The past decade has seen profound changes in how the hospital industry has organized itself, including the rising importance of hospital systems. Theoretically, system consolidation can have positive effects from improved efficiency and quality or negative effects from greater market power. Furthermore, these developments have led to hospital bankruptcies and closings, reductions in bed complements, and mergers and takeovers, as well as the formation of an ever-increasing number of hospital networks.
In this module, you studied how vertical integration can impact a health care system. In your opinion, should hospitals expand into other services in order to strengthen their financial standing, or is this a method of “self-referral,” reaching out for income-producing areas that are outside the realm of the hospital’s mission statement?
In a 1-2 page paper, written in APA format, address the following:
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- Explain how vertical integration can impact a health care system.
- Explain how a hospital’s expansion into other services can strengthen their financial standing.
- Explain how a hospital’s expansion into other services can have a negative impact on a system by operating outside the scope of the hospital’s mission statement.