Case 4: Innovations from an organizational (economic) perspective
Learning goals
1. Which strategies can be used to integrate health care delivery systems?
a. Which types of integration exist in the healthcare sector?
b. What is vertical integration?
c. What is horizontal integration
2. How does integration affect the boundaries of the (health care) organisation? – Healthcare
strategies
3. What role do transaction costs play in (vertical) integration and outsourcing?
Keywords of the case
Organisational innovation, integration strategies, horizontal integration, vertical integration,
upstream and downstream, transaction costs, economies of scope, economies of scale, boundaries
of the firm, organizational efficiency, effects of integration, ownership structure, (in)efficiency and
market power.
Literature
- Evans JM, Baker GR, Berta W, and Barnsley J (2013), The evolution of integrated health care
strategies. Annual Review of Health Care Management: Revisiting the Evolution of Health Systems
Organization. Advances in Health Care Management, Volume 15, 125-161.
- Laugesen MJ and France G (2014). Integration: the firm and the health care sector. Health
Economics, Policy and Law, 9(3), pp 295-312.
- Machta RM, KA Maurer, DJ Jones, MF Furukawa, EC Rich (2019), A systematic review of vertical
integration and quality of care, efficiency, and patient-centered outcomes. Health Care Management
Review, 44(2), 159-173.
- Post B, Buchmueller T, Ryan AM (2018), Vertical integration of Hospitals and Physicians: Economic
Theory and Empirical Evidence on Spending and Quality. Medical Care Research and Review,75(4),
pp. 399 - 433.
- Westra D, Angeli F, Kemp R, Batterink M, Reitsma, J (2020), If you say so: A mixed- method study of
hospital mergers and quality of care, Healthcare Management Review, doi:
10.1097/HMR.0000000000000302
,1.Which strategies can be used to integrate health care delivery systems?
Organization
- “A social entity which is goal-directed, is designed as a deliberately structured and
coordinated activity system, and is linked to the external environment” (Daft, Murphy &
Willmott, 2014).
- “A decision-making unit engaged in production” (Hall, 1994).
- “A system of interrelated behaviours of people who are performing a task that has been
differentiated into several distinct subsystems, each subsystem performing a portion of the
task, and the efforts of each being integrated to achieve effective performance of the
system” (Lawrence & Lorsch, 1967).
Organizations have boundaries; the scope of activities in which the firm engages (Hall, 1994).
Organizations operate in a supply/ value chain
- The reality of such a chain in very complex.
Institutional economics
According to the (neo-) institutional economics:
- “Institutions matter” (Williamson, 2009; Matthews, 1986)
- “There is a need to question the impact of institutions on economic activities and economic
performance”
- “There is a need to question how economic activities can be best organized to obtain the
best economic performace”
,
Learning goals
1. Which strategies can be used to integrate health care delivery systems?
a. Which types of integration exist in the healthcare sector?
b. What is vertical integration?
c. What is horizontal integration
2. How does integration affect the boundaries of the (health care) organisation? – Healthcare
strategies
3. What role do transaction costs play in (vertical) integration and outsourcing?
Keywords of the case
Organisational innovation, integration strategies, horizontal integration, vertical integration,
upstream and downstream, transaction costs, economies of scope, economies of scale, boundaries
of the firm, organizational efficiency, effects of integration, ownership structure, (in)efficiency and
market power.
Literature
- Evans JM, Baker GR, Berta W, and Barnsley J (2013), The evolution of integrated health care
strategies. Annual Review of Health Care Management: Revisiting the Evolution of Health Systems
Organization. Advances in Health Care Management, Volume 15, 125-161.
- Laugesen MJ and France G (2014). Integration: the firm and the health care sector. Health
Economics, Policy and Law, 9(3), pp 295-312.
- Machta RM, KA Maurer, DJ Jones, MF Furukawa, EC Rich (2019), A systematic review of vertical
integration and quality of care, efficiency, and patient-centered outcomes. Health Care Management
Review, 44(2), 159-173.
- Post B, Buchmueller T, Ryan AM (2018), Vertical integration of Hospitals and Physicians: Economic
Theory and Empirical Evidence on Spending and Quality. Medical Care Research and Review,75(4),
pp. 399 - 433.
- Westra D, Angeli F, Kemp R, Batterink M, Reitsma, J (2020), If you say so: A mixed- method study of
hospital mergers and quality of care, Healthcare Management Review, doi:
10.1097/HMR.0000000000000302
,1.Which strategies can be used to integrate health care delivery systems?
Organization
- “A social entity which is goal-directed, is designed as a deliberately structured and
coordinated activity system, and is linked to the external environment” (Daft, Murphy &
Willmott, 2014).
- “A decision-making unit engaged in production” (Hall, 1994).
- “A system of interrelated behaviours of people who are performing a task that has been
differentiated into several distinct subsystems, each subsystem performing a portion of the
task, and the efforts of each being integrated to achieve effective performance of the
system” (Lawrence & Lorsch, 1967).
Organizations have boundaries; the scope of activities in which the firm engages (Hall, 1994).
Organizations operate in a supply/ value chain
- The reality of such a chain in very complex.
Institutional economics
According to the (neo-) institutional economics:
- “Institutions matter” (Williamson, 2009; Matthews, 1986)
- “There is a need to question the impact of institutions on economic activities and economic
performance”
- “There is a need to question how economic activities can be best organized to obtain the
best economic performace”
,
