Strategies as a basis for the development of hospital assets

Bernhard Eicher and Reto Steiner

Public Money & Management, 2020, vol. 40, issue 1, 21-30

Abstract: This paper examines the correlation between generic strategies (differentiation, cost leadership, focus) and the financial scope of action for the development of assets of Swiss hospitals, considering strategy as practice (SAP). The results show that it is worthwhile for hospitals to follow one of three generic strategies, but success depends on the design of the chosen strategy. The results also confirm the strong influence of doctors on hospital performance.In order to widen the financial scope to develop assets and achieve a high EBITDA margin (earnings before interest, taxes, depreciation and amortization), hospital managers need to have a clear generic strategy (differentiation, cost leadership, focus). However, managers should be very careful when choosing a differentiation strategy. Differentiating their hospitals with a wide range of inpatient treatments can be helpful in achieving success but differentiating their hospital with a wide range of non-inpatient treatments can lower a hospital’s performance. Additionally, a hospital’s doctors should be included in discussions, because they have a strong influence on hospital performance.

Date: 2020
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DOI: 10.1080/09540962.2019.1612204

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