The vertical integration options are “defined as channels in which the intermediaries are integrated so their functions are performed at the most efficient place within the channel (Berkowitz, Essentials of Health Care Marketing 2017)”, and directions for the following providers: (a) a major academic medical center such as the University of Iowa, (b) a five-person general surgery group, and (c) a manufacturer of durable medical equipment. These all have to be run well by the administrator and goals should be set high to prevent failure. This helps with saving costs, internal and management factors, and helps with transactional relationships to make the process better. ” An alternative strategy is to develop a vertical marketing system by backward integration, acquiring operations that are farther from the consumer (Berkowitz, Essentials of Health Care Marketing 2017).” Doing all of this will better the program involved in keeping the business and community happier. Healthcare should be important to everyone and should be a priority for most. Having benefits like this is a giving and makes it easier on patients. Knowing that hospitals, clinics, and healthcare providers can contribute to this vertical integration option makes things a little easier and more understandable. This has to be run by a precise group to make things work to keep up with all issues.
Vertical integration in healthcare entails both forward and backward integration. Forward integration is a vertical integration that requires the manufacturer to be both the wholesaler and the retailer, and sometimes both in such a way that they are in direct contact with the final consumer, that only in traditional product marketing. On the other hand, backward integration is the manufacturer’s involvement in procuring and producing its raw materials (Boyce, 2021). The scenario is incorporated in healthcare sectors and facilities that otherwise end up integrating forward and backward.
An academic center would set up satellite primary care centers and its acute care hospital to feed its acute care hospital. As a result, the academic center will be granted full control over the whole system (Wijnen-Meijer et al., 2020). What are required patients must have access to the necessary expertise and professionalism? It is a matter of the reputation of the academic center being at stake.
An operating room in a small hospital could be used by a general surgery group of five individuals. It would be possible for them to collaborate with a special surgery group due to the complicated case referrals that need their professionalism (RevCycleIntelligence, 2021). Considering that this is a small group, which has to establish a contract amongst the general surgery group, in this case, the specialty and the hospital.
Manufacturers of durable medical equipment are also to follow the same process as other product manufacturers. His distribution channels would be determined by:
1) The equipment’s technical complexity.
2) The unit equipment cost per unit.
3) The overall company size.
Taking the case where the equipment Is complex, therefore, needs only equipped salespersons to dispose of the equipment to the market and explain the complexity of the equipment to their buyers. Where the unit cost is high, there will be multiple visits for the buyers to clinch the deal. The company’s size is another factor that dictates the sale force to afford the equipment (Heeringa et al., 2020). The company involved is therefore required to gather, transfer and train enough personnel with the duties of selling to other geographical parts. It would benefit a large firm if it opened branches in these other areas as they have already developed the workforce by training it.
If the company has no groundbreaking financial status to have these offices in different areas, then it will be required to train the other person who operates as an agent to have their products sold. The scenario is therefore based on the assumption that there is high complexity. If the equipment is simple and has a low capital cost, the product can be exposed through the website by direct selling. What is then required of the company here is to cater to the installation challenges and the appointing an after-sale agent. Or they could sell through these very same agents to the buyers. It, therefore, enables a relationship to be built before the sales.