Strategic hospital alliances: impact on financial performance (original) (raw)
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Understanding hospital performance
Health Care Management Review, 2011
Background: To improve efficiency and quality, a number of policies have recently been implemented to increase competition and cooperation within the health systems of many countries. We theorize how hospital performance, measured as productivity, is contingent upon network embeddedness, the extent to which a hospital is involved in a network of interconnected interorganizational relationships. Purpose: The aim of this study was to explore the effects on hospital productivity resulting from both collaborative network ties and competitive relationships between providers. Methodology: We used panel data collected between 2003 and 2007 from 35 hospitals in Abruzzo, one of the most populated regions of central Italy. We used secondary data of hospital activities regarding both clinical and administrative aspects. For each year, we examined the intensity of interhospital competition and the unique position each provider has within a larger network of relationships with other hospitals. Other idiosyncratic organizational characteristics were examined as well. Findings: Our results show that hospital productivity is negatively related to the degree of competition that a hospital faces and positively related to the degree with which hospitals establish collaborative relationships. We also found that the negative impact on hospital productivity due to competition was lessened when hospitals were more likely to create cooperative network ties. Practice Implications: Because interhospital collaboration and competition are related to hospital productivity, they should constitute a core element in the strategic planning of a hospital's operation. Health administrators should implement policies that favor collaborative network ties at the regional level and mitigate interorganizational rivalries when establishing collaborative relationships with local competitors. T he current environment in which health care providers operate and perform is characterized by the simultaneous influences of cooperation and competition among themselves. In the early 1990s, many national governments took initial steps toward introducing market forces into the provision of health care services while simultaneously emphasizing the need for closer collaboration between different health care providers (e.g., Cabiedes & Guillén, 2001; Light, 2001). Literature on health care management has widely investigated the impact of hospital competition on cost, access, and quality of services (e.g., Dranove, Shanley, & Simon, 1992; Dranove & White, 1994) as well as a number of benefits that interhospital collaboration might produce (Bazzoli, Chan, Shortell, & D'Aunno, 2000; Chukmaitov et al, 2009). Despite this extensive prior research, a number of limitations are observed. First, few empirical studies analyzed how interhospital competition influences hospital performance in countries that practice universalistic health care. Most studies focused on the health care system of the
The effects of strategic hospital alliances on hospital efficiency
The Service Industries Journal, 2013
This study examines the effects of strategic alliances on the efficiency of hospitals controlled by the Department of Health in Taiwan. Overall, it is found that the efficiency of the hospitals improved after they formed strategic hospital alliances (SHAs). The results also indicate that smaller hospitals located in competitive areas are more efficient, as exemplified by shorter patient stays, higher occupancy rates, and lower mortality rates. Based on Taiwan's experience, it is inferred that SHAs do improve the performance of the participating hospitals. It is hoped that the results of this study will encourage health policy officials and healthcare organizations in other countries to consider implementing similar strategies for their hospitals.
The RAND Journal of Economics, 2003
Our objective is to determine the effect of ownership type (for-profit, not-for-profit, government) on firm conduct in hospital markets. Secondary objectives include estimating hospital demand systems useful for market definition and merger simulation. To this end, we estimate a structural model of demand and pricing in the short term hospital industry in California, and then use the estimates to simulate the effect of a merger. Demand is modeled at the level of individual consumers using discrete choice techniques and micro data on individuals. Price in the demand equation is endogenous, and we use recently developed instrumental variables techniques to correct for this. We allow the behavior of for-profit and not-for-profit firms to differ, modeling these differences structurally following the relevant theory literature. We find that California hospitals in 1995 faced a downward-sloping demand for their products, with an average price elasticity of demand of -5.67.
1998
MARKET AND ORGANI ZATIONAL FACTORS ASSOCIATED WITH TEACHING. HOSPITAL PARTICIPATION IN STRATEGIC HOSPITAL ALLIANCES James D . Bramble , Ph . D . Virginia Commonwealth University, 1 9 9 8 Maj or Director : Roice D . Luke , Ph . D . Thi s research invest igated market and organi zat ional factors that influence the strategic dec isions of teaching hospi tals to part ic ipate in strategic hospital all iances ( SHAs ) . I t described the characteri stics of both teaching hospitals and the health care envi ronment in which they operate . This research also examines the assoc iat ion of these factors with the strategic position of teaching hospitals in terms of their dominance in the market or within their organi zat ions . The theoretical model used two concepts from ins t itut ional theorycoerc ive and normative pressures . I t was argued that coercive pressures in the market faci l i tated the dec i s ion to part ic ipate in SHAs and gain market and Organi zat ional dominant pos it ion...
Universal Journal of Management
A mixed methodology study of inter-hospital alliances in Germany, Canada and Switzerland was conducted to describe the goals and performance of inter-hospital alliances and to identify which alliance features best predict performance. Alliance features and performance were studied through a series of 59 interviews conducted within 12 hospitals involved in such partnerships. Respondents included administrative, medical and nursing staff. A standardized interview schedule was used to document the perceived as well as factual attributes and performance of the inter-hospital alliances they were included in. Results indicated that financial goals were not rated as being as important as improvements regarding service access and quality. A path analysis generated a seven component model of features linked to the perceived success of alliances: environmental, human and structural components of the alliances had an indirect relationship with overall success which was mediated through adaptability. Inter-hospital alliances have similar goals with regards to service quality and access, .notwithstanding the country, the type of health care system and the respondents.
Health Care Management Review, 2008
Background: Hospital purchasing alliances are voluntary consortia of hospitals that aggregate their contractual purchases of supplies from manufacturers. Purchasing groups thus represent pooling alliances rather than trading alliances (e.g., joint ventures). Pooling alliances have been discussed in the health care management literature for years but have never received much empirical investigation. They represent a potentially important source of economies of scale for hospitals. Purposes: This study represents the first national survey of hospital purchasing alliances. The survey analyzes alliance utilization, services, and performance from the perspective of the hospital executive in charge of materials management. This study extends research on pooling alliances, develops national benchmark statistics, and answers important issues raised recently about pooling alliances. Methodology/Approach: The investigators surveyed hospital members in the seven largest purchasing alliances (that account for 93% of all hospital purchases) and individual members of the Association of Healthcare Resource & Materials Management. The concatenated database yielded an approximate population of all hospital materials managers numbering 5,014. Findings: Hospital purchasing group alliances succeed in reducing health care costs by lowering product prices, particularly for commodity and pharmaceutical items. Alliances also reduce transaction costs through commonly negotiated contracts and increase hospital revenues via rebates and dividends. Thus, alliances may achieve purchasing economies of scale. Hospitals report additional value as evidenced by their long tenure and the large share of purchases routed through the alliances. Alliances appear to be less successful, however, in providing other services of importance and value to hospitals and in mediating the purchase of expensive physician preference items. There is little evidence that alliances exclude new innovative firms from the marketplace or restrict hospital access to desired products. Practice Implications: Pooling alliances appear successful in purchasing commodity and pharmaceutical products. Pooling alliances face the same issues as trading alliances in their efforts to work with physicians and the supply items they prefer.