Catholic Ownership, Physician Leadership and Operational Strategies: Evidence from German Hospitals

Abstract

Previous research has revealed that Catholic hospitals are more likely follow a strategy of horizontal diversification and maximization of the number of patients treated, whereas Protestant hospitals follow a strategy of horizontal specialization and focus on vertical differentiation. However, there is no empirical evidence pertaining to this mechanism. We conduct an empirical study in a German setting and argue that physician leadership mediates the relationship between ownership and operational strategies. The study includes the construction of a model combining data from a survey and publicly available information derived from the annual quality reports of German hospitals. Our results show that Catholic hospitals opt for leadership structures that ensure operational strategies in line with their general values, i.e., operational strategies of maximizing volume throughout the overall hospital. They prefer part-time positions for chief medical officers, as chief medical officers are identified to foster strategies of maximizing the overall number of patients treated. Hospital owners should be aware that the implementation of part-time and full-time leadership roles can help to support their strategies. Thus, our results provide insights into the relationship between leadership structures at the top of an organization, on the one hand, and strategic choices, on the other.