Partner, Press Ganey

Dissertation Title

Examining the relationship between surgical profiles and financial performance of hospitals

Dissertation Abstract

Hospitals operate in turbulent and complex environments with limited resources. Consequently, administrators need to understand how to best use resources and improve a hospital’s positioning in a market.

Surgical services is a key operational activity for hospitals, thus, a better understanding of how these services are organized by hospitals likely has important implications for a hospital’s performance and potentially survival. Given the potential importance of surgical services to hospitals, the purpose of this study was three-fold. First, the study identified different surgical profiles of hospitals based on the type and volume of surgical services provided by hospitals. Second, the study assessed whether these surgical profiles were associated with financial performance - defined as net patient revenue, total operating expense, and operating margin. Third, the study examined the moderating effects of local market characteristics on the relationship between surgical profiles and financial performance. This study found 6 surgical profiles of hospitals defined as: Specialist hospitals; No Focus hospitals; Cardiovascular Focus hospitals; Low Surgical Volume hospitals; High Surgical Volume hospitals; and Generalist hospitals. Hospitals differed in the types and volumes of procedures in predictable ways, yet these differences did not necessarily translate into differences in a hospital’s bottom line financial performance. Surgical services are critical to performance and administrators need to understand the effects of adopting different surgical profiles and whether those profiles are associated with better or worst financial performance. From a practitioner perspective, the findings of the study point to new ways of thinking about managing the portfolio of surgical services offered at the organization. From a policy standpoint the findings of this study suggest uniform approaches to treating hospitals with respect to surgical profiles and payment systems may be misguided.