Hospital service focus vs. breadth: Impact on hospital outcomes and the moderating role of hospital size

TL;DR

This study explores how hospital specialization and service variety affect performance, finding that specialization improves patient satisfaction and lowers costs, while service variety has mixed effects.

Contribution

The study introduces a combined focus and breadth strategy for hospitals and examines how hospital size moderates these effects.

Findings

Hospital focus improves patient satisfaction and lowers costs, but the effect on satisfaction is weaker in large hospitals.

Service breadth decreases patient satisfaction but reduces costs per discharge, with the negative impact on satisfaction lessened in large hospitals.

Abstract

There is an ever-increasing need for hospitals in the United States to improve upon their performance. In particular, it is necessary for hospitals to decrease their costs while improving patient satisfaction. Intuitively, hospitals adopt different strategies to accomplish those goals. Researchers have examined how hospitals that use a focus strategy (i.e., specialization) seek ways to improve performance by increased efficiencies and coordination among resources. Other studies examine the impact of increased hospital services (i.e. breadth) as a means to benefit from economies of scope. This study expands upon those literatures by submitting that focus and breadth do not have to be opposing strategies but can be implemented simultaneously; i.e. breadth of services with specialized focus on a few. The current study also examines how hospital size moderates the relationship between those two hospital strategies and performance. Specifically, this study applies an organizational information processing theory lens to predict that hospital focus and service breadth will impact patient satisfaction and cost per discharge, and how those relationships will be moderated by hospital size. Using a pooled cross-section, a regression analysis shows that hospital focus generally improves patient satisfaction while lowering cost; however, the impact on patient satisfaction is diminished for large hospitals. Additionally, service breadth tends to decrease patient satisfaction and lowers cost per discharge; however, the decrease in patient satisfaction is partially mitigated for large hospitals.

Figures