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.
- 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.