Week 5: Competition and Business Conditions in Health Care Markets
Introduction
Changes in health care financing and the business environment have spurred
competition among health care organizations. Patients and health care consumers
demand services from suppliers in local markets, and hospitals and providers
compete for these patients, depending on their health insurance plans. These
forces are leading to changes in existing health care organizational and market
structures, including hospital ownership of physicians’ practices (e.g.,
vertical integration) and the formation of integrated delivery systems. As a
health care administrator, you must understand implications of this competition
and the often resulting organizational integration.
This week, as you explore competition and business conditions in health
care markets, you compare advantages and disadvantages of vertical integration
in health care organizational structures. You also recommend strategies for the
organizational integration of hospitals and providers.
Week 5 Learning Resources
Required
Resources
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Note: To access this week’s |
Readings
· Getzen, T. (2015).Health economics for the
healthcare administrator(Laureate custom edition). New York: Wiley.
· Chapter 8, “Hospitals” (pp. 172–186)
· Chapter 12, “Financing and Ownership of Health Care Providers” (pp. 259–287)
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· Colla, C. H., Lewis, V. A., Shortell, S. M., & Fisher, E. S. (2014). First national survey of ACOs finds that physicians are playing strong leadership and ownership roles.Health Affairs,33(6), 964–971.Retrieved from the Walden Library databases.
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· Cutler, D., & Scott Morton, F. (2013). Hospitals, market share, and consolidation.Journal of the American Medical Association, 310(18), 1964–1970.Retrieved from the Walden Library databases.
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· Fisher, E. S., Shortell, S. M., Kreindler, S. A., Van Citters, A. D., & Larson, B. K. (2012). A framework for evaluating the formation, implementation, and performance of accountable care organizations.Health Affairs,31(11), 2368–2378.Retrieved from the Walden Library databases.
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· Healthcare Financial Management Association. (2014a).An HFMA value project report: Acquisition and affiliation strategies. Westchester, IL: Author. Retrieved fromhttp://www.hfma.org/WorkArea/DownloadAsset.aspx?id=23451An HFMA Value Project Report: Acquisition and Affiliation Strategies by Healthcare Financial Management Association. Copyright 2014 by Healthcare Financial Management Association. Reprinted by permission of Healthcare Financial Management Association via the Copyright Clearance Center.
Week 5 Discussion
Health Care Organizational and Market Structures
Scenario: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.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
value-based 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.
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.
Note:This Discussion will be
graded using this rubric:Document:Discussion Rubric (Word document)
Post
by Day 3 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 economic
principles.
Support
your response by identifying and explaining key points and/or examples
presented in the Learning Resources.
Read a selection of
your colleagues’ postings. Consider how your colleagues’ postings relate to the
information presented in the Learning Resources and to your own posting.
Respond
by Day 5 to at leasttwoof your colleagues’
postings and continue the Discussion through Day 7. Expand on this Discussion
by providing additional insights or alternative perspectives.
