Vertical Data Integration in Healthcare

Used for creating relations between all horizontally integrated actors, vertical data integration allows for a connection between many different types of entities.

As the present focus of the healthcare industry is increasing the quality of care, efficiency, and coordination, there are many important perks to vertical data integration. It can improve patient safety and reduce hospital readmissions, positively affect costs along with increasing the healthcare practice bargaining power with insurances.

Here you will be informed about how vertical data integration can improve healthcare outcomes, backed by a series of studies which are still ongoing today.

Examples of Vertical Data Integration

Some of the biggest mergers in healthcare with vertical integration are:

Entity

Number of Facilities/Hospitals

Ascension Health

2,331

Community Health Systems

1,930

Catholic Health Initiatives

1,740

HCA

1,688

Trinity Health

1,592

Kaiser Permanente

1,204

Tenet Healthcare

1,186

It Improves Efficiency

A recent study explains the effectiveness of vertical data integration in hospitals from Portugal, where readmission rates had been greatly reduced.

  • The results give us evidence which proves the positive effect of vertical integration on cost containment and care quality.
  • There are many benefits regarding efficiency, quality and access for the medical practice.
  • There is a higher consolidation of care quality objectives: A vertical integration needs to consolidate its patient experience and set objectives to lessen unwanted variations in care. By having all involved parties in a common data platform, each member can share common clinical content, such as recommendations or the definition for medicinal compounds. These objectives mean a wider and more uniform practice, being the ultimate goal for vertical data integration.

It Generally Improves Coordination of Care

The integration between the physician and the hospital is growing by the day, with a lot of hospitals buying their practices. Vertical integration can affect care coordination in several ways, as a study from 2020 states:

Physicians can change their behavior in response to shifts in incentive structures and ownership. A great example is the behavior of gastroenterologists, who have high levels of outpatients.

 

Pros

Cons

 

Vertical integration improves both coordination and quality of care

The results of the study also prove that vertical integration may not necessarily lead to huge improvements regarding readmissions.

 

Vertical integration can improve the hospital’s finances and the outcomes for the patients. finances.

 

Practices under hospital ownership May not be as efficient as hospitals themselves, due to patients not experiencing better quality of care in the same hospital.

 

Improves quality

A study done at North-western University explains the value of vertical integration by citing the CVS Health-Aetna merger as an example.

  • Vertical integration allows both partners to manage spending and chronic conditions while also improving the general quality. This means that the benefits of vertical integration transfer to patients, hospitals and business participants.
  • The NHS in the UK is a good example of an organization that has used vertical integration, implemented for at least two years in British hospitals.
  • According to the HITECH Act, hospitals are need to measure and collect data from all hospitals in their area of service. As per the study, the analysis includes statistics of process adherence, patient satisfaction and readmissions. The results tell us that vertical data integration increases quality and decreases costs.
  • It can also encourage better care coordination while greatly improving the patient experience.

It’s important to note that vertical integration is an ongoing matter of study, meaning there is not enough data to 100% prove its improvement on general healthcare.

Reducing Hospital Readmissions

Even with all the proof for high levels of public surveys, there aren’t many studies that can tell us with precision that vertical integration lessens hospital readmission rates.

A review of existing studies does however show us that vertical data integration could reduce hospital readmissions. A study found around 10% percent reduction in unplanned readmissions using vertically integrated hospitals. This means it could be a good way to address unplanned hospital admissions.

Increases Bargaining Power with Insurers

Hospitals and physicians are integrating more each day, be it through assets or through affiliations. To add, vertically integrated systems help with operational and clinical initiatives.

These organizations are also known as accountable care organizations. They play a very useful part for:

  • The need to increase bargaining power.
  • The need to reduce fixed costs.
  • The future of the healthcare system which is always uncertain.

Vertical integration can reduce structure costs by suppressing double marginalization: When insurers apply margins that surpass their combined profit margin.

  • By combining services, they are able to set prices that increase the general profits. This leads to lower prices for consumers.
  • Healthcare insurers and hospitals also save money by merging, especially when they use the same resources efficiently.
  • Customer service and billing may become cheaper and more efficient with a larger integrated actor.

Costs

Consumers must consider the costs of vertical integration when they have to decide which healthcare provider to use. Some key benefits for the costs are:

  • It can reduce transaction costs, but it can also lead to adverse effects on consumer health outcomes and consumer choice both.
  • Vertical data integration in healthcare can also allow for a more centralized approach regarding the quality of care: A proper planned vertical system will have more control over the patient’s experience, and set objectives to lessen unwanted variations in general care.
  • When there are multiple partners, a single solution suite can focus on future accuracy, consistent content and experience for the users.

As mentioned before, studies are still taking place, thus there is much to be analysed and discovered.

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