Chapter 9. Competition,
Cooperation & Integration
Long-Term Care: Managing Across
the Continuum
(Second Edition)
1
Learning Objectives
1. Understand the nature of the competitive forces
acting on long-term care organizations
2. Define the various forms of cooperation and
integration
3. Discuss the benefits of the various forms of
integration
4. Identify the components of integrated systems
and networks
5. Discuss management, financing, and quality
issues related to integration
2
Background
Reasons for more competition, cooperation,
integration:
Environment
 Increased demand
 More providers
 More demanding consumers
Financing changes
 Pressures to reduce costs
 Managed care
3
Competition
“Rivalry between two or more
businesses striving for the same
customer or market”
4
Conditions Required for
Competition
1. Lack of influence by individual
buyers and sellers
2. Lack of collusion to fix prices or
quantities
3. Free and easy entry into the market
4. Few government restraints
5. Good information about price and
quality
5
Sources of Competition




Other providers of the same type
Other types of long-term care providers
Other health care providers
Managed care organizations
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Effects of Increased Competition
New opportunities for some providers,
threats to others who do not compete
More large, multi-unit chains, fewer small
individual facilities
More cooperation & integration
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Cooperation
Agreements are not highly formalized
Transfer agreements
Shared purchasing
Sharing of scarce professionals
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Integration
More formal than cooperation
Seeking organizational efficiency and
effectiveness
Higher degree of central control
More exclusive contractual agreements
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Horizontal Integration
Multiple providers of the same level of care
(e.g., nursing facility, assisted living)
Central
Organization
Nursing
Nursing
Nursing
Nursing
Facility
Facility
Facility
Facility
A
B
C
D
Horizontal
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Vertical Integration
Multiple providers, different levels of care
Central Organization
Hospitals
Vertical
Subacute Care
Nursing Facilities
Assisted Living
Home Health Care
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Reasons for Joining an Integrated
System or Network
Economies of scale
Gaining market share
Increased bargaining power
Protection from competitors
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Benefits to Consumers
Larger range of services
Better access, availability of services
Coordinated information, scheduling
Centralized financial information,
meaning less hassle
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Continuum of Care
Integrating Mechanisms
1.
2.
3.
4.
Planning and management
Coordination of care
Information systems
Financing mechanisms
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Governance Issues
Balancing interests of overall system or
network and those of the member
organizations
Mixture of nonprofit and for-profit
organizations
Anti-trust potential
15
Summary
Increased competition within long-term
care has created pressures to cooperate and
integrate, with accompanying opportunities
and challenges, but it is here to stay.
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