Q. Are provider-sponsored networks ready to compete with HMOs?

Reports of a new survey on “IFDSs” from the accounting and consulting firm Ernst & Young may seem to require adding a whole new alphabet-soup entity to your health care vocabulary. Turns out it’s not quite that bad: “Integrated delivery and financing systems” is an umbrella term for “any type of managed care organization that accepts risk and is provider-owned,” including some things you’ve already heard of, such as physician-hospital organizations (PHOs), physician-owned HMOs and the “provider-sponsored networks” spoken of in antitrust policy.


In many ways, these organizations are prepared. Some have HMO licenses themselves, and a majority either accept premiums directly from employers or receive percentage-of-premium payments, usually from insurance carriers. Most are owned by hospitals, which despite financial woes tend to have deep pockets, and most give providers various kinds of utilization feedback.

…and No

By other measures, however, “IFDSs” have a way to go before they become a threat to managed care’s giants. They’re still relatively new, and regulatory uncertainty clouds their appeal for looser solvency requirements than HMOs face on the grounds that, as Ernst & Young says, “they are uniquely able to avert insolvencies because they deliver the services for which they assume risk.” Finally, a “shocking” 41 percent of these systems responding to the survey didn’t know their own rates of hospital inpatient days per 1,000.

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