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.

Analyze the provided scenario. What are the advantages and disadvantages of the vertical integration of the hospital with the 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.