Hospitals don’t have to pit service-line breadth against clinical-specialization focus: Operational analysis

Regardless of hospital size, per-patient-discharge costs are affected by two factors sometimes understood to exist in tension with one another. 

These are the concentration of clinical focus and the sheer breadth of clinical service lines on offer.

A new study supports the notion that focus and breadth need not become opposing strategies. 

Instead, the researchers demonstrate, in many instances these attributes can be pursued simultaneously such that a broad menu of service lines complements—or at least peacefully coexists with—a specialized focus on a few. 

The research was conducted at Boise State University and published by Health Care Management Science. 

Co-authors Matthew Castel, PhD, and Timothy Dunne, PhD, report they analyzed existing evidence in a novel way—through an “organizational information processing theory lens.” 

The outcomes they considered included patient satisfaction as well as costs. Among their key findings: 

• Focus and breadth both decrease cost per discharge, irrespective of hospital size.
   
• Focus increases patient satisfaction for small hospitals, but its effect is diminished for large hospitals.
   
• Service breadth decreases patient satisfaction, but its effect is partially mitigated for large hospitals.

Castel and Dunne note the influence of focus and breadth on patient satisfaction is “highly conditional.” That’s partly because the positive effect of focus tends to be attenuated in larger hospitals. 

Conversely, the negative direct effect of service breadth is mitigated in large hospitals, “meaning these facilities can maintain their patient satisfaction despite an increase in service breadth,” the researchers write. 

They suggest their findings “underscore the necessity for managers to tailor strategies based on existing scale when deciding whether to prioritize focus or service line expansion.”

Castel and Dunne believe their study makes two major contributions to the study of hospital outcomes. 

First, by drawing on organizational information processing theory, “we differentiate focus as an emphasis from service breadth to evaluate the effect of economies of scale and scope on cost per discharge and patient satisfaction.”

Second, “our study explores the ramifications of hospital size as a moderator for the relationships between focus as an emphasis and service breadth on cost per discharge and patient satisfaction.”

The study is available in full for free.