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What is an integrated delivery network (IDN)?

An integrated delivery network (IDN), or health system, is an organization that owns and operates a network of one or more healthcare facilities. Because health systems are designed to provide a wide variety of care services, they often contain many different types of inpatient and outpatient care facilities, including:

IDNs can be categorized into four different types, depending on the number of member healthcare facilities and the way in which it approaches strategic decisions like purchasing or care coordination. All health systems can be classified into one of the following IDN integration levels:

  • System II (Horizontal Integration) These are usually multi-hospital systems that can be either regional or national. System II networks primarily own and manage hospitals, but sometimes include other care facilities. Many government-, state-, and investor-owned IDNs are classified as System II networks.
  • System III (Vertical Integration) These networks provide cradle-to-grave healthcare services with a wide variety of different care facilities—ranging from prenatal care to assisted living facilities and hospices—all within the same system. The objective of a vertically integrated health system is to share information and resources equally across all care facilities. Many academic, catholic, and community health systems are classified as System III networks.
  • System IIIA (Single-Hospital System)These are single-hospital health systems that are vertically integrated and centralized. Despite their small size, System IIIA networks can, in some cases, command dominant or exclusive market share within their territories.
  • System IV (Strategic Integration) These are vertically integrated systems that implement an exceptional degree of strategy and organization in their internal structures. This means that information systems, centralized administrative control, purchasing, and distribution are aligned across all facilities within the network. Such structure allows these IDNs greater control and understanding at all levels of the health system.

Why are integrated delivery networks important in healthcare?

Much like accountable care organizations, IDNs use their vast network of healthcare providers to deliver high-quality, coordinated care to patients. Because many health systems offer a wide range of care services, providers are often able to address nearly all their patients’ healthcare needs without ever seeking an out-of-network referral. This not only allows for greater communication and care collaboration across a patient’s whole continuum of care, but also helps to prevent revenue loss from network leakage.

Some large integrated delivery networks are also able to leverage their market influence for greater negotiating power in much the same way that a group purchasing organization (GPO) would. By doing this, IDNs can secure competitive supply chain prices and help to lower overall healthcare costs.