In a Niche of Time

Abstract

Niche hospitals represent a growing segment in the health care industry. Niche facilities are primarily engaged in the treatment of cardiac or orthopedic conditions. The effectiveness of this strategy is of interest because niche hospitals focus on only the most profitable services. The purpose of this research was to assess the financial effectiveness of the niche strategy. We theorize that firm and market-level factors concomitantly with the strategy of the hospital-niche versus traditional-are associated with financial performance. This research used 2 data sources, the 2003 Medicare Cost Report and the 2003 Area Resource File. The sample was limited to only for-profit, urban, nongovernmental hospitals (n = 995). The data were analyzed using hierarchical least squares regression. Financial performance was operationalized using the hospital's return on assets. The principal finding of this project is that niche hospitals had significantly higher performance than traditional facilities. From the organizational perspective, the niche strategy leads to better financial performance. From a societal perspective, the niche strategy provides increased focus and efficiencies through repetition. Despite the limited focus of this strategy, patients who can access these providers may experience better outcomes than patients in more traditional hospitals.

Exploring characteristics of specialization as moderators of the link between specialization and patient experience of care

“…In the United States, as in many other industrialized countries, there is a long-running debate about the advantages and disadvantages of specialized versus nonspecialized hospitals (Carey et al, 2008;Zepeda et al, 2021). In the international research, specialization, also described in the literature as focus, has been linked to hospitals' financial performance (Eastaugh, 2009;Poole et al, 2013), efficiency (Capkun et al, 2012;KC & Terwiesch, 2011;Lindlbauer & Schreyogg, 2014;Zepeda et al, 2021), and indicators of clinical quality (Clark & Huckman, 2012;Zepeda et al, 2021). This evidence suggests that specialization is a promising way to achieve performance gains through organizational learning, process optimization, and standardization (KC & Terwiesch, 2011).…”