The New Palgrave Dictionary of Economics

Living Edition
| Editors: Matias Vernengo, Esteban Perez Caldentey, Barkley J. Rosser Jr

Vertical Integration Among Health Care Providers

  • Madeline M. GradeEmail author
  • Laurence Baker
Living reference work entry


The past decade in the United States has seen considerable interest in and rising prevalence of vertical integration of hospitals and physician practices, especially financially in the form of hospital acquisition of physician groups. In theory, this could yield a range of effects on cost, prices, efficiency, and quality of health delivery, which can be difficult to disentangle empirically. Furthermore, while financial integration may yield clinical integration, it need not. Current evidence often associates vertical integration with increased costs and spending; evidence on quality effects is much more mixed and a number of studies do not find associations between integration and improvements in quality and outcomes. In addition, a number of financial incentives have been implicated as drivers of vertical integration, including provider based billing. Further empirical investigation would be valuable, and discourse on mechanisms for better incentivizing societal value in this changing landscape, including the possibility of further regulatory action, are warranted.

JEL Classification

I10: health, general I11: analysis of health care markets I18: health, government policy, regulation, and public health L40: antitrust issues and policies, general 
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Copyright information

© The Author(s), under exclusive license to Springer Nature Limited 2020

Authors and Affiliations

  1. 1.University of California San FranciscoSan FranciscoUSA
  2. 2.Department of Health Research and PolicyStanford University School of MedicineStanfordUSA

Section editors and affiliations

  • Barbara Wolfe
    • 1
  1. 1.University of WisconsinMadisonUSA