The geographical restructuring of urban hospitals: Spatial dimensions of corporate strategy

Abstract

In response to demographic, economic and regulatory change, hospitals in the United States are increasingly adopting the diverse corporate strategies of private firms. The ability of a hospital to adopt these strategies and survive depends greatly on the nature of the hospital institution and the economic potential of its geographical market area. A typology is developed relating institutional strategies such as merger, expansion, diversification and closure to the size of the hospital and the socio-economic status of the neighborhood in which it is located. Data describing the geographical distribution, since 1967, of hospital closures, mergers and facility expansions in New York City are used to examine institutional strategies in relation to the typology. Closure has been most common among small hospitals located in low SES neighborhoods, whereas facility expansion has been most prevalent among large hospitals located in high status neighborhoods. The result is an increased concentration of patient care in large tertiary hospitals. Mergers have provided a means of not only increasing institutional size and rationalizing services, but also of establishing footholds in ‘profitable’ market areas. The final section considers the role of the state in hospital restructuring.