The impact of operations competitive priorities on hospital performance

A notable lack of empirical analysis exists on hospital operations strategy in spite of widespread debate on quality, cost and service delivery – issues which are widely included within the realm of operations competitive priorities. We empirically examine the degree of emphasis placed by administrators on competitive priorities and what impact this might have on performance of not-for-profit, general hospitals. Performance is defined as a composite of financial and operational performance. Our research shows that management's emphasis of cost containment and service delivery consistently results in superior business performance. Quality programs are found to be the most preferred competitive priority initiative, yet show relatively low relation with performance. This suggests that quality programs are a necessary, though not sufficient, component of hospital operations strategy. The competitive dimension of flexibility is being employed, but on a less universal scale. We conclude that administrators are not yet sufficiently skilled in the flexibility priority to make this dimension consistently result in superior business performance.