Classifying the Integration of Healthcare Providers and Insurers

Abstract

The value-based payment reform prompted by the Affordable Care Act has stimulated vertical integrations of healthcare providers and insurers. The consequences of these integrations may vary significantly depending on the markets and entities involved. This article points out the limitations of familiar binary classifications for provider-insurer integrations in prior studies. To address these limitations, we propose a framework and taxonomy that include four key aspects for examining variations in provider-insurer integrations. The first is from the care delivery perspective; it sheds light on levels of care services owned by an integrated system and their variation across regions within the system. The second is from the insurance markets' perspective; it pertains to insurance markets in which an integrated system competes. The third is from the organizational perspective; it points out that whether the insurer or the provider is dominant in an integrated system may affect the system's priorities—care delivery reform or cost containment. The last highlights the dynamics of integrated systems that can involve the other three. We offer these insights and their possible applications hoping to sharpen discussion and research on provider-insurer integrations, and to assist antitrust agencies in evaluating relevant legal cases under the 2023 Merger Guidelines.