DO GENERAL, COMMUNITY HOSPITALS COMPETE BY SPECIALIZING IN HIGH VOLUME, HIGH REVENUE-GENERATING SERVICE LINES?

Abstract

DO GENERAL, COMMUNITY HOSPITALS COMPETE BY SPECIALIZING IN HIGH VOLUME, HIGH REVENUE-GENERATING SERVICE LINES? By Nancy J. Muller, Ph.D. A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy at Virginia Commonwealth University Virginia Commonwealth University, 2010 Director: Roice D. Luke, Ph.D. Professor, Department of Health Administration Among the challenges confronting U.S. healthcare are improved quality and safety, greater efficiencies, and increased rivalry among competitors. Against the backdrop of technological advancements, shifts in market dynamics, and organizational restructuring, hospitals are likely to adopt clinical service line specialization as a competitive strategy. The purpose of the research was to determine if general, community hospitals show evidence of specializing within the nation‘s six highest volume, highest revenuegenerating service lines and to identify market and organizational factors correlating with such a strategy. The study used a retrospective, non-experimental, correlational design to analyze secondary 2003-2007 data of hospitals throughout Florida, Virginia, and Nevada. Simultaneous regression and subsequently backward deletion, stepwise regression modeling was applied to analyze cross-sectional relationships between descriptive variables of markets and hospital organizations, as well as state as a covariate, and five selected measures of specialization. Six leading service lines were selected for study: cardiac surgery, cardiology, invasive cardiology, orthopedics, labor and delivery, and pulmonary services. Results indeed show evidence of specialization among the top six service lines. There are, however, different characteristics supporting such evidence in each service line and thus variation from one line to the next. While this research is considered exploratory in nature, findings suggest that the general, community hospital, traditionally a full-service provider of a wide range of costly and complex services, may be undergoing transformations including specialization. This study demonstrates the usefulness of examining service lines separately when assessing specialization. Complex differences among states may exist. There was no evidence from the sub-analysis of hospitals of specialization due to cluster effect. At least six policy issues surface to warrant the need for further investigation: (a) source of hospital admission and drivers of physician referral patterns; (b) potential usefulness of case studies in studying service line strategies; (c) localized analysis of variations by state; (d) usefulness of studying specialization at the service line level; (e) loss of choice in access for labor and delivery as a service line; and (f) further analysis of hospital size as an important variable in its influence on strategic choices by hospitals.