At a minimum, other changes in the healthcare industry should be considered when evaluating the effects of vertical integration, including: the fact that the U.S. population is aging, which will lead to changes in the required mix of healthcare services; and technology improvements that change the costs of providing different health services, for example, new technologies that allow procedures to be shifted from inpatient to outpatient settings (Ackerman). The appeal of vertical integration, especially upstream, is when necessary technical skills are easily mastered (Ackerman). Abbott Labs, and basically all of the pharmaceutical industry, are in a specialized industry that keeps trade secrets very private. Meaning, Abbott must keep their upstream processes such as R&D and legal in house in order to keep their products and services secure from infringement by outside competition. While keeping all of these processes internal is the essence of vertical integration, it is very costly to house all of these processes. We can measure these costs as best as we can
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This note was uploaded on 03/25/2010 for the course BUS 210 taught by Professor Scottrought during the Spring '08 term at University of Phoenix.