Hospital service scope expansion and market share improvement: a dynamic modeling and multivariate approach.

Abstract

In a national trend, large, acute-care hospitals located in urban areas of the nation were continuously broadening their service scope, adding services at the rate of one each year, from 1982 to 1987. This study proposes that the underlying rationale of hospital service-scope expansion is status-gap minimization. This perspective was quantitatively interpreted and tested by a dynamic modeling analysis. Findings support status-gap minimization as the rationale for service-scope expansion. Using multivariate regression and dynamic modeling analysis, the study demonstrates that the cross-sectional relationship between two steady states--the relationship between service scope and market share--is positive and statistically significant. However, the market share change is not related to hospital service scope. The interpretation offered is that hospitals expand the scope of services looking not so much to increase their market share benefit in the short run as to raise their organizational status. In the long run, higher organizational status such as broader service scope then benefits market share.