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 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.