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Health Care Management Review:

Is It Resources, Habit or Both: Interpreting Twenty Years of Hospital Strategic Response to Prospective Payment

Balotsky, Edward R.

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Abstract: The 1983 Tax Equity and Fiscal Responsibility Act (TEFRA) transformed acute care from a benevolent to malevolent environment. A dual-paradigm of resource dependency and institutional theories that balances isomorphic with economic variables has emerged to better explain hospital strategic response to the resultant constraint on resources than a traditional single paradigm approach. Using the population of non-rural, non-federal acute-care hospitals, strategic response from 1982 to 2001 is studied; distinct cost and service changes occur. Cost strategy is linked primarily to Medicare utilization, a resource dependence response. Service strategy favors high technology regardless of prospective payment diffusion, an institutional theory perspective. Strategic implications are discussed.

© 2005 Lippincott Williams & Wilkins, Inc.


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