Local Government and Healthcare

Regional-based IHNs arise from the devolution

of health care management to a lower tier of local government,

either a regional health authority or a municipality.

In the first case, the IHN generally encompasses

two health care tiers (first-line and hospital

care), but that is not necessarily true in the second case

as some municipalities may be too small to justify having

a hospital with specialized care. In both cases, IHN

populations are geographically defined.

The enrolment-based IHN evolved in countries

with a system based on competitive insurance markets

(managed competition model), where consumers buy

prepaid health care plans. In these countries, market

forces and reforms have led to the integration of providers

and insurers in a single entity—the enrolmentbased

IHN, a term that encompasses a variety of managed

care organizations, such as health maintenance

organizations and preferred maintenance organizations

(19). Whatever its specific composition, the IHN

function, under this system, is called “articulation” by

Frenk and Londoño (20), and it corresponds to a specific

way of organizing and managing health care, encompassing

key activities such as purchasing health

services on behalf of the registered population, organizing

providers’ networks, allocating resources to

health providers, and ensuring quality of care.

Health care services have to be adjusted specifically

to meet local demand (e.g., to be treated as close

to home as possible) and organized to ensure the links

between the different tiers of health care are specific.

Therefore, IHNs should meet five essential criteria

(21): (1) They should not contain any functional gaps;

most health problems should find a solution within

existi...

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...rms, as IHNs competing for affiliates

respond to rising costs by limiting coverage, as some

studies have demonstrated (26–29). In addition to risk

selection (cream skimming) and underservicing, Enthoven

(30) pointed out segmentation of health care

and information and transactions’ costs as a result of

IHN competition in a health market environment. The

experience of industrialized countries suggests that little

confidence should be placed in the regulatory and

legislative capacities of countries with weak state functions

(31). In regional-based IHNs, the risks are those of

decentralization: geographic inequities, decreased efficiency,

and decreased quality of care (32).

The infrequent IHN evaluations that have been

done (33) were conducted mainly in the United States

and Canada and emphasized the analysis of IHN

strategies, structures, and performance.