In an industry as complex as health care, organizational and market structures must be carefully considered. To participate in accountable care organizations (ACOs) and other value-based care initiatives, for example, hospitals need to have a coordinated care organization model across ambulatory care, acute care, and other settings. Developing these coordinated relationships may require vertical integration to ensure efficient utilization. Although there are many advantages to this integration of organizational and market structures, there are some disadvantages for both the hospital and the providers. For this Discussion, examine the following scenario and recommend strategies for the organizational integration of the hospital and practice.
You are the chief financial officer (CFO) of a hospital located in a highly competitive, urban market split with two competing hospitals. The hospital is considering purchasing or affiliating with a large physicians’ practice. Your hospital has 30% market share, but does not currently have any owned/employed physicians. Private insurers and Medicare are aggressively pushing value-based reimbursement under ACO contracts, and the one competing hospital has already acquired a large physicians’ practice.
To prepare for this Discussion:
- Analyze the provided scenario. What are the advantages and disadvantages of the vertical integration of the hospital and physicians’ practice? What economic factors should be considered?
- Consider strategies for the organizational integration of the hospital and physicians’ practice. Be sure to address the economic factors you identified.
BY DAY 3
Post a cohesive response to the following:
Compare advantages and disadvantages of the vertical integration of the hospital and physicians practice, including economic factors that should be considered. Then, recommend strategies for the organizational integration of the hospital and practice. Defend or argue your recommendations using economic principles.