Assessing an IDS's readiness to operate profitably under a risk contract.

An IDS that wishes to assume risk should understand first the factors that have caused IDSs to experience poor financial performance under risk contracts. Then, the IDS should clarify its goals for managed care contracting, assess its operational strengths and weaknesses, evaluate potential managed care payer partners, and understand the amount of risk associated with various contract options. Implementation issues that need to be addressed include aligning the financial incentives of physicians and the IDS, establishing systemwide policies and procedures for monitoring performance, and developing information systems capabilities.