must be coordinated by a team of individuals. Building this infrastructure for better and more cost-effective care costs money, so those involved with CIN formation must work with payers to create new models of reimbursement that reward the effort that also rewards the payers (and, ultimately, the consumers) with less downstream morbidity, and, therefore, less downstream claims exposure.

From a practical point of view, clinical integration makes physicians feel like they’re part of system of care again. This is not only good for patients, but helpful and supportive to physicians, who more and more work in isolation. Physicians naturally respond to credible feedback about their patients because they want their patients to have better outcomes. Hospitals and health systems can naturally benefit from closer ties with their affiliated physicians. Patients and payers benefit as described above.

Since 1997, many CINs have sprung up around the country. Most large systems already have one, so they are focusing on optimizing existing CINs and working with multiple CINs that benefit from coming together in even larger structures as healthcare regionalizes. Mergers of systems create a new level of complexity in governance and legal structures, but they also create economies of scale and theoretical benefits to patients. Larger number sets from more patients improve predictive modeling through data analytics.

Multi-State and Multi-Region CINs

More than a decade ago, CINs typically consisted of one hospital and its medical staff, as well as employed and independent physicians forming a local CIN. During the past five years or so, CINs have developed into multi-state, multi-regional CINs with either single owners or multiple independent health system owners. These CINs are typically structured as follows:

Diagram of how CINs operate

Properly setting up the foundation of these CINs is critical to their success. This includes the support structure, governance, legal compliance, and overall operational build. One of the first things for any system’s leadership to do is to critically question why they want to pursue a clinical integration strategy. The investment is significant, and leaders must think through the ROI.

Clinical integration is a disruptive business model that requires changes in infrastructure and business plans. Leaders must think “big picture” about why they would invest in the strategy (hint: think about what the consumer is demanding). It is also critical to find physician leaders and other clinicians who are willing to roll up their sleeves to work with system business leaders in crafting the network and its capabilities. Once an effective payer strategy is secured and a critical mass of physicians is engaged in governance, an organization is well on its way to creating an effective CIN.

Daniel J. Marino is managing partner for Lumina Health Partners. John P. Marren is a founding partner of Hogan Marren Babbo & Rose Ltd., and Thomas J. Babbo is partner and shareholder.

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