The Dynamics and Limits of Corporate Growth in Health Care

Abstract

This paper analyzes the economic dynamics of five forms of organizational growth in health care: horizontal integration within a single geographic market; horizontal integration across different geographic markets; diversification among multiple products and types of service; diversification among multiple distribution channels; and vertical integration with suppliers. These principles are illustrated through brief case studies of three firms that have grown by way of internal expansion, mergers, acquisitions, and diversification: WellPoint Health Networks, UniHealth America, and Mullikin Medical Enterprises. The paper analyzes the potential limits of organizational growth in health care and explores the implications of integration and diversification for antitrust policy.