All ETDs from UAB

Advisory Committee Chair

Susan Key

Advisory Committee Members

Norris W Gunby

Gerald Glandon

George Munchus

Jeffrey Burkhardt

Document Type

Dissertation

Date of Award

2009

Degree Name by School

Doctor of Philosophy (PhD) School of Health Professions

Abstract

ABSTRACT OBJECTIVE: Niche hospitals represent a growing segment in the health care industry. A niche strategy is an approach that focuses on a narrow market segment that its resources and capabilities can exploit (Porter, 1980; Powers and Khan, 2004). The purpose of the proposed study was to provide an understanding of the antecedents and consequences of the niche approach to healthcare delivery. The interaction of the niche strategy and the physician-owner as a unique bundle of resources was also examined. The subsequent model tested the relationships among generic strategies, market effects, firm effects, and financial performance. RESEARCH DESIGN AND METHODS: The evaluation of the Porterian focused differentiation strategy, also referred to as the niche approach to healthcare delivery, revealed efficient models that explain financial performance. The evaluation of the fully specified model suggested the use of Hierarchical Least Squares Regression as it was desirable to confirm the hypotheses about the potential relationships among the variables in the model. The full model consisted of one continuous dependent variable, five independent variables representing the market effects, and seven independent variables representing firm level effects. One way Analysis of Variance (ANOVA) was used to assess the differences in variation between specialty and traditional acute care hospitals. Pearson correlations were calculated to assess the correlations between each of the factors in the study. RESULTS: The years of certification and occupancy percentage are statistically significant in the Porterian model. Ten percent increases in occupancy rates would provide a 22 percent increase in the dependent variable, ROA. The Porterian focused-differentiation variable was statistically significant and a 10 percent increase of this variable was found to contribute to a 15 percent increase in ROA. The Adjusted R-squared for the model was 8.1. While two of the firm level variables were found to be statistically significant, none of the market level variables were found to be significant. CONCLUSIONS: The niche or focused factory strategy, as applied to healthcare, provides increased focus and efficiencies through repetition. Porter's (1980) framework can help hospital decision makers understand the dynamic nature of market forces, how these forces affect the strategic approaches of competitors, and how the interaction of these forces impact the financial performance of the firm.

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