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. hos...

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Bibliographic Details
Published in:Health services management research : an official journal of the Association of University Programs in Health Administration 2023-05, Vol.36 (2), p.127-136
Main Authors: Ghiasi, Akbar, Weech-Maldonado, Robert, Zengul, Ferhat, Puro, Neeraj
Format: Article
Language:English
Subjects:
Acute services
Differentiation
Environmental aspects
Hospitals
Leadership
Medicare
Nonprofit organizations
Older people
Organizational factors
Penetration
Private sector
Teaching
Unemployment
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Summary: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.
ISSN:0951-4848
1758-1044
DOI:10.1177/09514848221115093