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 valuebased 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 valuebased
reimbursement under ACO contracts, and the one competing hospital has already acquired a large
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
Support your response by identifying and explaining key points and/or examples presented in the