The Moderating Effect of Environmental Instability on the Hospital Strategy-Financial Performance Relationship

Authors

  • Akbar Ghiasi, PhD The University of Incarnate Word, H-E-B School of Business and Administration, Health Administration Department
  • Robert Weech-Maldonado, PhD The University of Alabama at Birmingham, School of Health Professions, Department of Health Services Administration
  • Larry Hearld, PhD The University of Alabama at Birmingham, School of Health Professions, Department of Health Services Administration
  • Ferhat Zengul, PhD The University of Alabama at Birmingham, School of Health Professions, Department of Health Services Administration
  • Maziar Rsulnia, PhD Pack Health LLC, Birmingham, AL
  • Anthony Hood, PhD Collat School of Business, The University of Alabama at Birmingham, Department of Management, Information Systems & Quantitative Methods, Birmingham, Alabama
  • Neeraj Puro, PhD Florida Atlantic University, College of Business, Department of Health Administration

Abstract

The health care environment experiences rapid changes. It is essential to investigate how these changes can affect the viability of competitive strategies of hospitals. This study aimed to examine whether Porter's typology of cost leadership, differentiation, and hybrid are equally viable in different environments of the hospital industry.  

This study used longitudinal data from 2006 to 2016 of the US urban general acute care hospitals. Three secondary datasets, including the American Hospital Association (AHA) Annual Survey, Medicare cost reports (CMS), and Area Health Resource File (AHRF), were used. Multiple regression with an interaction term was used to test the moderating effect of environmental factors on strategy-financial performance relationship. The results showed that the cost leader hospitals outperform hybrid ones in an unstable environment compared to a stable environment. There was no performance difference between the cost-leaders versus differentiators and hybrids versus differentiators in a stable and unstable environment. Environmental factors seem to moderate the relationship between hospital strategic group membership and financial performance.

Author Biographies

  • Akbar Ghiasi, PhD, The University of Incarnate Word, H-E-B School of Business and Administration, Health Administration Department

    The University of Incarnate Word, H-E-B School of Business and Administration, Health Administration Department

  • Robert Weech-Maldonado, PhD, The University of Alabama at Birmingham, School of Health Professions, Department of Health Services Administration
    The University of Alabama at Birmingham, School of Health Professions, Department of Health Services Administration
  • Larry Hearld, PhD, The University of Alabama at Birmingham, School of Health Professions, Department of Health Services Administration
    The University of Alabama at Birmingham, School of Health Professions, Department of Health Services Administration
  • Ferhat Zengul, PhD, The University of Alabama at Birmingham, School of Health Professions, Department of Health Services Administration
    The University of Alabama at Birmingham, School of Health Professions, Department of Health Services Administration
  • Maziar Rsulnia, PhD, Pack Health LLC, Birmingham, AL
    Pack Health LLC, Birmingham, AL
  • Anthony Hood, PhD, Collat School of Business, The University of Alabama at Birmingham, Department of Management, Information Systems & Quantitative Methods, Birmingham, Alabama

    Collat School of Business, The University of Alabama at Birmingham, Department of Management, Information Systems & Quantitative Methods, Birmingham, Alabama

  • Neeraj Puro, PhD, Florida Atlantic University, College of Business, Department of Health Administration
    Florida Atlantic University, College of Business, Department of Health Administration

References

Please see the article for references.

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Published

2019-12-30

Issue

Fall 2019 and Winter 2020

Section

Articles