Economics of healthcare (HPI 4001)
Tutorial group 4 27-09-2019
Case 4: Innovations from an organizational (economics) perspective
Articles and books
Evans (2013)
To examine the evolution of health care integration strategies and associated conceptualization and
practice.
The greater placing and synergy (samenwerking tussen kerk en staat) achieved through integration
enhances quality of care, efficiency, and patient satisfaction.
Complex-Adaptive Systems (CAS): Complexity in CAS’s refers to the potential for emergent
behaviour in complex and unpredictable phenomena. Examples: the economy, ecosystems and the
human brain. Each is a system with a network of many agents acting in parallel.
System: encompassing multiple sectors, organizations, and professionals involved in the delivery of
health care services.
The four questions that reflect the key decisions that shape integration strategies:
1. Which organizations and services are targeted for integration?
Strategy content Definition
Same level Organizations that provide similar care services (e.g., hospital-hospital
Horizontal integration relationships and physician group relationships).
Different level Organizations that provide different care services (e.g., hospital-
Vertical integration physician and hospital-homecare relationships). It increases the
boundaries.
Institution-centred Organizations that provide full-time in-house monitoring and care to
patients (e.g., acute care/specialty hospitals).
Community-based Organizations that provide health and social services to clients within
their homes or communities, focus on primary care (e.g., homecare and
mental health agencies).
2. What are the desired outcomes of integration?
Strategy content Definition
Economic Minimizing costs or increasing profits through control of resources,
efficiencies, marketing, and market share.
Value with a focus on Cost-effectiveness or health outcomes per dollar spent with an emphasis
quality on the quality of patient care.
Organizational level Evaluation and measurement of integration reflects an organizational
focus.
Patient level Evaluation and measurement of integration reflects a patient focus.
3. How will integration be achieved?
Strategy content Definition
Organizational change Changes to organizational structures and/or the relationships between
organizations/providers (mergers, governance, hierarchy).
Process change Changes to operational activities, including the way health services are
delivered (teamwork, use of technology).
Policy change Changes to system-level public policies (decisions regarding the
funding).
Cultural change Changes to the shared norms, values, attitudes, assumptions, and beliefs
that guide the behaviours and interactions of professionals and
1
, organizations (change in leadership).
4. When, where, or for whom does integration add the most value?
Strategy content Definition
Defined regions All patients within a geographic boundary.
Targeted populations Specific groups of patients based on age/gender etc.
Integration strategies
There are six, inter-related shifts in integration strategies (divided under the questions):
Which organizations and services are targeted for integration?
1. From horizontal to vertical integration
Late 1980s: less interest in horizontal integration
Mid 1990s: vertical integration became the focus of restructuring efforts with hospitals acquiring
physician practices, long-term care homes, and medical equipment companies in addition to other
hospitals. This integration strategy was driven by:
Environmental conditions
The desire to control increasing costs
Respond to changing patient needs
Acquire legitimacy
2. From acute care and institution-centred models to community-based integrated care
Last decade: increasing focus on integrating more levels of medical care and public health, social
services, and related supports (education, housing). Due to the increasing evidence regarding the
impact of nonmedical determinants on individual and population health (social conditions).
Hospitals should become ‘peripheral organizations’ and not leading role. Accountable Care
Organizations (ACOs) and the Patient-Centred Medical Home (PCMH) emphasize incentives for
quality and efficiency, performance-based accountability, and a strong primary care foundation
respectively.
What are the desired outcomes of integration?
3. From economic to quality arguments for integration
The focus on potential economic benefits of integration in the literature has expanded to a dual
emphasis on both efficiency and quality of care. This shift in thinking may have occurred for two
reasons:
1. ‘Increasing corporatization’ of healthcare management practices in the US fear that quality
was at risk demand for greater patient protection.
2. Successfully integrating policy, staff, funding, and clinical processes requires substantial
investments that may result in improved quality of care, but not necessarily
Since the early 2000s, there is a growing recognition that efficiency and quality are linked and must be
addressed simultaneously to create enduring value for patients, providers, and purchasers.
The shift toward quality arguments for integration may have arisen with the recognition that it is
important to align and balance competing motives among various stakeholders in order for integration
efforts to succeed.
4. From Organization-Focused Evaluation of Integration to an Emerging Interest in Patient-
Centered Measures
Although, there is a reliance on reporting the perceived extent and impacts of integration from the
perspectives of managers and clinicians, a growing number of researchers are emphasizing patient
expectations, perceptions, and experiences of integration beyond patient satisfaction.
The limited attention in the literature to measurement and evaluation highlights a gap in knowledge
and practice that may be hindering progress toward integrated systems of care.
How will integration be achieved?
2
Tutorial group 4 27-09-2019
Case 4: Innovations from an organizational (economics) perspective
Articles and books
Evans (2013)
To examine the evolution of health care integration strategies and associated conceptualization and
practice.
The greater placing and synergy (samenwerking tussen kerk en staat) achieved through integration
enhances quality of care, efficiency, and patient satisfaction.
Complex-Adaptive Systems (CAS): Complexity in CAS’s refers to the potential for emergent
behaviour in complex and unpredictable phenomena. Examples: the economy, ecosystems and the
human brain. Each is a system with a network of many agents acting in parallel.
System: encompassing multiple sectors, organizations, and professionals involved in the delivery of
health care services.
The four questions that reflect the key decisions that shape integration strategies:
1. Which organizations and services are targeted for integration?
Strategy content Definition
Same level Organizations that provide similar care services (e.g., hospital-hospital
Horizontal integration relationships and physician group relationships).
Different level Organizations that provide different care services (e.g., hospital-
Vertical integration physician and hospital-homecare relationships). It increases the
boundaries.
Institution-centred Organizations that provide full-time in-house monitoring and care to
patients (e.g., acute care/specialty hospitals).
Community-based Organizations that provide health and social services to clients within
their homes or communities, focus on primary care (e.g., homecare and
mental health agencies).
2. What are the desired outcomes of integration?
Strategy content Definition
Economic Minimizing costs or increasing profits through control of resources,
efficiencies, marketing, and market share.
Value with a focus on Cost-effectiveness or health outcomes per dollar spent with an emphasis
quality on the quality of patient care.
Organizational level Evaluation and measurement of integration reflects an organizational
focus.
Patient level Evaluation and measurement of integration reflects a patient focus.
3. How will integration be achieved?
Strategy content Definition
Organizational change Changes to organizational structures and/or the relationships between
organizations/providers (mergers, governance, hierarchy).
Process change Changes to operational activities, including the way health services are
delivered (teamwork, use of technology).
Policy change Changes to system-level public policies (decisions regarding the
funding).
Cultural change Changes to the shared norms, values, attitudes, assumptions, and beliefs
that guide the behaviours and interactions of professionals and
1
, organizations (change in leadership).
4. When, where, or for whom does integration add the most value?
Strategy content Definition
Defined regions All patients within a geographic boundary.
Targeted populations Specific groups of patients based on age/gender etc.
Integration strategies
There are six, inter-related shifts in integration strategies (divided under the questions):
Which organizations and services are targeted for integration?
1. From horizontal to vertical integration
Late 1980s: less interest in horizontal integration
Mid 1990s: vertical integration became the focus of restructuring efforts with hospitals acquiring
physician practices, long-term care homes, and medical equipment companies in addition to other
hospitals. This integration strategy was driven by:
Environmental conditions
The desire to control increasing costs
Respond to changing patient needs
Acquire legitimacy
2. From acute care and institution-centred models to community-based integrated care
Last decade: increasing focus on integrating more levels of medical care and public health, social
services, and related supports (education, housing). Due to the increasing evidence regarding the
impact of nonmedical determinants on individual and population health (social conditions).
Hospitals should become ‘peripheral organizations’ and not leading role. Accountable Care
Organizations (ACOs) and the Patient-Centred Medical Home (PCMH) emphasize incentives for
quality and efficiency, performance-based accountability, and a strong primary care foundation
respectively.
What are the desired outcomes of integration?
3. From economic to quality arguments for integration
The focus on potential economic benefits of integration in the literature has expanded to a dual
emphasis on both efficiency and quality of care. This shift in thinking may have occurred for two
reasons:
1. ‘Increasing corporatization’ of healthcare management practices in the US fear that quality
was at risk demand for greater patient protection.
2. Successfully integrating policy, staff, funding, and clinical processes requires substantial
investments that may result in improved quality of care, but not necessarily
Since the early 2000s, there is a growing recognition that efficiency and quality are linked and must be
addressed simultaneously to create enduring value for patients, providers, and purchasers.
The shift toward quality arguments for integration may have arisen with the recognition that it is
important to align and balance competing motives among various stakeholders in order for integration
efforts to succeed.
4. From Organization-Focused Evaluation of Integration to an Emerging Interest in Patient-
Centered Measures
Although, there is a reliance on reporting the perceived extent and impacts of integration from the
perspectives of managers and clinicians, a growing number of researchers are emphasizing patient
expectations, perceptions, and experiences of integration beyond patient satisfaction.
The limited attention in the literature to measurement and evaluation highlights a gap in knowledge
and practice that may be hindering progress toward integrated systems of care.
How will integration be achieved?
2
