Healthcare Organizational and Market Structures
In an industry as complex as healthcare, 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.
Strategies for Organizational Integration Scenario
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 a 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 physician’s 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.
Post a cohesive response to the following:
· Compare advantages and disadvantages of the vertical integration of the hospital and physicians’ practice.
· Evaluate economic factors that should be considered for the vertical integration of the hospital and physicians’ practice.
· Propose strategies for the organizational integration of the hospital and practice. Defend or argue your recommendations using economic principles.
Support your response by identifying and explaining key points and/or examples presented in the Learning Resources.
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