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Regulatory change, constraints on adaptation and organizational failure: An empirical analysis of acute care hospitals

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  • Thomas S. Gruca
  • Deepika Nath

Abstract

The advent of the Medicare prospective payment system (PPS) in 1983 affected individual general hospitals in varying degrees based on their revenue and cost structures. These same factors served to constrain a hospital's ability to adapt to the post‐PPS environment. The three constraints are based on the proportion of the hospital's private‐pay (non‐Medicare/Medicaid) patients, economies of scale and economies of scope among medical services. We test the relationship between these constraints and organizational failure in the Chicago area. Hospitals selected out of the new environment (1986‐91) were at a significant relative disadvantage with respect to the proposed constraints.

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  • Thomas S. Gruca & Deepika Nath, 1994. "Regulatory change, constraints on adaptation and organizational failure: An empirical analysis of acute care hospitals," Strategic Management Journal, Wiley Blackwell, vol. 15(5), pages 345-363, June.
    • Handle: RePEc:bla:stratm:v:15:y:1994:i:5:p:345-363
    DOI: 10.1002/smj.4250150503
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    Cited by:

    1. Oetzel, Jennifer M. & Banerjee, Sudeshna Ghosh, 2008. "A case of the tortoise versus the hare? Deregulation process, timing, and firm performance in emerging markets," International Business Review, Elsevier, vol. 17(1), pages 54-77, February.
    2. Bozeman, Barry, 2011. "The 2010 BP Gulf of Mexico oil spill: Implications for theory of organizational disaster," Technology in Society, Elsevier, vol. 33(3), pages 244-252.
    3. Zinn, Jacqueline & Mor, Vincent & Feng, Zhanlian & Intrator, Orna, 2009. "Determinants of performance failure in the nursing home industry," Social Science & Medicine, Elsevier, vol. 68(5), pages 933-940, March.
    4. Rhys Andrews & George A. Boyne & Jennifer Law & Richard M. Walker, 2012. "Strategic Management and Public Service Performance," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-34943-8, October.
    5. Pettus, Michael L. & Kor, Yasemin Y. & Mahoney, Joseph T., 2007. "A Theory of Change in Turbulent Environments: The Sequencing of Dynamic Capabilities Following Industry Deregulation," Working Papers 07-0100, University of Illinois at Urbana-Champaign, College of Business.
    6. Vassilis H. Aletras, 1999. "A comparison of hospital scale effects in short‐run and long‐run cost functions," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 521-530, September.
    7. Rhys Andrews, 2007. "Civic Culture and Public Service Failure: An Empirical Exploration," Urban Studies, Urban Studies Journal Limited, vol. 44(4), pages 845-863, April.
    8. Charles Eesley, 2016. "Institutional Barriers to Growth: Entrepreneurship, Human Capital and Institutional Change," Organization Science, INFORMS, vol. 27(5), pages 1290-1306, October.
    9. Miller, Stewart R. & Lavie, Dovev & Delios, Andrew, 2016. "International intensity, diversity, and distance: Unpacking the internationalization–performance relationship," International Business Review, Elsevier, vol. 25(4), pages 907-920.
    10. Ni, Huan & Paul, Jomon Aliyas & Bagchi, Aniruddha, 2017. "Effect of Certificate of Need Law on the intensity of competition: The market for emergency care," Socio-Economic Planning Sciences, Elsevier, vol. 60(C), pages 34-48.
    11. Rhys Andrews & George A Boyne, 2008. "Organizational Environments and Public-Service Failure: An Empirical Analysis," Environment and Planning C, , vol. 26(4), pages 788-807, August.
    12. Fan, Di & Liang, Tianheng & Yeung, Andy C.L. & Zhang, Haomin, 2020. "The impact of capacity-reduction initiatives on the stock market value of Chinese manufacturing firms," International Journal of Production Economics, Elsevier, vol. 223(C).
    13. Ken Chadwick & James J. Chrisman & Anthony F. Jurkus, 1997. "Sanders Hospital and Health Center: A Case Study," Entrepreneurship Theory and Practice, , vol. 22(1), pages 75-89, October.
    14. Mariola Ciszewska-Mlinaric, 2009. "The Adaptive Capabilities of Organizations. Case of Polish Public Hospitals," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 3(3), September.

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