Vertical Integration in Health Care Delivery: Physicians, Hospitals, and Long-term Care

Topics:
(1) Vertical Integration in Health Care Delivery: Physicians, Hospitals, and Long-term Care

Lesson Objectives:
(1) To identify and describe the factors driving vertical integration along the
continuum of care
(2) To understand the fundamentals of transaction costs.
(3) What are the advantages and disadvantages of vertical integration with respect to
costs and quality?
Readings:
Burns and Muller, “Hospital-Physician Collaboration: Landscape of Economic Integration
and Impact on Clinical Integration.” The Milbank Quarterly, 2008, 86(3): 375-434.
Cuellar, A. and P. Gertler. “Strategic integration of hospitals and physicians.” Journal of
Health Economics, 2006, 25(1): 1-28.
TBD
Supplemental Resources:
Joskow. P. “Vertical Integration.” Accessed at: http://economics.mit.edu/files/1191
Grossman, Sanford J., and Oliver D. Hart. 1986. The costs and benefits of ownership: A
theory of vertical and lateral
integration. Journal of Political Economy 94(4): 691-719. Accessed at:
http://dash.harvard.edu/bitstream/handle/1/3450060/Hart_CostsBenefits.pdf?sequence=4
Rebitzer, J. and M. Votruba. “Organizational Economics and Physician Practices.”
NBER Working Paper 17535.
Accessed at: http://www.nber.org/papers/w17535.
Walston, S., J. Kimberly, L. Burns. “Owned vertical integration and health care: promise
and performance.” Health Care Management Review, 1996, 21(1): 83-92.

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