The impact of strategic operations management decisions on community hospital performance

Over the past decade, 10% of community hospitals have closed. In this challenging time, our study presents hospital administrators with some valuable information that can help improve community hospitals’ performance. The purpose of this paper is to develop a strategic operations management model that links long‐term service choices, intermediate operations decisions, and hospital performance given the structural constraints of location, size, and medical teaching status. Data collected from 151 community hospitals are used to test the model. The research identifies strategic operations management decisions in the US community hospitals, shows their causal relationships, and identifies their effects on hospital performance. Specifically, we find that intermediate infrastructural operations decisions affect a community hospital’s cost, quality, and financial performance after the structural decisions of location and size have set the stage. Our study also reveals that community hospitals have adopted new staff and demand management decisions in response to the market needs.