Vice President, Quality and Safety, Our Lady of the Lake Regional Medical Center.

Dissertation Title

Organizational Characteristics and Environmental Factors Associated With Hospitals Identified as Consolidation Targets

Dissertation Abstract

In today’s dynamic healthcare landscape, hospitals face uncertainty and pressure from changing reimbursement schemas, intense government regulation, technological advances, and consumer demand and workforce scarcity. These increased pressures have led to an acceleration of consolidation activities as hospitals position themselves to cope with a dynamic and complex external environment by maximizing resources, creating economies of scale and expanding access to care.

Despite increased hospital consolidation activity, little is known about what makes a hospital attractive as a consolidation target to an acquiring hospital, particularly post-ACA. The purpose of this study was to evaluate the organizational characteristics and environmental factors associated with hospitals identified as consolidation targets through the lens of Resource Dependence Theory (RDT) and Resource Based Theory (RBT).

A multivariate binary logistic regression model was used to analyze the differences between hospitals selected as consolidation targets and hospitals that were not targets. The findings in this study were somewhat mixed with weak support found for one hypothesis (socio-demographic factors), partial support found for two of the six hypotheses (structural characteristics and competitive factors), and no support found for three of the hypotheses (operational performance, financial performance and physical factors).

The results suggest that while operational performance is important to hospital success, when selecting a hospital target, traditionally viewed organizational characteristics (i.e. ownership status) and market factors (i.e. HHI) tend to continue as motivators for the selection of target hospitals. As the healthcare industry continues to shift towards a value-driven approach to reimbursement, operational performance may play a more important role in target hospital selection over time. Additionally, recognizing there is interplay between tangible and non-tangible characteristics that drive the target hospital selection process, future research may benefit from a mixed methods approach where acquiring hospital management is interviewed to better understand the motivations behind the selection of a particular target hospital.