Jonathan R. Clark

Broadening Focus: Spillovers, Complementarities, and Specialization in the Hospital Industry

The long-standing argument that focused operations outperform others stands in contrast to claims about the benefits of broader operational scope. The performance benefits of focus are typically attributed to reduced complexity, lower uncertainty, and the development of specialized expertise; the benefits of greater breadth are linked to the economies of scope achieved by sharing common resources, such as advertising or production capacity, across activities. Within the literature on corporate strategy, this tension between focus and breadth is reconciled by the concept of related diversification (i.e., a firm with multiple operating units, each specializing in distinct but related activities). We consider whether there are similar benefits to related diversification within an operating unit and examine the mechanism that generates these benefits. Using the empirical context of cardiovascular care within hospitals, we first examine the relationship between a hospitals level of specialization in cardiovascular care and the quality of its clinical performance on cardiovascular patients. We find that, on average, focus has a positive effect on quality performance. We then distinguish between positive spillovers and complementarities to examine (1) the extent to which a hospitals specialization in areas related to cardiovascular care directly impacts performance on cardiovascular patients (positive spillovers) and (2) whether the marginal benefit of a hospitals focus in cardiovascular care depends on the degree to which the hospital “cospecializes” in related areas (complementarities). In our setting, we find evidence of such complementarities in specialization. This paper was accepted by Christian Terwiesch, operations management.

Learning from Customers: Individual and Organizational Effects in Outsourced Radiological Services

The ongoing fragmentation of work has resulted in a narrowing of tasks into smaller pieces that can be sent outside the organization and, in many instances, around the world. This trend is shifting the boundaries of organizations and leading to increased outsourcing. Though the consolidation of volume may lead to productivity improvement, little is known about how this shift toward outsourcing influences learning by providers of outsourced services. When producing output, the content of the knowledge gained can vary from one unit to the next. One dimension along which output can vary—a dimension with particular relevance in outsourcing—is the end customer for whom it is produced. The performance benefits of such customer experience remain largely unexamined. We explore this dimension of volume-based learning in a setting where doctors at an outsourcing firm complete radiological reads for hospital customers. We examine more than 2.7 million cases read by 97 radiologists for 1,431 customers and find evidence supporting the benefits of customer-specific experience accumulated by individual radiologists. Additionally, we find that variety in an individual’s customer experience may increase the rate of individual learning from customer-specific experience for a focal task. Finally, we find that the level of experience with a customer for the entire outsourcing firm also yields learning and that the degree of customer depth moderates the impact of customer-specific experience at the individual level. We discuss the implications of our results for the study of learning as well as for providers and consumers of outsourced services.

The internal processes and behavioral dynamics of hospital boards: an exploration of differences between high- and low-performing hospitals.

BACKGROUND Nonprofit hospital boards are under increasing pressure to improve financial, clinical, and charitable and community benefit performance. Most research on board effectiveness focuses on variables measuring board structure and attributes associated with competing ideal models of board roles. However, the results do not provide clear evidence that one role is superior to another and suggest that in practice boards pursue hybrid roles. Board dynamics and processes have received less attention from researchers, but emerging theoretical frameworks highlight them as key to effective corporate governance. PURPOSE We explored differences in board processes and behavioral dynamics between financially high- and low-performing hospitals, with the goal of developing a better understanding of the best board practices in nonprofit hospitals. METHODOLOGY/APPROACH A comparative case study approach allowed for in-depth, qualitative assessments of how the internal workings of boards differ between low- and high-performing facilities. FINDINGS Boards of hospitals with strong financial performance exhibited behavioral dynamics and internal processes that differed in important ways from those of hospitals with poor financial performance. PRACTICE IMPLICATIONS Boards need to actively attend to key processes and foster positive group dynamics in decision making to be more effective in governing hospitals.

Strained Local And State Government Finances Among Current Realities That Threaten Public Hospitals’ Profitability

This study demonstrates that some safety-net hospitals--those that provide a large share of the care to low-income, uninsured, and Medicaid populations--survived and even thrived before the recent recession. We analyzed the financial performance and governance of 150 hospitals during 2003-07. We found, counterintuitively, that those directly governed by elected officials and in highly competitive markets were more profitable than other safety-net hospitals. They were financially healthy primarily because they obtained subsidies from state and local governments, such as property tax transfers or supplemental Medicaid payments, including disproportionate share payments. However, safety-net hospitals now face a new market reality. The economic downturn, slow recovery, and politics of deficit reduction have eroded the ability of local governments to support the safety net. Many safety-net hospitals have not focused on effective management, cost control, quality improvement, or services that attract insured patients. As a result, and coupled with new uncertainties regarding Medicaid expansion stemming from the recent Supreme Court decision on the Affordable Care Act, many are likely to face increasing financial and competitive pressures that may threaten their survival.

Comorbidity and the limitations of volume and focus as organizing principles.

Some scholars advocate for health care organizations designed around the principles of volume and focus, while others suggest that the complexity of patient care renders this approach to organizing care inefficient (and ineffective). This article attempts to reconcile these views, drawing on the idea of organizational capabilities as knowledge integration to motivate an empirical examination of the extent to which the efficiency benefits of hospital volume and focus depend on the degree of patient comorbidity. In doing so, the article has two aims: (a) to shed light on both the benefits and limitations of volume and focus as organizing principles and (b) to contribute to our understanding of the implications of comorbidity for the organization of health care delivery. Using data on U.S. hospitals, the author finds evidence that the efficiency benefits of volume and focus are diminishing in the level of patient comorbidity.

Organizing for Performance: What does the Empirical Literature Reveal about the Influence of Organizational Factors on Hospital Financial Performance?

This chapter reviews and integrates the empirical literature on the influence of organizational factors on hospital financial performance. Five categories of organizational characteristics that research has addressed are identified and examined as part of the review: ownership, governance, integration, management strategy, and quality. With some exceptions, our review reveals a general lack of consistency and conclusiveness across studies in each area. Exceptions were found in the areas of governance (e.g., physician participation and board processes) and integration (e.g., horizontal system centralization). Despite the lack of conclusive findings across studies, our review suggests substantial opportunities for future work, including opportunities for qualitative and exploratory work. Additional implications for theory and management are discussed.

The Effects of Hospital Characteristics on Delays in Breast Cancer Diagnosis in Appalachian Communities: A Population-Based Study.

PURPOSE Despite being generally accepted that delays in diagnosing breast cancer are of prognostic and psychological concern, the influence of hospital characteristics on such delays remains poorly understood, especially in rural and underserved areas. However, hospital characteristics have been tied to greater efficiency and warrant further investigation as they may have implications for breast cancer care in these areas. METHODS Study data were derived from the Kentucky, North Carolina, Ohio, and Pennsylvania state central cancer registries (2006-2008). We then linked Medicare enrollment files and claims data (2005-2009), the Area Resource File (2006-2008), and the American Hospital Association Annual Survey of Hospitals (2007) to create an integrated data set. Hierarchical linear modeling was used to regress the natural log of breast cancer diagnosis delay on a number of hospital-level, demographic, and clinical characteristics. FINDINGS The baseline study sample consisted of 4,547 breast cancer patients enrolled in Medicare that lived in Appalachian counties at the time of diagnosis. We found that hospitals with for-profit ownership (P < .01) had shorter diagnosis delays than their counterparts. Estimates for comprehensive oncology services, system membership and size were not statistically significant at conventional levels. CONCLUSIONS Some structural characteristics of hospitals (eg, for-profit ownership) in the Appalachian region are associated with having shorter delays in diagnosing breast cancer. Researchers and practitioners must go beyond examining patient-level demographic and tumor characteristics to better understand the drivers of timely cancer diagnosis, especially in rural and underserved areas.

Pressure and performance: buffering capacity and the cyclical impact of accreditation inspections on risk-adjusted mortality.

EXECUTIVE SUMMARY The Joint Commissions move toward unannounced site visits in 2006 clearly underscores its goal to ensure more consistent compliance with its standards among accredited hospitals between site visits. As Joint Commission standards are intended to inform a host of practices associated with preventing adverse patient outcomes, and accreditation is intended to signal a satisfactory level of adoption of these practices, there should be no significant fluctuation in patient outcomes if hospital compliance remains sufficiently consistent before, during, and after an accreditation site visit, ceteris paribus. However, prior research on the implementation of practices in healthcare organizations (especially those practices related to quality improvement) points to the likelihood of inconsistency in the use of such practices, even after they have been “adopted.” This inconsistency may emerge from shifts in manager attention patterns that may be driven by (1) resource constraints that preclude managers from dedicating consistent and perpetual attention to any given program or initiative and (2) accreditation pressures that are predictably cyclical even when site visits are, technically, unannounced. If these shifts in organizational attention patterns are sufficiently salient, we might expect to see patient outcomes ebb and flow with accreditation site visits. In this study, we explore this possibility by examining monthly patterns in risk‐adjusted mortality rates around accreditation site visits. As shifts in organizational attention may be linked to resource constraints, we also explore the role of slack resources in shielding healthcare organizations from the ebbs and flows of external pressures, a capability we term buffering capacity.

Goal Relatedness and Learning: Evidence from Hospitals

Organizations vary significantly in the rates at which they learn from experience (i.e., learning by doing). While prior work has explored how different categories of prior experience affect learning outcomes, limited attention has been paid to the role played by the organizational context. We focus on one important aspect of an organization’s context—goals—and examine how the degree of goal relatedness across an organization’s diverse set of activities affects the rate at which it learns from experience. In doing so, we argue that even where otherwise diverse activities are knowledge related, if they are not goal related, learning by doing is likely to suffer. Using data from the hospital industry our findings suggest that goal relatedness is an important consideration when it comes to learning. Although goal-related teaching aids learning by doing in clinical care, we find that strong academic affiliations (and the research-oriented tasks and goals they bring with them) may detract from it.

Associations between patients’ perceptions of care integration and organizational features of medical groups in the United States

Background : Prior studies suggest structurally integrating healthcare organizations may not yield care that is integrated for patients. This research has been limited by lack of comprehensive measures of integrated patient care. Our study establishes an evidence base of care integration from the patient’s perspective among a national sample in the United States using a reliable and valid survey. We explore the relationship between patient-perceived integration and elements of organizational integration among medical groups. Methods : We refined and administered the Patient Perceptions of Integrated Care (PPIC) survey. It was theoretically derived, refined through pilot-testing, cognitive testing, and advisory panel input, and tested for reliability and validity. Psychometric analysis supported six dimensions of patient-perceived integration: (1) Provider Knowledge of the Patient, (2) Staff Knowledge about the Patient’s Medical History, (3) Specialist Knowledge about the Patient’s Medical History, (4) Support for Self-directed Care, (5) Support for Medication and Home Health Management, and (6) Test Result Communication. We also created an index of Integration following Hospitalization. This structure achieved good model fit and internal, discriminant, and construct validity. We administered the survey across a stratified random sample of 12,364 Medicare beneficiaries with at least two chronic conditions who had received care from a sample of 150 medical groups from the National Study of Physician Organizations (NSPO3). The final sample included 3,067 Medicare beneficiaries (26% response after 412 exclusions). We extracted data on the medical groups from the NSPO3 for five dichotomized dimensions: large/small size, physician/hospital ownership, primary care/multi-specialty, an information technology sophistication index related to electronic medical record and e-prescribing use (high/low), and an index regarding key care management process intensity (high/low). We conducted analyses using ordered logistic regression models with robust standard errors and weighting by response probability, adjusting for patient demographic, health and psychological characteristics. Results : Among the seven dimensions of integration, Test Result Communication exhibited the most consistently positive responses; each of its three items had over 70% of respondents reporting the most favorable option. Support for Self-directed Care and Support for Medication and Home Health Management exhibited consistently the least favorable responses. For Support for Self-directed Care, none of its five items had more than half of responses in the most favorable option, and four of the five items had over 20% of responses in the least favorable option. For Support for Medication and Home Health Management, only one of its four items revealed a majority in the most favorable option (at 55%). We did not find evidence of strong, consistent relationships between medical group characteristics and integrated care from the patients perspective. Being a patient in a multispecialty group was associated with higher patient-perceived integration in all domains except for test result communication, but only the relationship with staff knowledge was statistically significant (odds ratio = 1.70; p Discussion : According to respondents in this national survey, many opportunities exist to better integrate care for patients with multiple chronic conditions. Notably, the two dimensions exhibiting the lowest levels of integration both related to how well providers support patients in participating in their own care. Particularly for patients with complex illnesses, who require care at home and often face barriers to receiving it, this gap signals an important opportunity for investment and improvement. Our results indicate that opportunities to better integrate care exist for all organizations. No single organizational feature was associated with stronger integration across all dimensions. Conclusion : This research suggests that producing truly integrated care may be more complex than can be captured by simple measures of organizational structure, function and process. Considering patient-perceived assessments of care integration is critical to understanding delivery system transformation.