Reference no: EM133568024
In an industry as complex as healthcare, organizational and market structures must be carefully considered. For example, hospitals need to have a coordinated care organization model across ambulatory care, acute care, and other settings to participate in accountable care organizations (ACOs) and other value-based care initiatives. Developing these coordinated relationships may require vertical and/or horizontal integration to ensure efficient utilization. Although there are many advantages to integration of organizational and market structures, there are some disadvantages for both the hospital and the providers.
Then examine the following scenario:
Scenario: You are the chief financial officer (CFO) of a hospital located in a highly competitive, urban market split with two competing hospitals. The two competing hospitals have announced their intention to merge. Your hospital has 10% market share in the area. The two competing hospitals which are merging would concentrate their market share to 25%. A large hospital chain has approached your hospital about a possible acquisition to become a member of its hospital system. They have indicated that they ranked in the top 10 percent in the country in savings of all accountable care organizations participating in a Medicare program in which hospitals and physicians can share in the savings when they provide care at a lower cost while meeting quality measures.
To prepare for this Discussion, analyze the provided scenario. What are the advantages and disadvantages of the horizontal integration being suggested to you? What economic factors should be considered? Consider strategies for the organizational integration of your hospital into the large hospital system. Be sure to address the economic factors you identified.
Compare the advantages and disadvantages of the horizontal integration of the two hospitals, including economic factors that should be considered.
Recommend strategies for the organizational integration of the two hospitals. Defend or argue the merits of your recommendations using economic principles.