Healthcare Trends: What is Vertical Integration?
As a result of tragic events last week, US healthcare has taken the center stage. With 30 years of experience in the industry, I will be providing insights on key trends and challenges. Let’s talk about: What is Vertical Integration?
Vertical integration occurs when a company takes control of multiple stages of the distribution path or multiple market segments for its products or services.
A major milestone in vertical integration in the healthcare sector in the U.S. was United Healthcare creation of Optum in 2011 to control more aspects of the healthcare delivery system. Please see the major players in the attached picture illustrating the scope of services controlled. These moves aimed to streamline services and reduce costs, influencing both the quality and accessibility of healthcare.
Here's what this change means for consumers:
- Integration & Profits: Allows insurance companies to reduce expenses and boost profits by managing more aspects of healthcare delivery directly
- Impact on Patient Costs: Can lead to higher costs for patients due to fewer choices and less competition
- Incentives for Expensive Medicines: There might be a push for more expensive medications if that increases the insurance's profits, affecting what treatments are available
- Control over Low Margin Medicines: Insurance-owned providers might place more restrictions on less profitable medicines to control costs, impacting timely access – the infamous #priorauth
- Patient Access: Forces patients to use the insurer's network, limiting options and potentially compromising the quality of care - the infamous #denial
- Billing and Data Integration: Combines clinical and billing data, enhancing treatment insights but raising data privacy concerns
- Overall Impact: This approach can prioritize organizational control over cost and provider practices at the expense of patient access and care quality
IMPORTANT: Because labels on the verticals are different, it may appear to a consumer that these are different companies, when in fact these are growing monopolies representing the interests of the „mothership” and not those of the patient
This illustrates how an insurance company's business strategy can influence our healthcare choices and expenses by controling behavior of pharmacies, physicians and billing companies.
#healthcare #womenshealth #transformation #leadership #communication #verticalintegration #populationhealth #valuebasedcare #VBC Baruch College Zicklin Women In Business American College of Healthcare Executives American College of Healthcare Executives of New Jersey (ACHE-NJ) Healthcare Leaders of New York (HLNY) MGMA Healthcare Financial Management Association (HFMA) Association of University Programs in Health Administration (AUPHA) Drug Channels Institute, an HMP Global Company Accenture
Source: https://lnkd.in/e3TUzrza by Adam Fein, Ph.D.