For many decades, the U.S. healthcare industry mostly consisted of a diversity of unintegrated physicians, hospitals, and insurers. Over the last 10 to 15 years, vertical consolidations involving providers as well as insurers have brought greater attention to the effects of vertical integration on the cost and quality of healthcare. Attention to vertical integration increased further in 2020, when the Department of Justice and Federal Trade Commission issued the Vertical Merger Guidelines in order to describe how the agencies assess potential antitrust concerns and potential efficiencies from vertical transactions. In this article, we discuss different forms of vertical integration among insurers, hospitals, and physicians and the different antitrust considerations and analyses they are likely to raise.

By Cory Capps, Nitin Dua, Tetyana Shvydko & Zenon Zabinski1

In a well-functioning market, firms seek to profit by producing, as efficiently as possible, goods or services that customers value. This often entails firms pursuing not just technological but also organizational innovation, including pursuit of the most effective extent of vertical integration. Through the choices of end-customers, market competition will then select organizational forms that deliver the greatest value to customers. This may result in a single organizational form or may sustain a variety of organizational forms that compete with one another. For example, Apple’s integrated iPhone and i


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