Integrated delivery systems. Evolving oligopolies

The proliferation of Integrated Delivery Systems (IDSs) in regional health care markets has resulted in the movement of these markets from a monopolistic competitive model of behavior to an oligopoly. An oligopoly is synonymous with competition among the few, as a small number of firms supply a dominant share of an industry's total output. The basic characteristics of a market with competition among the few are: (1) A mutual interdependence among the actions and behaviors of competing firms; (2) competition tends to rely on the differentiation of products; (3) significant barriers to entering the market exist; (4) the demand curve for services may be kinked; and (5) firms can benefit from economies of scale. An understanding of these characteristics is essential to the survival of IDSs as regional managed care markets mature.