HOSPITALS VERTICAL INTEGRATION INTO SKILLED NURSING - A RATIONAL APPROACH TO CONTROLLING TRANSACTION COSTS

Using 1985 and 1988 American Hospital Association data, this study exa mines 1,523 hospitals nationwide and concludes that hospitals' ownersh ip of skilled nursing facilities helps minimize the transaction costs associated with post-acute patient transfers while productively using empty hospital beds. Unfortunately, such ownership creates complex cos t, quality, and accessibility trade-off's in terms of the skilled nurs ing care provided.