Hospitals' vertical integration into skilled nursing: a rational approach to controlling transaction costs.

Using 1985 and 1988 American Hospital Association data, this study examines 1,523 hospitals nationwide and concludes that hospitals' ownership 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 cost, quality, and accessibility trade-offs in terms of the skilled nursing care provided.