Vertical Integration Definition

Table of Contents Situational Analysis Appendices External Analysis Appendix A: S.W.O.T. Analysis Appendix B: External Trend/Issue Analysis Appendix C: Environmental Trends/Issues Plot Appendix D: Stakeholder Map Appendix E: Service Area Profile Appendix F: Service Area Structural Analysis Appendix G: Service Area Competitor Analysis Appendix H: Critical Success Factor Analysis Appendix I: Mapping Competitors Appendix J: Synthesizing the Analysis Internal Analysis Appendix K: Financial Analysis Appendix L: Value Chain Strengths and Weaknesses Appendix M: Value Chain Competitive Advantages Relative to Strengths

“An Integrated Physician Model is the result of a series of partnership between hospitals and physician develop overtime” (Harrison, 2016). Primarily, it is a joint venture that has become many joint ventures. In addition, all of this joint ventures are connected through congruent goals, and that is to provide different level of care to all the patients. Integrated physician model also organizing themselves to improve the cost and quality by operating under a clinical guideline. This could include acute care hospital, home care, nursing homes, affiliated medical group, primary care clinics, employed physician and any independent medical groups.

“Health maintenance organization (HMO) quality on several primary care indicators and more rapid quality improvement, despite its substantially lower level of expenditure” (Rosen, et al., 2011, p. 15). In the medicinal services organization, the proper goal of any human services system is to grow the cost dispersed to patients. The cost of the human services measured as far as the patient results achieved per dollar expended. It does not matter the kind of various service supplier or volume of service delivered that matters, however, the cost. More care and expensive care is not really better

According to Harrison (2016), “an integrated physician model is the result of a series of partnerships between hospitals and physicians developed over time.” The plan behind this model is to enhance joint efforts with medical specialists and associations. There are four strategies that need to be implemented for successful integration: “1) understand the forces affecting physicians; design strategic offerings to meet the needs of local physicians, 2) understand the hospital or health system’s specific capabilities and infrastructure in the context of the communities served, 3) ground physician-integration efforts on a well-defined strategic financial plan with sufficient resources and performance targets, and 4) ensure strong physician participation, leadership and governance.” (Cullen, S. J., Lambert III, M. J., & Pizzo, J. J. (2012)

Managed care integrates the delivery of health care and financing of health care. In managed care, insurance companies controls the cost, quality, and access of medical care to beneficiaries by limiting the reimbursement levels paid to providers,, by reducing utilization, or both (Beik, 2014, p. 116). There are different types of managed care. Some of the most common types of managed care are Preferred Provider Organization (PPO) and Health Maintenance Organizations. Managed care programs uses different interventions such as economic incentives for doctors and patients, increased cost sharing, controls on inpatient admission and length of stays, and so forth (Deom, Agoritsas, Bovier, & Perneger, 2010, p. 1). On the other hand, managed care tools such as gate keeping, health care networks, second opinion requirement, and pre approval requirement for expensive treatments or hospitalization has changed healthcare delivery on both the macro and micro levels. On the micro level, it greatly impacts the quality of care, cost, autonomy, and relations with patients. According to the research study, managed care greatly affects physicians. It reduces career satisfaction through its impact on doctors’ autonomy and the pressure caused by managed care may affect the doctor’s ability to provide high quality of medical care. (Deom, Agoritsas, Bovier, & Perneger, 2010, p. 7). Like for example, managed care contracting has a positive and negative impact on physicians and patients. The

Simonet, D. (2005). Medical Practice under Managed Care: Cost-control Mechanisms and Impact on Quality of Service. Public Organization Review, 5(2), 157-176. Doi: 10.1007/s11115-005-0954-8

A review of the literature on physician employment illustrates why there has been a significant reduction in the number of independent physicians. Specifically, the number of hospital-employed physicians has increased 50% between 2012 and 2015, from 95,000 physicians in 2012 to 140,000 in 2015 (Physicians Advocacy Institute, 2016). Theoretically, it would seem that this type of vertical integration would ease the burden of coordinating patient care in a fragmented system, in turn leading to decreased pricing gained through efficiencies of reduced duplicative testing for example. However, a recent Health Affairs study has proven the opposite. Specifically, vertical integration leads to higher prices and spending (Baker, Bundorf, & Kessler, 2014).

The demand for cost containment, the growth of purchaser influence, the decline trend in inpatient utilization, and the demands of managed care organizations for efficiency, cost containment, coordination of services, and accountability for service outcomes has changed hospitals strategic planning. Hospitals need to reconfigure and reorganize their health service delivery in order to meet the demands of managed care. To make their organization attractive to the managed care industry, system integration strategies began to emerge such as horizontal and vertical integration (Sultz & Young, 2009, p. 103).

But mostly the barriers to integrations are on the legal side. As mentioned in the article for this module, one obstacle would be the The Sherman Antitrust Act prohibits negotiations between providers that could result in excessive market power. Also, there is the issue of the anti-kickback law and Civil Monetary Penalties (CMP) Law where it mandates a penalty for payments from hospitals that directly or indirectly encourage physicians to reduce or limit services to Medicare or Medicaid patients. Finally, Stark Ethics in Patient Referral Act. According to Stark Law, it prohibits referrals of Medicare patients to institutions in which the physician has a financial interest.

This option is flexible, can be set up relatively quickly, and be managed short- or long-term. However, with this type of physician alignment arrangement, hospitals may have limited ability to influence physician behavior, clinical quality, and costs. And despite requiring less capital than a physician acquisition model , this option still demands that the health care organization dedicate enough resources to ongoing monitoring and performance improvement across the network. 2) Employed physician

1.3 Compare and contrast employee engagement with other related concepts; ‘flow’, organisational commitment, job involvement and job satisfaction.

To form and operate integrated health care delivery systems successfully requires a great deal of commitment, leadership, and business savvy and can pose major challenges to even the most experienced health care executives. Health care providers integrate for many reasons. From the insurance and liability perspective, risk financing for these entities has also been integrated.

Successful organizations demand satisfied employees. Figure 1 below shows a theoretical one-way linkage chain called the "Engagement-Profit Chain." This chain directly shows how active employee engagement leads to good service which ensures that customers will to continue coming back, providing a solid foundation on which the company can grow. As employee effort is indeed discretionary, it has been observed that higher levels of engagement, or the way management commits itself emotionally to employees, pushes a higher level of discretionary effort (Kruse, 2014). It is not by chance that

Companies that have higher levels of engaged employees have higher earnings per share (EPS) than companies that have lower engagement levels (Kelleher, 2011). Engaged employees are more productive, have higher levels of customer loyalty and help their employers become more profitable. An engaged employee is less likely to leave their current position. This saves their company money because there is no need to spend money to hire and train new personal. These saving can be passed along to the employees for increased wages, bonuses, and benefits. All of these items help in motivating employees, to attempt to engage the disengaged.

The successful business of a hospital organization comes with the cooperation of our medical physicians and the tasks they handle in medical services to our patients. It also comes with the achievements of fundamental tools used to succeed in the healthcare organization. We use relative concepts that impact the efforts in which are made to be managed in the best practices. With the integrated physician model, understanding the partnerships we gain between most of the hospitals, primary care clinics and independent medical groups is defined as supporting the integrated physician model (Harrison.2016). We can tie this model with joint ventures and see the similarities in healthcare services, mainly with the characteristics between the successes of hospitals through our physicians. The joint ventures align with hospitals and their implementations of financial and scope terms that engage our physicians with providing adequate patient care and strategies for a growing organization. Physician integration can take a variety of forms. We know that hospitals can hire and contract out physicians to provide more of an impact in the healthcare networks that gives a more marketable share. This employment provides us with a growing progression of our hospitals and various other clinics. We should look at this with an innovative framework because it is generated to improve the relationships between the hospitals and the competing medical teams (Amgwerd.et al.2017). This same framework can