Temporal specificity and task alignment: Evidence from patient care

We show how integration solves temporal specificity problems that arise from the misalignment of tasks between organizations, and test the predictions of the model using a large and rich patient-level dataset on hospital discharges to nursing homes and home health care. As predicted by the theory, we find that vertical integration allows hospitals to shift patient recovery tasks downstream to lower cost delivery systems by discharging patients earlier and in poorer health, and leads to greater post-hospitalization service intensity, holding patient outcomes constant across the care continuum. The evidence suggests that by improving the alignment of tasks to assets, integration solves temporal specificity problems that arise in market exchange.