What can hospitals considering vertical integration learn from Humana’s mishaps?
Why did Humana integrate and then evolve into a managed care company?
Did Humana act most efficiently by divesting its provider assets? What might the company have done to overcome the problems inherent in managing both provider and insurance operations?
Did Humana have difficulty transferring managerial knowledge across business lines? Why or why not?
Was vertical integration an issue as a result of the four problems mentioned in the case, or is it an issue in all large organizations? How can largeness affect the managerial ability of a company such as Humana?
What problems did Humana’s choice of transfer pricing present? Why were the transfer prices of Humana’s hospitals set higher than market prices? What recommendation would you have given to Humana?
What were the specific reasons physician relationships and incentives caused problems? What structural or incentive plans might have helped resolve these problems?
What can hospitals considering vertical integration learn from Humana’s mishaps?
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