Hospital capacity management decisions: Emphasis on cost control and quality enhancement

This paper empirically examines the effects of several key hospital demographic factors (hospital size, location, teaching involvement) and service characteristics on hospital capacity management decisions, and the effects of hospital capacity resource management choices on cost control and quality enhancement. In this research structural equation modeling (SEM) was used as the research vehicle. SEM modeling measures multiple relationships among independent and dependent variables, thus accommodating aggregated dependent relationships simultaneously in one comprehensive model. Several managerial insights emerged from the research: (a) outpatient service, health care network, workforce competence, and information technology are identified as key indicators of hospital capacity resource management decisions in the current health care environment; (b) hospital cost control is influenced by equipment/technology and workforce decisions; (c) hospital quality performance is associated with equipment/technology decisions, and positively but not strongly related to workforce decisions; (d) location, size and service mix have a significant impact on hospital capacity decisions; and (e) staff training, staff competence, and job enlargement are key operational indicators influencing workforce development/management decisions.