Organizational and environmental determinants of hospital strategy.

This study focuses on the relationship between the business strategy of acute care hospitals and several organizational and environmental characteristics. Business strategy is assessed using the Miles and Snow (1978) typology. The organizational characteristics examined are size, system membership, type of ownership, and case-mix severity. The environmental characteristics examined are those of the local environment, which includes general economic factors and measures of market structure. General economic factors include family income, unemployment rate, percent of population over 65, and ratio of physicians to general population. The measures of market structure include the Herfindahl index and each hospital's individual market share. The results of our analysis using multiple regression indicate that organizational characteristics are more likely than environmental factors to influence the business strategy of hospitals. Specifically, hospitals that are relatively small or operate independently are less likely than other hospitals to follow a proactive strategic orientation.