Why provider-sponsored health plans don't work

Integrated delivery systems (IDSs) that assume risk directly by starting their own health plans need to ensure that they have set realistic goals. Many provider-health plan integrations fail because either the conditions under which they are started are not optimal or the integration is faulty. Successful provider-plan integrations generally have developed in rural areas where they faced limited competition, had higher utilization rates, and enjoyed greater profit margins because of lower price competition and employers' acceptance of premium rates. These factors are uncommon today. IDDSs sponsoring health plans can face problems in partnering with physicians, who may not demonstrate concern for the success of the healthcare system as a whole. For these and other reasons, IDDSs should consider partnering with existing health plans rather than starting their own plans.