Background: The policy environment in China is rapidly changing. Strategic planning may enable hospitals to respond more effectively to changes in their external environment, little evidence exists on the extent to which public hospitals in China adopt different strategies and the relationship between strategic decision-making and hospital performance.
Purposes: The purposes of our study were to determine the extent to which different hospitals adopt different strategies, whether strategies are associated with organizational culture and whether hospital strategies are associated with hospital performance.
Methodology: Presidents (or vice presidents), employees, and patients from 87 public hospitals were surveyed during 2009. Measures of strategic group were developed using cluster analysis based on the three dimensions of product position, competitive posture, and market position. Culture was measured using a tool developed by the investigators. Performance was measured based on profitability, patient satisfaction, and employee satisfaction with overall hospital development in the recent 5 years. The association of strategic group and organizational culture with hospital performance was analyzed using multivariate models.
Findings: Chinese public general hospitals were classified into five strategic groups that had significant differences in product positioning, competitive posture, and market position. Hospitals of similar types based on regulation adopted different strategies. Organizational culture was not strongly associated with hospital strategic group. Although strategic group was associated with hospital profitability and patient satisfaction in the models with or without control for hospital location, these effects did not persist after controlling for organizational culture, hospital level, and hospital location.
Practice Implications: It is important for public hospitals in China to make effective strategic planning and align their organizational culture with the strategies for better execution and therefore better performance. Moreover, the method of hospital strategic grouping in the study provides a new way to analyze management issues within a strategic group and between strategic groups.