Vertical integration in the Australian community care setting: Can it work? A theoretical review of current literature

Vertical integration (VI) is considered a strategic management plan whereby an organisation has ownership of its supply chain. It is utilised as a method for managing the economic needs and approaches of an organisation and ensuring that a product is readily available for use. From a healthcare perspective, this pertains to the coordination of services or levels of care and allows for adaptation to changing circumstances. This study reviews existing literature on VI in a healthcare setting to assess feasibility and effectiveness of this proposed solution. A theoretical literature review was performed utilising conceptual categorisation to understand how VI may benefit community care organisations, using the needs of a local organisation as an example. Seventeen articles were included from a range of databases and grey literature with findings categorised according to two research questions. The findings suggest that for VI to be effective and efficient it is important to consider the following themes: market failure, barriers to entry, productive capabilities and specific healthcare issues. In conclusion, from a management and economic perspective, when markets are not functioning efficiently and are in disequilibrium, VI may provide an appropriate avenue to address these problems, in particular for community care organisations. Highlights Vertical Integration is a strategic management plan whereby an organisation has ownership of its supply chain—in healthcare this comprises the coordination of services or levels of care and allows for adaptation to changing circumstances In order for Vertical Integration to be effective and efficient in healthcare it is important to consider market failure, barriers to entry, productive capabilities and specific healthcare issues Vertical integration may be a beneficial model for the healthcare sector, alleviating known barriers within allied health, particularly focussed on community care, by increasing the efficacy and efficiency of service access Vertical Integration can inform broad and localised policy for access to healthcare services through focussing on patient outcomes rather than financial or economic outcomes