NAVIGATING TURBULENT TIMES: STRATEGIC GROUPS AND PERFORMANCE IN THE HOSPITAL INDUSTRY, 1983 TO 1993

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.

Contextual factors and business strategy choice: The case of us hospitals

US hospitals are struggling with how to compete and remain viable in an increasingly turbulent and competitive environment. Using Porter’s generic strategies and resource dependence theory, this study examined the relationship between environmental factors and business strategy choice among U.S. hospitals. The study used longitudinal data from 2006 to 2016 of US urban, general acute care hospitals from the American Hospital Association Annual Survey, Medicare cost reports, and Area Health Resource File. Multinomial regression was used to analyze the data. and Discussion: Our findings showed four types of hospital strategy: cost-leadership, differentiation, hybrid, and stuck-in-the-middle. A greater number of physicians (county-level) increases the likelihood of pursuing differentiation and hybrid strategy. On the other hand, a higher older adult population (65 years+) increases the likelihood of pursuing a cost-leadership strategy. Similarly, lower competition and higher Medicare Advantage penetration increases the likelihood of pursuing cost-leadership over hybrid strategy. An increase in the unemployment rate decreases the likelihood of pursuing differentiation and cost-leadership strategies versus the hybrid strategy. Finally, hospitals pursuing a differentiation strategy tended to be larger, teaching, and not-for-profit. The results showed the importance of environmental and organizational factors in predicting the strategy choice of hospitals.

What role does generic strategy play in how managers adapt their aspirations in response to performance feedback?

Purpose

When managers set aspirations for their firms, they typically compare their own firms' performance to past aspirations as well as to the performance of social reference groups. The authors explore how firm generic strategy affects managers' adaptation of firm aspirations in response to feedback from three social reference groups that vary in terms of breadth (population average, strategic group, and one direct rival).

Design/methodology/approach

The authors propose that firm generic strategy (low-cost or differentiation) functions as an organizational information filter through with managers interpret performance feedback. The authors test for whether generic strategy has a moderating effect on the influence of performance feedback from social reference groups.

Findings

Based on a longitudinal sample of US airlines, the study shows that all firms are influenced most strongly by their strategic groups. Low-cost and differentiation generic strategies differ in terms of which social reference group motivates a larger reaction when overperforming: low-cost firms are more influenced by the population average which is contributed to by the entire industry than are differentiating firms, while differentiating firms are more swayed by the narrow focus of their direct rivals than are low-cost firms.

Originality/value

Although firm strategy represents a core decision at the firm level, to the best of the authors’ knowledge, performance feedback research, surprisingly, has not yet integrated generic strategy into its models.

A configurational view of executive selection behaviours: a taxonomy of USA acute care hospitals

Health-care organizations, particularly hospitals, are among the most complex organizations to manage. However, the executive selection processes these organizations have in place are poorly understood. The purpose of this study is to explore the executive selection processes employed by USA acute care hospitals and discern if such processes are related to environmental, structural and strategic organizational characteristics. We conceptualize this model using a configurational approach. We present an empirically derived taxonomy of hospitals based on executive selection processes, structural and environmental characteristics, and organizational strategy based on the Porter framework. Based on the analyses, three types of hospitals are identified: (1) small, rural, cost leaders with limited selection processes; (2) large, urban, differentiators, with a plan; and (3) small, rural, caught in the middle muddlers.

The impact of health system membership on patient safety initiatives

BACKGROUND

Research in configurations and strategic groups has a rich history of revealing performance differences for hospitals and health care systems.

PURPOSES

To assess the relationship between hospital-led health system configurations and the adoption of patient safety practices. In particular, the adoption of computerized physician order entry (CPOE) and intensive care unit physician staffing (IPS) is analyzed.

METHODOLOGY

Analysis of variance was used to detect differences in patient safety measures based on health networks and systems' initial configuration clustering, and regression was used to assess group membership, controlling for hospital-level characteristics. The 2002 American Hospital Association survey and the first 3 years of the Leapfrog Group annual survey (2003-2005) are used for the analyses.

RESULTS

There were significant differences in CPOE and IPS adoption and implementation levels based on health systems' configurations. Centralized physician/insurance health systems and moderately centralized health systems were the highest configurations in terms of CPOE adoption. Group membership was not positively related to the use of IPS relative to hospitals that are not classified using the taxonomy. In fact, there is a significant and negative adoption rate for both patient safety measures in facilities classified in the independent hospital systems category.

CONCLUSION

There are systematic differences in the adoption of CPOE and IPS patient safety measures based on health system configurations. The configuration with an insurance company as part of its structure was more likely than other groups to be adopting CPOE. PRACTITIONER IMPLICATIONS: Given the durability of group membership, the Leapfrog Group and other patient safety initiatives could explicitly target configurations most likely to adopt and implement patient safety programs.