Geisinger’s turnaround offers lessons on integrated delivery

Geisinger Health System faciliity
Geisinger Health System's transformation offers lessons to other integrated delivery networks that may be struggling.

Geisinger Health System’s turnaround from the financial brink is now detailed in the memoirs of former CEO Glenn Steele, M.D., Ph.D., and the system’s efforts offer lessons for other struggling providers in the integrated delivery network (IDN) model.

Steele took over at Geisinger in 2001, shortly after the system parted ways with its partner and former competitor, the Penn State Milton S. Hershey Medical Center. The system found itself at a crossroads and was facing significant operating losses at its hospitals and physician group. Geisinger Health Plan was also underperforming, notes a blog post from Health Affairs.

RELATED: At Geisinger Health System, advanced analytics pave the way to better outcomes

Steele’s diagnosis, according to the blog, was that the system was “too integrated.” The system's three primary business lines were adjusted to better fit market demand, dropping capitation to 35% of revenue compared to 60%. He also spearheaded efforts to recruit new specialists and more physician leaders to take charge of transformation on the clinician side.

Geisinger did, however, have an advantage that other IDNs may not have. Thanks to profits from its health plan and earnings from its market leverage with local health plans, the organization was able to pursue innovation. 

“Geisinger’s experience suggests that market timing and creative opportunism—finding the right balance between growth and clinical discipline—play a significant role in the viability of IDNs,” healthcare futurist Jeff Goldsmith, Ph.D., writes in the blog. “These factors are as important as, or even more important than, any inherent advantages of scale, or integration itself.”

Geisinger has built on its turnaround in recent years by branching out into “radical” population health initiatives, acquiring a medical school and embracing advanced analytics. Its money-back guarantee has allowed the system to gather data on patient experience concerns and continue making changes to how it delivers care.