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Hospital Expansion vertical integration
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Hospital Expansion vertical integration
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1Hospital Expansion
Name
Institution
Course
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Date
, 2
Hospital Expansion
Vertical Integration
In healthcare systems, vertical integration often occurs due to combining a different
supply chain level, such as when health care plans combine with pharmacy benefits managers
or when physician's practice is acquired by hospitals. This integration shifts the way patients
pay and receive health care services. Vertical integration promotes healthcare economic
efficiencies, thus significantly reducing the costs and impacting the quality of care, such as
health care plans acquiring pharmacy benefits managers. Recently, vertical integration of
hospitals and physicians affects the quality of care, and spending has become especially
important (Baker et al., 2014). Evidence indicates that vertical integration is linked to higher
performance, particularly on the quality of care measures, hence improved quality outcomes.
However, not all mergers yield the same outcomes; some can lead to higher costs and
anticompetitive behaviors, thus evaluating mergers should be on a base-to-base approach.
There is an indication of higher hospital spending and higher prices associated with
physician’s practices owned by hospitals. According to Bion (2019), “Physician groups
owned by large hospital systems were more than 50% more expensive than those owned
exclusively by physicians.”
Other Revenue Services
Health care facilities can boost their revenues by providing other services, such as
wellness programs. Promoting wellness is one of the ways to improve profitability; the
approach will increase patient satisfaction and reduce readmissions in the hospitals. Wellness
promotions help the patients and ensure that staff provides exceptional service at significantly
reduced costs. Healthy employees decrease absence and improve patient care, particularly by
projecting a positive image. Telehealth services and wearable devices is another way
hospitals can expand their revenue continuum of care, especially for managing chronic
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