Performance-oriented: toward a successful strategy

• Published in: Marketing health services 1997, Vol.17 (2), p.10-20
• Main Authors: Kumar, K, Subramanian, R, Yauger, C
• Format: Magazinearticle
• Language: English
• Subjects: Competition; Competitive advantage; Economic Competition; Economics, Hospital; Health administration; Health care industry; Health Facility Merger - economics; Health Services Research - methods; Hospitals; Manufacturing; Market orientation; Marketing; Marketing of Health Services - organization & administration; Marketing of Health Services - standards; Nonprofit hospitals; Nonprofit organizations; Organizational Objectives; Planning Techniques; Politics; Profitability; Profits; Statistical analysis; Strategic management; Strategic planning; Studies; United States
• ISSN: 1094-1304

Changes in the health care industry have profoundly affected hospital management and have caused severe declines in hospital profitability. In 1993, Health Care Management Review reported that the average operating profit margin, around 2% in 1984, had declined to a 0.2% loss by 1990. In the past, hospitals were buffered by entry regulations and cost reimbursement; thus, they rarely dealt with traditional market pressures. But the changed terrain means that competitive factors now underscore all strategic decisions. This study examines the strategic significance of market orientation in the health care industry. The authors identified forms of market orientation by emphasizing different components, and discovered that hospitals fell into four distinct clusters or groups. They also found a critical relationship between market orientation and performance scores on a number of criteria. Finally, the authors suggest that different forms of market orientation should be employed to target specific performance measures.