Please read the Case study below and answer the questions below in depth.

1. The Affordable Care Act encourage vertical integration and consolidation to improve the coordination of care period however, too much consolidation can give one organization too much market power. What could be done to balance the need to coordinate care and maintain some level of competition?
2. What are the advantages of directing physician referrals within one system of care? Disadvantages?
3. Why would cost or charges increase if services or performed within hospital setting versus an independent physicians office?
4. How could virtual integration be used to coordinate care without raising fixed costs?

The Battle of Boise

One would not expect Idaho, a state with fewer than two million residents, to be highlighted nationally as an example of heightened conflict among physicians and hospitals. Nevertheless, competitive pressures and the trend of physician employment have profoundly changed the state's health care market. In 2012, the dominant Saint Luke's Health System and its smaller competitor, St. Alphonsus Health System, employed about half of the 1400 doctors in southwestern Idaho.

St. Luke's Regional Health System consisting of seven medical centers in southwestern Idaho. Its largest facility is a 399-bed hospital in Boise. The system has expanded in the recent past and controls hospitals in Twin Falls (228 beds), Jerome (25 beds), Ketchum (25 beds), and McCall (15 beds) (St. Luke's 2013). The system also aggressively prepared itself for the will be instituted by the Affordable Care Act.

Saint Alphonsus, on the other hand, belonged to Trinity Health, a large national system of approximately 30 hospitals. Saint Alphonsus had two facilities in southwestern Idaho: the 381-bed Saint Alphonsus Regional Medical Center in Boise and a 152-bed hospital in Nampa (Trinity Health 2017).

By 2012, = according to an article in the New York Times, - many independent doctors were complaining that both hospitals in Boise, = especially St. Luke's, - had too much power and control over their medical practices (Creswell and Abelson 2012b). The doctors accused St. Luke's of dictating which tests and procedures to perform, how much to charge, and which patients to admit. Independent specialists claimed that their referrals from the physicians employed by St. Luke's had dropped sharply and that patients frequently paid more for treatment at the hospital than they would pay at an independent physician's office.

At the same time, employed physicians voiced growing pressure to meet the financial goals the hospitals had set for them, which in the physicians' opinions often entailed unnecessary tests, procedures, and hospital admissions.Although the two hospitals have competed for decades, their rivalry intensified in the years just prior to 2013. Saint Alphonsus, trying to slow St. Luke's perceived domination, even sought a court injunction to stop St. Luke's from buying physician practices. This legal maneuver claimed that St. Luke's market dominance allowed them to raise prices and to demand exclusive or preferential agreements with insurance companies. As an example, Saint Alphonsus claimed that the price of a colonoscopy had quadrupled, and that St. Luke's charges for laboratory work were nearly three times the fees charged by others in the market. Saint Alphonsus argued that St. Luke's dominance was hurting Saint Alphonsus's business and creating steep declines in hospital admissions and referrals from physicians employed by St. Luke's.

St. Luke's justified its actions, saying it was positioning itself to better compete and improve its ability to coordinate patient care when it was to become an accountable care organization (CO). ACOs require close cooperation between hospitals and physicians and are predicted to cut healthcare costs by eliminating unneeded procedures and tests and keeping patients out of the hospital.

As result, the Federal Trade Commission (FTC) and the Idaho Attorney General began to investigate St. Luke's. Jeffrey Perry, an assistant director in the FTC's Bureau of Competition, was quoted in the New York Times. "We're seeing a lot more consolidation than we did 10 years ago. Historically, what we've seen with the consolidation in the health care industry is that prices go up, but quality does not improve" (Creswell and Abelson 2012a).

The number of independent physicians in the United States is rapidly decreasing. In 2000, 1 in every 20 physician specialists was a hospital employee. By 2012, 1 in 4 was employed and 40 percent of primary care physicians were hospital employees. By one estimate, Medicare is paying upward of a billion dollars more annually for the same services because hospitals can charge more when their doctors are employees. For instance, laser eye surgery can cost $738 when performed by a hospital-employed doctor, compared to $389 when done by an independent doctor. Likewise, an echocardiogram can cost $319 if done in a hospital versus $143 if performed in an independent doctor's office.

Employed physicians in Boise also stated that they were strongly encouraged to refer to other doctors working for their employer, even if those doctors were not the best choice of provider for their patients. (Hospitals employing physicians have financial incentives to retain referrals and admissions.) In Boise, doctors employed by St. Luke's were pressured to refer only within the St. Luke's System, according to Saint Alphonsus's complaint. Saint Alphonsus claimed a 90 % drop in admissions to its hospitals by physicians employed by St. Luke's. The complaint also contended that independent doctors in nearby community often sent patients 40 miles away for CT scans because of the much higher prices at St. Luke's.

Mr. Pate, St. Luke's CEO, stated in the New York Times that prices for some of their services had increased, but he justified the increase by suggesting that the services had been exceptionally underpriced. He believed that overall costs would decline at St. Luke's as a result of physician employment because it would be better able to coordinate care, prevent expensive emergency department visits, and eliminate redundant tests. Nevertheless, many area physicians remained skeptical that patients would be better served, especially after the price increases.

Please answer all 4 questions listed above in as much depth as possible.

Thank you!!!!