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Integration and Task Allocation: Evidence from Patient Care

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  • Guy David
  • Evan Rawley
  • Daniel Polsky

Abstract

Using the universe of patient transitions from inpatient hospital care to skilled nursing facilities and home health care in 2005, we show how integration eliminates task misallocation problems between organizations. We find that vertical integration allows hospitals to shift patient recovery tasks downstream to lower‐cost organizations by discharging patients earlier (and in poorer health) and increasing post‐hospitalization service intensity. Although integration facilitates a shift in the allocation of tasks and resources, health outcomes either improved or were unaffected by integration on average. The evidence suggests that integration solves coordination problems that arise in market exchange through improvements in the allocation of tasks across care settings.

Suggested Citation

  • Guy David & Evan Rawley & Daniel Polsky, 2013. "Integration and Task Allocation: Evidence from Patient Care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(3), pages 617-639, September.
    • Handle: RePEc:bla:jemstr:v:22:y:2013:i:3:p:617-639
    DOI: 10.1111/jems.12023
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    References listed on IDEAS

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    1. Guy David & Evan Rawley & Daniel Polsky, 2011. "Integration and Task Allocation: Evidence from Patient Care," NBER Working Papers 17419, National Bureau of Economic Research, Inc.
    2. Sharon Novak & Scott Stern, 2008. "How Does Outsourcing Affect Performance Dynamics? Evidence from the Automobile Industry," Management Science, INFORMS, vol. 54(12), pages 1963-1979, December.
    3. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    4. Pirrong, Stephen Craig, 1993. "Contracting Practices in Bulk Shipping Markets: A Transactions Cost Explanation," Journal of Law and Economics, University of Chicago Press, vol. 36(2), pages 937-976, October.
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    1. Norton, E.C., 2016. "Health and Long-Term Care," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 951-989, Elsevier.
    2. Rahman, Momotazur & Norton, Edward C. & Grabowski, David C., 2016. "Do hospital-owned skilled nursing facilities provide better post-acute care quality?," Journal of Health Economics, Elsevier, vol. 50(C), pages 36-46.
    3. Konetzka, R. Tamara & Stuart, Elizabeth A. & Werner, Rachel M., 2018. "The effect of integration of hospitals and post-acute care providers on Medicare payment and patient outcomes," Journal of Health Economics, Elsevier, vol. 61(C), pages 244-258.
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    5. David, Guy & Kim, Kunhee Lucy, 2018. "The effect of workforce assignment on performance: Evidence from home health care," Journal of Health Economics, Elsevier, vol. 59(C), pages 26-45.
    6. Bocci, Corinne F., 2023. "Assessing the private and social benefits of forest concessions in the Maya Biosphere Reserve," 2023 Annual Meeting, July 23-25, Washington D.C. 335973, Agricultural and Applied Economics Association.
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    9. Elena Andreyeva & Guy David & Hummy Song, 2018. "The Effects of Home Health Visit Length on Hospital Readmission," NBER Working Papers 24566, National Bureau of Economic Research, Inc.
    10. Hyunjee Kim & Edward C. Norton, 2015. "Practice Patterns among Entrants and Incumbents in the Home Health Market after the Prospective Payment System was Implemented," Health Economics, John Wiley & Sons, Ltd., vol. 24(S1), pages 118-131, March.
    11. Stephen McCarthy & Damien Sheehan‐Connor, 2022. "The effect of hospital‐physician integration on hospital costs," Health Economics, John Wiley & Sons, Ltd., vol. 31(11), pages 2333-2368, November.
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    13. Yingchao Lan & Deepa Goradia & Aravind Chandrasekaran, 2022. "Ancillary Cost Implications of Physicians Multisiting and Inter‐Organizational Collaboration During Healthcare Delivery," Production and Operations Management, Production and Operations Management Society, vol. 31(2), pages 561-582, February.
    14. Mishra, Khushbu & Sam, Abdoul G., 2016. "Does Women’s Land Ownership Promote Their Empowerment? Empirical Evidence from Nepal," World Development, Elsevier, vol. 78(C), pages 360-371.
    15. Jing Gu & Neeraj Sood & Abe Dunn & John Romley, 2019. "Productivity growth of skilled nursing facilities in the treatment of post-acute-care-intensive conditions," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-14, April.
    16. R. Tamara Konetzka & Fan Yang & Rachel M. Werner, 2019. "Use of instrumental variables for endogenous treatment at the provider level," Health Economics, John Wiley & Sons, Ltd., vol. 28(5), pages 710-716, May.
    17. Hummy Song & Elena Andreyeva & Guy David, 2022. "Time Is the Wisest Counselor of All: The Value of Provider–Patient Engagement Length in Home Healthcare," Management Science, INFORMS, vol. 68(1), pages 420-441, January.
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