Rural integrated systems in California: preparing for managed care.

Abstract

The recent rapid growth of managed care has been largely an urban phenomenon. Given their narrow population and economic bases, many rural communities lack the volume necessary for the cost-effective management of health care, which is required under managed care systems. 1 As a res ult, providers in many rural areas are only peripherally influenced by recent changes in health care financing, and these providers continue to operate under fee-for-service or cost-based reimbursement systems. However, market forces and government initiatives, among other factors, are forcing change on the existing health care organization and financing systems in these communities. As both the public and private sectors shift to managed care and other strategies for controlling health care costs, many rural communities and providers are seeking to respond to this administrative and financial environment. Preserving local access to services and gaining control of local premium dollars are particularly important to rural communities, for both the health of their residents and for economic well-being. In response to this rapidly changing environment, the James Irvine Foundation launched a four-year, $6 million initiative in 1997. The goals of the Developing Rural Integrated Systems (DRIS) Initiative are to help rural California communities to better understand managed care and to spur the development of integrated, community-based health systems that can operate effectively in the changing managed care marketplace. The DRIS Model The DRIS Initiative is designed to support a community-based dialogue and planning process that engages various parties in the community and results in the creation of integrated health systems at each participating site. Under the DRIS Initiative, integration can occur at different levels of the health care system: clinical (the coordination of patient care services); functional (the coordination of key support or administrative functions); and/or financial (the sharing of capital, risks, and profits). The primary value of the DRIS Initiative is that it provides a structured framework for rural communities to examine their health care delivery systems. The framework involves three phases of activity, defined as follows. Phase I includes data collection and assessment, community education, formation of local community health councils, and selection of managed care functions. Phase II includes feasibility analysis of the selected func