The Role of Organizational Slack in Buffering Financially Distressed Hospitals from Market Exits

The Moderating Effect of the Social Deprivation Index (SDI) on the Relationship Between Hospital Strategy and Financial Performance

Background: One of the major tenets of contingency theory is that the appropriate fit between strategy and environmental contingencies results in better financial performance. The purpose of this study was to investigate whether the Social Deprivation Index (SDI) moderates the association between hospital strategy and financial performance. Methods: We used longitudinal data from 2011 to 2016 from US urban general acute care hospitals. Four secondary datasets were used: the American Hospital Association (AHA) Annual Survey, Medicare cost reports (CMS), Area Health Resource File (AHRF), and the Robert Graham Center's SDI. A generalized estimating equation (GEE) regression model was used to analyze the data. An interaction term was used to test the moderating effect of the SDI on the strategy-financial performance relationship. Results and Discussion: Our results showed that compared to hybrids, the SDI moderates the relationship between strategy and financial performance for cost leaders and hybrids. Increasing market social deprivation increases the hospital operating margin of cost leaders by 0.06%. Similarly, increasing levels of market social deprivation increases the hospital operating margin of hybrids by 0.06% (p < 0.05). As such, our results suggest that social deprivation may affect the viability of hospital strategy.

Operating Room Organization and Methodology of Surgical Activity Regulation

This article discusses the implementation of surgical activity regulation methodology in the operating room to reduce organizational dysfunction, improve quality of work life of the surgical staff, and decrease staff overtime.

How slack resource affects hospital financial performance: The evidence from public hospitals in Beijing

Background

Beijing is a city with high concentration and congestion of quality medical resources in China. While moderate slack seems to be beneficial to the improvement of medical quality. The actual relationship between hospital slack resources and their performance deserves further exploration. The study aims to analyze the slack resources of public hospitals in Beijing and investigate the relationship between slack and hospital financial performance. Finding a reasonable range of slack to optimize resource allocation.

Methods

The panel data of 22 public hospitals in Beijing from 2005 to 2011 were selected as the sample, and the DEA model was applied to measure the main variable using DEAP 2.1. Descriptive statistical analysis was performed using Excel and STATA 15. Pearson correlation coefficient analysis and variance inflation factor test were performed for each variable to avoid multicollinearity. The HAUSMAN test was used to determine the appropriate panel regression model, and then to analyze the influence relationship between the variables.

Results

From 2005 to 2011, hospital slack resource transitioned from high to low. The slack measured by the DEA model has an inverted U-shaped relationship with financial performance, with ROA increasing from 4.088 to 8.083 when slack increases from 0 to about 0.378, and then showing a decreasing trend; slack measured by financial indicators has a transposed S-shaped relationship with financial performance, with ROA increasing when slack increase from 3.772 to 5.933.

Conclusions

The slack resources of Beijing public hospitals decreased year by year from 2005 to 2011. Moderate slack resources are conducive to the improvement of healthcare quality, but when slack resources increase to a certain level, it will have a negative impact on healthcare quality. Therefore, hospital managers should control the slack within a moderate range according to the hospital operation policy and development plan to obtain the best performance.

For-profit hospitals as anchor institutions in the United States: a study of organizational stability

Background

Anchor institutions, by definition, have a long-term presence within their local communities, but it is uncertain as to whether for-profit hospitals meet this definition; most research on anchor institutions to date has been limited to nonprofit organizations such as hospitals and universities. Accordingly, this study aims to determine whether for-profit hospitals are stable enough to fulfill the role of anchor institutions through a long-term presence in communities which may help to stabilize local economies.

Methods

This longitudinal study analyzes national, secondary data between 2008 and 2017 compiled from the Dartmouth Atlas of Health Care, the American Hospital Association Annual Survey, and County Health Rankings. We use descriptive statistics to calculate the number of closures and mergers of hospitals of different ownership type, as well as staffing levels. Using logistic regression, we also assessed whether for-profit hospitals had higher odds of closing and merging, controlling for both organization and community factors.

Results

We found for-profit hospitals to be less stable than their public and nonprofit hospital counterparts, experiencing disproportionately more closures and mergers over time, with a multivariable analysis indicating a statistically significant difference. Furthermore, for-profit hospitals have fewer full-time employees relative to their size than hospitals of other ownership types, as well as lower total payroll expenditures.

Conclusions

Study findings suggest that for-profit hospitals operate more efficiently in terms of expenses, but this also may translate into a lower level of economic contributions to the surrounding community through employment and purchasing initiatives. For-profit hospitals may also not have the stability required to serve as long-standing anchor institutions. Future studies should consider whether for-profit hospitals make other types of community investments to offset these deficits and whether policy changes can be employed to encourage anchor activities from local businesses such as hospitals.