Organization design of integrated delivery systems

Healthcare integrated delivery systems (IDSs) evolve through four observed stages of development, with each successive stage having greater levels of interdependence among facilities and between facilities and physicians. The cottage industry stage is characterized by competition among hospitals and little interdependence. Healthcare organizations in the next stage, horizontally integrated systems, have pooled interdependencies, and in the third stage, vertically integrated systems, have predominately sequential interdependence with reciprocal interdependence between physicians and hospitals. In the fourth stage, community healthcare, community systems have reciprocal interdependence among their facilities and other organizations providing services along the continuum of care. This reciprocal interdependence is characteristic of the level of integration that must be addressed for system effectiveness. Greater levels of interdependence require stronger organizational integrating mechanisms and processes. "Integrative management" or "service-line management" is one vehicle for providing this integration. Although few empirical studies are available, this article relates the available empirical and conceptual literature to analyze the interdependencies at each level of IDS development, as well as the organizational design characteristics to address those interdependencies. It then examines the organization of the Veterans Health Administration (VHA) in terms of the four stages of IDS evolution, and suggests organization designs to address VHA's increased needs for integration.