Do IDSs really benefit from affiliating with managed care plans?

Integrated delivery systems (IDSs) affiliate with HMOs primarily to gain access to patients enrolled in managed care plans. Outright ownership of an HMO offers an IDS additional advantages, including opportunities to create a more seamless care process, improve patient outcomes, draw on the HMOs' experience in reducing costs, and administer health management and delivery at a significantly lower cost than the industry standard. The current trend toward IDS ownership of HMOs suggests that the line between providers and payers is blurring. Some states have encouraged this trend by enacting legislation that allows IDSs to act as insurers. Recent data indicate that IDSs with HMO components tend to be more vertically integrated than those without such components. These data suggest that close alignment with an HMO may be a key element in the effort to achieve vertical integration.