This paper focuses on Presbyterian Healthcare Services, the largest health system in New Mexico. Presbyterian began as a hospital, and later added an insurance plan, and finally an employed medical group. The health system has no “narrow network” product, though approximately 10 percent of its clientele are users of all three Presbyterian services: the health plan, hospital, and medical group.

This case unfolds in three parts. The first section considers Presbyterian’s path to integration and the critical steps to becoming a successful, integrated health care system. The second section examines the present-day system, highlighting practices and disruptive innovations that are often dependent on integration. The third section presents lessons for other health care systems attempting to move toward integration and considers policy and payment reforms that would most effectively stimulate the spread of integrated systems.

Disruptive innovations in health care have the potential to decrease costs while improving both the quality and accessibility of care. This is one in a series of Pioneer-funded case studies by the Innosight Institute that uses disruptive innovation theory to examine integrated delivery systems and aims to identify the critical factors necessary to achieve increased quality, reduced cost, and access improvements.