Abstract
Despite their prevalence and power in markets throughout the United States, local multihospital systems (LMSs)—also referred to as hospital-based “clusters”—remain an understudied organizational form, with studies instead primarily focusing either upon individual hospitals or viewing hospital systems collectively without distinguishing the local “sub-systems” that comprise larger regional or national hospital chains. To better understand these organizational forms, we develop a taxonomy specifically devoted to LMSs, applying taxonomic analysis methods to a sample of LMSs in six U.S. states while accounting for LMSs’ geographic arrangements and non-hospital-based service locations. Our analysis identifies five distinct LMS categories, with forms clearly distinguished according to their varying degrees of differentiation and integration. The study’s results accentuate the importance of accounting for hospital systems’ activities and arrangements in local markets—including their non-hospital-based sites—and highlight differences in systems’ achievement of integration and coordination across services and locations, providing considerations in light of U.S. health system reform as well as international patterns of regional system formation.
Similar content being viewed by others
Notes
We recognize the potential for confusion between Porter’s use of the term “configuration” and others’ approaches to the term “configuration,” including the shape of organizational role structures [19] as well as in relation to configuration or archetype theory [e.g., 20, 21]. For this reason, we use the term “spatial differentiation” to refer to the concepts described in Porter’s definition of configuration.
Figure 1 is adapted from similar depictions of the continuum of care by Conrad and colleagues [23: 54, 29: 493], Mick and Conrad [26: 351], and Clement [28: 103]. These depictions recognize different stages along the continuum of care, represented in Fig. 1 as “Inputs to Services,” “Direct Service Outputs,” “Episodic Service Outputs,” and “Chronic Service Outputs.” Within each of these stages, different categories of service or product settings are identified, as shown in Fig. 1. Examples of “Education of Labor” sites operated by LMSs include nursing schools, therapy schools, and management schools, and “Medical Equipment” sites include durable medical equipment vendor locations. “Ancillary Services” settings include diagnostic laboratories, diagnostic imaging centers, and pharmacies, while “Wellness & Health Promotion” sites include fitness and wellness centers, diabetes clinics, and pregnancy testing and education facilities. “Primary Care” locations refer to primary care physician practices and clinics, and “Specialty Physician Care” locations refer to specialty physician practices and clinics. Examples of “Acute Outpatient Care” settings include ambulatory surgery centers, sleep clinics, and wound care clinics. “Non-Physician Provider Care” locations refer to sites providing care primarily through the services of non-physician providers, such as retail clinics, outpatient rehabilitation clinics, behavioral health clinics, and occupational health clinics. “Urgent & Emergency Care” sites include freestanding emergency centers and urgent care clinics. “General Hospital Inpatient Care” refers to services provided within general, acute care hospitals, and “Specialty Hospital Inpatient Care” refers to services provided within specialty hospitals such as heart hospitals and surgical hospitals. Examples of “Short-term Inpatient Rehab & Nursing” settings include inpatient rehabilitation facilities and behavioral health hospitals, while “Long-term Inpatient Rehab & Nursing” sites include long-term acute care hospitals and skilled nursing facilities. “Outpatient Rehab & Nursing” refers to LMS services such as home health and comprehensive outpatient rehabilitation facilities, and “Extended Care & Living” locations are settings such as long-term care facilities, assisted living facilities, continuing care retirement communities, adult day care centers, and hospice homes. “Multi-Service Outpatient Centers” may include varied combinations of ancillary, wellness & health promotion, primary care, acute & specialty outpatient care, non-physician provider care, or urgent and emergency care services.
Additional information regarding the study’s data sources, including substitution of AHA 2010 Annual Survey data and instances in which LMSs lacked observations for individual facilities, is available upon request.
A detailed listing of each service variable and its assigned stage, as well as a listing of corresponding service location types identified in primary data collection, is available upon request.
A comparison of agreement rates between the final solution and alternative cluster analysis results is available upon request.
Separate discriminant analyses were also performed for cross-validation purposes, using a within-groups covariance matrix, equal prior probabilities, and split-sample validation methods. Each of the classification rates obtained from these multiple discriminant analyses greatly exceeded the recommended classification accuracy, indicating that the final cluster groupings are internally valid and reliable. A comparison of these results is available upon request.
References
Luke RD, Ozcan YA (2013) Health care strategic decision making. In: Gass SI, Fu MC (eds) Encyclopedia of operations research and management science, 3rd edn. Springer, New York, pp 684–693
Luke RD (2010) System transformation: USA and international strategies in healthcare organisation and policy. Int J Public Pol 5:190–203
Shay PD, Luke RD, Mick SSF (2014) Differentiated, integrated, and overlooked: hospital-based clusters. In: Mick SSF, Shay PD (eds) Advances in health care organization theory, 2nd edn. Jossey-Bass, San Francisco, pp 179–203
Cuellar AE, Gertler PJ (2003) Trends in hospital consolidation: the formation of local systems. Health Aff 22(6):77–87
Luke RD, Luke T, Muller N (2011) Urban hospital ‘clusters’ do shift high-risk procedures to key facilities, but more could be done. Health Aff 30:1743–1750
Sikka V, Luke RD, Ozcan YA (2009) The efficiency of hospital-based clusters: evaluating system performance using data envelopment analysis. Health Care Manag Rev 34:251–261
Trinh HQ, Begun JW, Luke RD (2014) Service duplication within urban hospital clusters. Health Care Manag Rev 39:41–49
Shortell SM, Bazzoli GJ, Dubbs NL, Kralovec P (2000) Classifying health networks and systems: managerial and policy implications. Health Care Manag Rev 25(4):9–17
Bazzoli GJ, Shortell SM, Dubbs N, Chan C, Kralovec P (1999) A taxonomy of health networks and systems: Bringing order out of chaos. Health Serv Res 33:1683–1717
Lewis BL, Alexander J (1986) A taxonomic analysis of multihospital systems. Health Serv Res 21:29–56
Luke RD (1991) Spatial competition and cooperation in local hospital markets. Med Care Rev 48:207–237
Carrier ER, Dowling M, Berenson RA (2012) Hospitals’ geographic expansion in quest of well-insured patients: will the outcome be better care, more cost, or both? Health Aff 31:827–835
Aldenderfer JA, Blashfield RK (1984) Cluster analysis. Sage University Paper Series on Quantiative Applications in the Social Sciences, 07–044. Sage Publications, Beverly Hills, CA
Lawrence PR, Lorsch JW (1967) Organization and environment: managing differentiation and integration. Harvard University Press, Boston
Porter ME (1986) Competition in global industries: a conceptual framework. In: Porter ME (ed) Competition in global industries. Harvard Business School Press, Boston, pp 15–60
Mileti DS, Gillespie DF, Haas JE (1977) Size and structure in complex organizations. Soc Forces 56:208–217
Goldman P (1973) Size and differentiation in organizations: a test of theory. Pac Sociol Rev 16:89–105
Tay A (2003) Assessing competition in hospital care markets: the importance of accounting for quality differentiation. RAND J Econ 34:786–814
Pugh DS (1973) The measurement of organization structures: does context determine form? Organ Dyn 1(4):19–34
Greenwood R (2008) Configuration theory. In: Clegg SR, Bailey JR (eds) International encyclopedia of organization studies. Sage Publications, Thousand Oaks, pp 248–252
Miller D (1986) Configurations of strategy and structure: towards a synthesis. Strateg Manag J 7:233–249
Banner DK, Gagne TE (1995) Designing effective organizations: traditional and transformational views. Sage Publications, Thousand Oaks
Conrad DA, Mick SS, Watts-Madden C, Hoare G (1988) Vertical structures and control in health care markets: a conceptual framework and empirical review. Med Care Rev 45:49–100
Snail TS, Robinson JC (1998) Organizational diversification in the American hospital. Annu Rev Public Health 19:417–453
Gillies RR, Shortell SM, Anderson DA, Mitchell JB, Morgan KL (1993) Conceptualizing and measuring integration: findings from the health systems integration study. Hosp Health Serv Adm 38:467–489
Mick SS, Conrad DA (1988) The decision to integrate vertically in health care organizations. Hosp Health Serv Adm 33:345–360
Morrison A, Roth K (1993) Relating Porter’s configuration/coordination framework to competitive strategy and structural mechanisms: analysis and implications. J Manag 19:797–818
Clement JP (1988) Vertical integration and diversification of acute care hospitals: conceptual definitions. Hosp Health Serv Adm 33:99–110
Conrad DA (1993) Coordinating patient care services in regional health systems: the challenge of clinical integration. Hosp Health Serv Adm 38:491–508
Jones SG, Ashby AJ, Momin SR, Naidoo A (2010) Spatial implications associated with using Euclidean distance measurements and geographic centroid imputation in health care research. Health Serv Res 45:316–327
Luke RD (1992) Local hospital systems: forerunners of regional systems? Front Health Serv Manag 9(2):3–51
Dranove D, Shanley M, Simon C (1992) Is hospital competition wasteful? RAND J Econ 23:247–262
Newhouse RP, Mills ME, Johantgen M, Pronovost PJ (2003) Is there a relationship between service integration and differentiation and patient outcomes? Int J Integr Care 3(10):1–13
Hubert L, Arabie P (1985) Comparing partitions. J Classif 2:193–218
Hair JF, Black WC, Babin BJ, Anderson RE, Tatham RL (2006) Multivariate data analysis, 6th edn. Pearson Prentice Hall, Upper Saddle River
Punj G, Stewart DW (1983) Cluster analysis in marketing research: review and suggestions for application. J Mark Res 20:134–148
Jaccard J, Becker MA, Wood G (1984) Pairwise multiple comparison procedures: a review. Psychol Bull 96:589–596
Luke RD, Wholey DR (1999) Commentary: on ‘a taxonomy of health networks and systems: bringing order out of chaos’. Health Serv Res 33:1719–1725
Burns LR, Wholey DR, McCullough JS, Kralovec P, Muller R (2012) The changing configuration of hospital systems: centralization, federalization, or fragmentation? In: Friedman LH, Savage GT, Goes J (eds) Advances in health care management, volume 13: annual review of health care management: Strategy and policy perspectives on reforming health systems. Emerald Group Publishing, Bingley, pp 189–232
Fox DM (1986) Health policies, health politics: the British and American experience, 1911–1965. Princeton University Press, Princeton
Porter ME, Lee TH (2013) The strategy that will fix health care. Harv Bus Rev 91(10):50–70
Shortell SM, Casalino LP (2008) Health care reform requires accountable care systems. JAMA 300:95–97
Shay PD (2014) More than just hospitals: an examination of cluster components and configurations. Dissertation, Virginia Commonwealth University
Acknowledgments
The authors wish to thank Dr. Carl F. Ameringer, Dr. Roice D. Luke, Dr. Carolyn A. Watts, and anonymous reviewers for their valuable comments on previous versions of this article.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Shay, P.D., Mick, S.S.F. Clustered and distinct: a taxonomy of local multihospital systems. Health Care Manag Sci 20, 303–315 (2017). https://doi.org/10.1007/s10729-016-9353-7
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10729-016-9353-7