Impact of Vertical Integration in Healthcare

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Impact of Vertical Integration in Healthcare
Today the healthcare industry is going through a
transformative change called Vertical
Integration and its popularity is rising
continuously over the US. However, it is observed
in most cases that such mergers would lead to
higher healthcare costs and a low level of
patient satisfaction. As a physician or
healthcare organization, you should know about
these rising trends and their impact on your
practice hence in the article you will learn
about Vertical Integration in Healthcare as well
as its impacts.   What is Vertical Integration in
Healthcare? Vertical integration can be referred
to as the purposeful creation of strategic
combinations of alliances to enhance the delivery
of health care. Hospital systems, drug
manufacturers, wholesale distributors, pharmacy be
nefit managers (PBMs), retail pharmacy outlets,
and medical insurers have all jumped on the
bandwagon to form unique synergies across the
healthcare industry. Vertical integration is
completely different from horizontal integration,
which occurs when entities operating in the same
market come together like when one physician
group buys another or hospitals merge with other
hospitals.
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Impact of Vertical Integration in Healthcare
In the dynamic health care industry, the use of
traditional horizontal integration for joining
forces with another competitor does not guarantee
cost savings to the organization or, more
importantly, to the patient. In fact, by avoiding
a reactive approach with direct competitors or
established rivals and instead carefully
selecting opportunities that create complementary
synergies, health care companies can achieve the
upper hand. After knowing briefs about the
current trend of vertical Integration in
Healthcare, now you must be aware of its impact
so you can decide if its suitable for your
practice or not. Impact of Vertical Integration
in Healthcare The rise in referral patterns for
common diagnostic tests and procedures It is
observed that after vertical integration,
referrals to hospitals increased resulting in
millions more in Medicare spending. For example,
after vertical integration, the monthly number of
diagnostic imaging tests per 1,000 attributed
beneficiaries performed in a hospital setting
increased by 26.3 per 1,000, and the number
performed in a non-hospital setting decreased by
24.8 per 1,000.
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Impact of Vertical Integration in Healthcare
Hence it was observed that vertical integration
in healthcare impacts referral patterns for
common diagnostic tests and procedures and the
associated spending. Anticompetitive
behavior Vertical integrations are categorically
safe but can lead to anti-competitive behavior
and higher costs and evaluation should be done on
a case-by-case basis, especially as health care
accounts for such a large part of the
economy. According to a study, Physician groups
owned by large hospital systems were more than
50 more expensive than those owned exclusively
by physicians, and rising vertical integration in
California is associated with higher prices for
primary care, higher health insurance premiums,
and more expensive specialty care.   Preserving a
Competitive Market When it comes to a proposal
of hospital mergers then policymakers and
regulators should focus scrutiny on mergers to
maintain competition and reduce counterproductive
barriers to entry. Currently, both federal and
state governments are keeping an eye on vertical
integrations effects on competition.
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Impact of Vertical Integration in Healthcare
The Department of Justice and the Federal Trade
Commission at the federal level are responsible
for investigating antitrust issues. While
investigating this regulator should follow
expanding and clarifying guidelines but even in
the presence of such clear guidelines scarcity of
resources couldnt keep with the pace of vertical
integration in health care. One more important
aspect is vertical integration in healthcare i.e.
Physicians and hospital mergers threaten
competition in local healthcare markets and
regulators may want to focus their efforts on
identifying vertical mergers and acquisitions
that may negatively impact patient satisfaction
and costs. Patient satisfaction It is an
important aspect for every physician but
increased market concentration through
physician-hospital integration affects patient
satisfaction badly. While higher clinical quality
and better patient experience cannot be
correlated but measuring quality based on patient
perception is increasingly important as more
consumers use online physician ratings and
reviews of patient experience to select
providers. Are you still looking for its impact
and afraid if it affects your revenue? Of course
not, we are one of the top medical billing
service providers in the US and you can rely on
us for your billing.