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Organizing the U.S. Health Care Delivery System for High Performance

An Organized Health System


Executive Summary

Health care delivery in the United States has long been described as a "cottage industry," characterized by fragmentation at the national, state, community, and practice levels. There is no single national entity or set of policies guiding the health care system; states divide their responsibilities among multiple agencies, while providers practicing in the same community and caring for the same patients often work independently from one another. Furthermore, the fragile primary care system is on the verge of collapse. This report from The Commonwealth Fund Commission on a High Performance Health System examines the problem of fragmentation in our health care delivery system, particularly at the community level, and offers policy recommendations to stimulate greater organization.

The fragmentation of our delivery system is a fundamental contributor to the poor overall performance of the U.S. health care system. In our fragmented system:

  • patients and families navigate unassisted across different providers and care settings, fostering frustrating and dangerous patient experiences;
  • poor communication and lack of clear accountability for a patient among multiple providers lead to medical errors, waste, and duplication;
  • the absence of peer accountability, quality improvement infrastructure, and clinical information systems foster poor overall quality of care; and
  • high-cost, intensive medical intervention is rewarded over higher-value primary care, including preventive medicine and the management of chronic illness.


How Do We Want Health Care to Be Delivered?

If we do not want the status quo, how do we want health care to be delivered? The Commission has identified six attributes of an ideal health care delivery system, each of which has been demonstrated to be an important driver of high performance:

  1. Patients' clinically relevant information is available to all providers at the point of care and to patients through electronic health record systems.
  2. Patient care is coordinated among multiple providers, and transitions across care settings are actively managed.
  3. Providers (including nurses and other members of care teams) both within and across settings have accountability to each other, review each other's work, and collaborate to reliably deliver high-quality, high-value care.
  4. Patients have easy access to appropriate care and information including after hours; there are multiple points of entry to the system; and providers are culturally competent and responsive to patients' needs.
  5. There is clear accountability for the total care of patients.
  6. The system is continuously innovating and learning in order to improve the quality, value, and patients' experiences of health care delivery.


Is It Achievable?

After identifying these six attributes, we examined 15 diverse health care delivery systems. From the case analyses, four important lessons emerged:

  • Our ideal delivery system is achievable; existing delivery systems have many of the key attributes we have identified.
  • There is more than one way to organize providers to achieve those key attributes, ranging from fully integrated delivery systems and large, multi-specialty group practices to looser forms of organization such as private networks of independent providers (e.g., independent practice associations) and government-facilitated networks of independent providers.
  • Although there are diverse approaches, some form of organization (i.e., established mechanisms for working across providers and settings) is required to achieve these attributes. This finding is consistent with the literature, which suggests that greater organization is associated with better quality and, to some extent, greater efficiency.
  • Leadership is a critical factor in the success of delivery systems.


Getting the Care We Want: Policy Recommendations

Despite the potential benefits, the financial, regulatory, professional, and cultural environments act as barriers to organizing health care delivery. Policy interventions are needed for this critical component of health system reform. The policy recommendations below would promote greater organization of the delivery system to achieve gains in the quality and value of care. In proposing these policies, we are guided by two principles:

  1. The policies should move the system toward achievement of the attributes of the ideal delivery system we have identified.
  2. The policies should allow for diverse models of organization to achieve these attributes, explicitly recognizing that different regions of the country may require different arrangements.


No single policy will fix the fragmentation of our health care system. Rather, a comprehensive approach is required—one that might lead progressively to greater organization and better performance. We recommend the following strategies:

  • Payment reform. Provider payment reform offers the opportunity to stimulate greater organization as well as higher performance. The predominant fee-for-service payment system fuels the fragmentation of our delivery system. We recommend that payers move away from fee-for-service toward bundled payment systems that reward coordinated, high-value care. In addition, we recommend expanding pay-for-performance programs to reward high-quality, patient-centered care. The more organization in delivery systems, the more feasible these payment reforms become (Exhibit ES-1). These payment reforms also could spur organization, since they reward optimal care over the continuum of services. Specifically, we believe that:
  • Full population prepayment—a single payment for the full continuum of services for a given patient population and period of time—should be encouraged. Such payments should be adequately risk-adjusted to avoid adverse patient selection. If full population prepayment is not feasible, payers should encourage:
  • Global case payments for acute hospitalizations. Ideally, such payments should bundle all related medical services from the initial hospitalization to a defined period post-hospitalization (including preventable rehospitalizations). These payments also should be risk-adjusted to avoid adverse patient selection.
  • Alternative payment structures for primary care. Primary care practices that provide comprehensive, coordinated, patient-centered care (e.g., certified medical homes) should be offered an alternative to fee-for-service payment. Promising alternatives include comprehensive prepayment for primary care services or fee-for-service payments plus a per-patient care management fee.


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  •  Pay-for-performance should be expanded. The more bundled the payment mechanism, the higher proportion of the payment should be tied to performance. These programs should migrate away from measures that focus on individual processes in a single provider setting (e.g., hemoglobin A1C testing rates for patients with diabetes) toward broader measures of quality, such as clinical outcomes (e.g., blood pressure control or hospital readmission rates), care coordination, or patient experiences.

  • Medicare should support further demonstration projects that test innovations in o payment design and care delivery.
  • Patient incentives. Patients should be given incentives to choose to receive care from high-quality, high-value delivery systems. This requires performance measurement systems that adequately distinguish among delivery systems.
  • Regulatory changes. The regulatory environment should be modified to facilitate clinical integration among providers.
  • Accreditation. There should be accreditation programs that focus on the six attributes of an ideal delivery system we have identified. Payers and consumers should be encouraged to base decisions on payment and provider networks on such information, in tandem with performance measurement data.
  • Provider training. Current training programs for physicians and other health professionals do not adequately prepare providers to practice in an organized delivery system or team-based environment. Provider training programs should be required to teach systems-based skills and competencies, including population health, and be encouraged to include clinical training in organized delivery systems.
  • Government infrastructure support. We recognize that in certain regions or for specific populations, formal organized delivery systems may not develop on their own. In such instances, we propose that the government play a greater role in facilitating or establishing the infrastructure for an organized delivery system, for example through assistance in establishing care coordination networks, care management services, after-hours coverage, health information technology, and performance improvement activities.
  • Health information technology. Health information technology provides critical infrastructure for an organized delivery system. Providers should be required to implement and utilize certified electronic health records that meet functionality, interoperability, and security standards, and to participate in health information exchange across providers and care settings within five years.



Our fragmented health care delivery system delivers poor-quality, high-cost care. We cannot achieve a higher-performing health system without reorganization at the practice, community, state, and national levels. This report focuses on the community level, for which we have identified six attributes of an ideal delivery system. Our vision of health care delivery is not out of reach; some delivery systems have achieved these attributes, and they have done so in a variety of ways.
We can no longer afford, nor should we tolerate, the outcomes of our fragmented health care system. We need to move away from a cottage industry in which providers have no relationship with, or accountability to, one another. Though we acknowledge that creating a more organized delivery system will be difficult, the recommendations put forth in this report offer a concrete approach to stimulate greater organization for higher performance.

Publication Details



A. Shih, K. Davis, S. Schoenbaum, A. Gauthier, R. Nuzum, and D. McCarthy, Organizing the U.S. Health Care Delivery System for High Performance, The Commonwealth Fund, August 2008.