Since the implementation of the Affordable Care Act in 2010, integrated delivery networks (IDNs) have carved a significant place for themselves in the healthcare industry. An IDN is a network of healthcare providers and facilities, usually within a specific geographic region, that offers a full range of healthcare services. An IDN is often designed to offer a full spectrum of care that includes primary care physicians, specialists, general acute care (ie, inpatient services), and home health services. Additionally, many are now operating their own specialty pharmacies.
Like accountable care organizations (ACOs), IDNs exist to coordinate patient care, improve the quality of care, and control costs. However, unlike ACOs, which may work with group purchasing organizations (GPOs) and may not contract directly with local employer group plans, IDNs have negotiating power. Their negotiating power comes in 2 forms: the market power to directly negotiate with pharmaceutical manufacturers or distributors, and the ability to disrupt market competition with traditional healthcare insurers by contracting directly with employer groups for the delivery of healthcare to their employees.
With the costs of providing healthcare coverage to employees out of reach for some employers, those employers may be drawn to IDNs offering their own health plans because IDNs may be able to offer lower prices to deliver care. Although IDNs cover only a fraction of patients in the United States, and that coverage is generally limited to the geographic areas they serve, the IDN strategy is one that the health insurance industry cannot ignore.
Some of the largest IDNs that also have integrated health plans include the Mayo Clinic, Kaiser Permanente, UPMC, Geisinger, and Sutter Health. As these IDNs look to grow and expand the number of lives they cover, many payer programs for managing prescription drugs have also been adopted by IDNs.
Large IDNs have centralized control of physicians through employment, clinical integration, and common branding across facilities in a region. Providers within an IDN share a common electronic health record (EHR) that can be monitored to evaluate protocol adherence and patient outcomes. These IDNs also have their own formularies. By using EHRs, the IDN can show the prescribers preferred products and may even require justification to use a non-preferred product.
IDNs also focus on standardizing the delivery of healthcare. Standardization can help reduce medical errors and liability and improve the patient’s experience. Standardization is achieved through implementing a pathway or protocols for certain common chronic conditions. By integrating these protocols into the EHR, the IDN can point prescribers to appropriate, cost-effective treatments without using payer tactics such as step therapy and prior authorization.
As noted previously, many large IDNs leverage their market influence for greater negotiating power without working through a GPO. By doing this, IDNs can secure competitive supply chain prices and lower overall healthcare costs. For example, to get better pricing, many IDNs negotiate directly with pharmaceutical manufacturers instead of working with GPOs. IDNs want manufacturers to partner with them on drug access and price so they can take care of their patients. IDNs cannot do that when, for instance, a limited-distribution contract for a drug means a prescription must be sent to an outside pharmacy even if a patient wants to fill it at the IDN pharmacy.
It’s likely that the number of IDNs will continue to grow as more health systems and payers merge and acquire new facilities, functions, and operations. Healthcare organizations that exist as fragmented or disorganized systems cannot meet the necessary goals of improved patient outcomes at lower costs.
- AMCP Partnership Forums: integrated delivery networks’ role in pharmaceutical value-based agreements. Academy of Managed Care Pharmacy. 2018. Accessed May 15, 2022. https://www.amcp.org/sites/default/files/2019-03/168742_AMCPH_PROOF_V01.pdf
- Martin R. Integrated delivery networks: what pharmaceutical companies need to know before engaging them. IQVIA. 2018. Accessed May 15, 2022. https://www.iqvia.com/-/media/iqvia/pdfs/us/us-location-site/market-access/integrated-delivery-networks.pdf
- Integrated delivery networks as “payviders” aim to succeed at value-based care. Symplr.com. October 5, 2021. Accessed May 15, 2022. https://www.symplr.com/blog/integrated-delivery-networks-as-payviders
- What is an IDN & what role does it play in healthcare? Carevoyance. December 29, 2018. Accessed May 15, 2022. https://www.carevoyance.com/blog/idn-healthcare