What Have We Learned About Health Systems?

Team of medical professionals walking through the lobby of a hospital, photo by PeopleImages/Getty Images

Photo by PeopleImages/Getty Images

Studies that look at the performance of health systems typically start with a series of assumptions:

  • being part of a health system means that system-affiliated hospitals and physician practices are integrated;
  • health systems have access to capital and other resources that they invest in transforming health care delivery;
  • physicians who are part of a health system have access to a single, interoperable electronic health record (EHR); and
  • being part of a health system means clinical care is integrated — for example, between hospital and community and between primary and specialty care.

In principle, consolidating health care organizations into vertically-integrated health systems sets the stage for major changes in health care delivery—and therefore superior performance over unaffiliated health care organizations. However, in the real world, are any of these assumptions about health systems valid?

Researchers at the RAND Center of Excellence on Health System Performance have explored these (and other) assumptions by taking a "deep dive" into 24 health systems and their affiliated physician organizations in four regions of the United States. For these studies, we defined a health system as at least one hospital and at least one physician organization (e.g., medical group, IPA, faculty practice) affiliated through shared ownership or a contractual relationship for payment and service delivery. We selected our sample to include small, medium, and large health systems as well as some that were high, medium, and low performers. We conducted in-depth interviews with a range of c-suite executives in each system to gain a richer understanding of health system functioning than is possible to glean from analyzing administrative, claims, or survey data.

As in other areas of inquiry, this type of qualitative research is useful for looking at how and why in addition to what—and for unpacking assumptions. Our in-depth assessment is leading to a more nuanced understanding of the complex structures of health systems as well as the myriad contextual and environmental factors that contribute to their performance.

In brief, we learned:

  • If you’ve seen one health system, you’ve seen one health system
  • Integration is a multi-layered concept—structural, functional, and clinical—each of which may affect health system performance
  • A single interoperable EHR—accessible to all affiliated physicians—is considered the gold standard—but implementation is by no means universal
  • Health systems are taking a highly individualized approach to care delivery redesign, with an emphasis on standardizing and increasing the efficiency of existing practices over disruptive innovation
  • The pace at which value-based payment arrangements are being implemented by the government and commercial payers may be too slow to support transformation of care delivery
  • Structural integration does not necessarily signal clinical integration

If You’ve Seen One Health System, You’ve Seen One Health System

Hospital exterior, photo by EyeMark/Getty Images

Photo by EyeMark/Getty Images

Integration of hospitals and physician organizations into health systems presents an opportunity to improve performance: Better integrated systems should offer a path to care that is more coordinated and therefore more appropriate and less costly. However, prior assessments of performance, which have relied on secondary data, report mixed findings. By contrast, our “on the ground” assessment provides important insights about how health systems are organized and what mechanisms they have available to influence physician practice at the front lines of care.

In our study of 24 health systems, we expected—and found—variation across systems on multiple dimensions related to organizational structure (such as ownership, size, and complexity), often reflecting a system’s history, market, and mission. Systems spanned the continuum from a single legal entity to very complex multi-layered systems that operate or manage multiple hospitals and multiple physician organizations and also provide care through clinically integrated networks and other affiliation arrangements with private practice physicians. However, we also found variation within systems in terms of how the health systems relate to the hospitals and physician organizations they own, manage, or with which they are affiliated, and how that potentially impacts physician behavior.

Health systems differ in the degree to which they control hospitals and physician organizations centrally or whether these entities have autonomy—a configuration sometimes referred to as functional integration. For example, executives report having the most influence over the hospitals they own and the physicians they employ—either directly or through medical foundations. There is often less control over those in the periphery of the system (for example, physicians within an IPA or a hospital operated under a memorandum of understanding).

An important way that health systems can exert influence is through an enterprise-wide EHR, which can be used to monitor quality and standardize care—for example, by implementing care guidelines through clinical decision support. However, not all of the health systems we examined had a system-wide interoperable EHR—in particular, one that encompasses all affiliated private practice physicians. Some systems lack the needed capital; others found that not all physicians were willing or able to adopt the enterprise EHR.

Executives report that clinical integration is essential for competing in a value-based market but is more difficult to achieve (and has a longer trajectory) than either financial integration—through mechanisms like a single signature authority for contracting—or functional integration, through merging back-office functions and centralized planning and budgeting. A particular concern was the need to reduce variation in care across physician groups operating under different degrees of autonomy. Health systems need private practice physicians to fill out their networks, but giving physicians too much autonomy can constrain a health system's ability to influence care directly.

The diversity of health system organization suggests two important lessons for those who study health systems:

  1. “Ownership” may not be a system's defining characteristic. We concluded from our discussions with health system executives that concepts such as "core" and "peripheral" were more salient than "ownership" in describing a system’s potential effect on its hospitals and physician practices.
  2. Our detailed, on-the-ground examination suggests one reason that prior assessments of health system performance have shown mixed results: Viewing health system affiliation as a “yes/no” construct ignores the substantial variation in system structure, management, or operations revealed in our interviews, all of which can affect performance.

Are Health Systems in the Business of Redesigning Health Care Delivery?

Many arrows changing direction as a concept for structural reorganization, photo by Olivier Le Moal/Getty Images

Photo by Olivier Le Moal/Getty Images

One of the oft-made assumptions about health systems is that they will invest capital and other resources to transform health care delivery. Our interviews with executives revealed that the 24 health systems engaged in care delivery redesign (CDR) for a variety of reasons. Some executives said they were motivated strongly by external factors such as the movement toward value-based payment models. Others mentioned the impact of internal influences—for example, an organizational culture that values patient outcomes.

All respondents reported CDR activities in four areas: care coordination, quality improvement-QI/quality, use of evidence, and costs. Few executives reported efforts to address social determinants of health. Areas of CDR with the most uptake were those focused on standardizing and increasing the efficiency of existing practices rather than establishing innovative delivery models or adopting methods that disrupt existing processes.

...New value-based payment models still represent only a small percentage of their ... business.

Executives noted that, contrary to expectations, the new value-based payment models still represent only a small percentage of their book of business. As a result, while some executives believe they need to “get out in front” to assume risk, others are taking a wait-and-see approach. This ambiguity puts some systems in what has been called the Valley of Death—the lag between making investments in care redesign and the time when those investments will pay off.

In a complementary study, Center investigators also examined whether and to what extent health systems are facilitating primary care redesign (PCR). Substantially redesigning primary care could reorient the entire U.S. health system toward comprehensive, coordinated care. However, individual primary care practices often lack the infrastructure and resources to transform care delivery, raising the question of whether integration into health systems would enhance the likelihood and potential effect of redesign. This study is the first to look across multiple health systems to understand what PCR initiatives are taking place in their primary care clinics and the challenges faced in implementing them.

All of the health system executives report some level of redesign initiative, but many were small scale and in the early stages. Only two of the 24 health systems have a large and organized effort around PCR—and both have a centralized approach, with aligned strategic and operational plans. Across the health systems, both health system leadership and interoperable EHRs were deemed essential to implementing redesign efforts.

  • Scanlon, Dennis P., Jillian B. Harvey, Laura J. Wolf, Jocelyn M. Vanderbrink, Bethany Shaw, Yunfeng Shi, Yasmin Mahmud, M. Susan Ridgely, and Cheryl L. Damberg, "Are Health Systems Redesigning How Health Care Is Delivered?," Health Services Research, Volume 55, Issue S3, December 2020, Special Issue: Comparative Health System Performance, pp. 1129–1143.
  • Harvey, Jillian B., Jocelyn M. Vanderbrink, Yasmin Mahmud, Erin Kitt-Lewis, Laura J. Wolf, Bethany Shaw, M. Susan Ridgely, Cheryl L. Damberg, and Dennis P. Scanlon. "Understanding How Health Systems Facilitate Primary Care Redesign," Health Services Research, Volume 55, Issue S3, December 2020, Special Issue: Comparative Health System Performance, pp. 1144–1154.

Does Structural Integration Signal Clinical Integration?

Group of medical staff consulting in hospital corridor, photo by katleho Seisa/Getty Images

Photo by katleho Seisa/Getty Images

Clinical integration aims to achieve more than just care coordination. As noted in the introduction, one of the fundamental assumptions about health systems is that their hospitals and physician practices provide more integrated care than hospitals and physician organizations without a system affiliation. But whether health systems in fact play an integrating role, and what mechanisms they use to foster care integration, are empirical questions.

Using manager and staff surveys at 59 practice sites across 17 of the 24 health systems, Center investigators examined integration from the point of view of front-line clinicians. We asked them to describe their experience at four organizational levels: their own practice site, the physician organization that owns the practice, the health system, and their interaction with providers outside of their health system. For this analysis, the investigators focused on staff perceptions of clinical integration and how well those perceptions were aligned with their subjective assessment of the quality of care delivered in their practice.

Our survey findings do not support the assumption that being part of a health system automatically leads to greater clinical integration

Overall, our survey findings do not support the assumption that being part of a health system automatically leads to greater clinical integration. Indeed, managers and staff feel that there is ample room to improve integration in all types of care. In general, respondents report that care is reasonably well integrated at their practice site. But the larger the organizational unit (for example, within the physician organization, within the health system), the lower the staff’s perception of care integration. Perceptions of care integration were aligned with perceptions of care quality, and also with measures of staff job satisfaction and burnout.

These survey data suggest that structural integration will not necessarily result in clinical integration. To achieve the latter, health systems may need to take more direct action, especially in health information technology, mental/behavioral health, hospitals, and community-based services.

  • Singer, Sara J., Anna D. Sinaiko, Maike V. Tietschert, Michaela J. Kerrissey, Russell S. Phillips, Veronique Martin, Grace Joseph, Hassina Bahadurzada, and Denis Agniel, "Care Integration Within and Outside Health System Boundaries," Health Services Research, Volume 55, Issue S3, December 2020, Special Issue: Comparative Health System Performance, pp. 1033–1048.

Summing Up - What Have We Learned About Health Systems?

Health systems vary widely in size and ownership type, complexity of organization and governance arrangements, and investment in care delivery transformation. Structural, functional, and clinical integration vary widely across systems. Executives describe clinical integration as essential but more difficult to achieve. Therefore, we have to conclude that the general assumptions about health systems routinely cited in papers on health system performance are unwarranted.

Studies that treat "health system" as a binary variable may be inappropriately aggregating for analysis health systems of very different type; at different degrees of maturity; and at different stages of structural, functional, and clinical integration. As a result, a "signal" indicating performance may be distorted by the "noise." At this point we do not know whether health systems perform better than unaffiliated health care organizations or whether a particular type of health system is more likely to be high performing than others.

One thing we do know from a policy perspective: Despite the rhetoric about value-based payment, health care remains a largely fee-for-service world. While virtually all of the health systems in our study had some experience with risk-based payment, most executives reported that the majority of their book of business continues to be fee-for-service. The pace at which value-based payment arrangements are being implemented by the government and commercial payers may be too slow to support the desired transformation of health care delivery.

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