The paper addresses the world-wide tendency of health care fragmentation and explores the ways how to overcome it. The international developments are discussed but the focus is on the health sector in the Russian Federation. The major objective of the paper is to evaluate the level of fragmentation/integration in the delivery of care, as well as to suggest organizational and economic mechanisms of strengthening integration. The conceptual model of integration is suggested with the focus on three characteristics – teamwork, coordination and continuity of care. They are affected by the instruments of integration – joint clinical guidelines, information exchange, and integrated methods of payment. A set of indicators is developed to evaluate each integration characteristic (around 50 in sum). The empirical data is collected based on the survey of 1500 physicians in three regions of Russia. The survey indicates that outpatient physicians don’t contact much with hospitals doctors before in the process and after hospital admission; joint work of curative and diagnostic services providers is at its initial stage; the readiness of patients for admission is very low as a result of poor teamwork. The continuity of care indicators shows low frequency of easy transfers of patients from an acute care stage to long term and rehabilitative stages. Policy implications are discussed with the focus on economic incentives. It is argued that more integrated units of health care payment should be used –those which cover both outpatient and inpatient care. In the context of the Russian Federation the most promising instrument is "policlinic as a fundholder" (fundholding) which creates strong incentives for outpatient care to plan inpatient care and work closer with hospitals and other providers. It also encourages the role of district physician as a gatekeeper and coordinator. We conclude with the point that strengthening integration should become an independent area of health policy.