vertical integration



  • noun the extent to which supply-chain activities are controlled within an organisation.

Health Economics

  • (written as Vertical Integration)

    This entails the bringing together in managed units, activities or firms that were previously separate. It generally comes in one of three forms: backward vertical integration, forward vertical integration and balanced vertical integration. Under backward vertical integration, an organization has subsidiaries producing inputs used in the production of its more 'downstream' products. Under forward vertical integration, an organization has subsidiaries that distribute or market products 'downstream' to customers or use the products themselves. Under balanced vertical integration, an organization has both upstream and downstream subsidiaries.

    Health care is characterized by a variety of types of integration (or lack of it). Examples of its absence are the existence (in the US) of doctors contracting with hospitals for use of their beds and provision of professional services to the patients in them, and (in most countries) the complete absence of any kind of coordination between health care services and community-based social care services. In the US there is a variety of degrees of integration of physicians and hospitals. Some common ones are: Independent Practice Associations (IPAs), which contract with managed health care plans; Open Physician-Hospital Or- ganizations (OPHOs) which, in addition, offer administrative services to physicians; Closed Physician-Hospital Organizations (CPHOs), which are similar but have exclusive arrangements with their physicians and claim to coordinate care better; Management Services Organizations (MSOs), which in addition often buy the physicians' assets and manage their financial affairs (billing etc.), and Fully Integrated Organizations (FIOs), which generally also have salaried practitioners. The degree of vertical integration has been rising in the US, probably as a response to the rise of managed care.

Media Studies

  • noun the acquisition of companies at all levels of production in the same market sector as each other – e.g., a single company owning the newspaper offices, the printers that produce the papers and the chain of newsagents that sell them.


  • noun the joining together of two businesses which deal with different stages in the production or sale of a product, as when a publisher buys a bookseller, or a printer buys a typesetter


  • noun the joining together of businesses which deal with different stages in the production or sale of the same product, as when a restaurant chain takes over a wine importer