Exploring the underlying mechanisms through which financial strategies translate into improved performance in U.S health care organizations

Background: Prior studies have examined the relationship between financial strategies and organizational performance in health care facilities; however, the underlying mechanisms through which financial strategies translate into improved performance remain largely unexplored. In particular, value appropriation mechanisms, such as advertising intensity and relationship investment, have received limited attention in health care management and marketing literature despite their potential importance for managerial and policy decision-making. Purpose: This study investigates the mechanisms through which financial strategies translate into improved organizational performance by examining the mediating role of value appropriation mechanisms, specifically, advertising intensity and relationship investment. By focusing on these underexplored pathways, the study aims to examine how financial resources are effectively leveraged to generate performance gains in U.S health care organizations. Methodology: This cross-sectional study uses secondary data from U.S. health care organizations, including hospitals, ambulatory care centers, and long-term care facilities. Drawing on the resource-based view and financial ratio theory, we analyzed 10 years of financial and operational data from Standard & Poor’s Global Market Intelligence and the Center for Research in Security Prices databases. Structural equation modeling was used to estimate direct and indirect effects through two mediation pathways. Findings: Results show that value appropriation mechanisms support financial sustainability by enhancing patient awareness and retention. Financial flexibility, distress risk, and operating efficiency had significant direct effects on performance. Relationship investment strengthened connections between financial metrics and performance, while advertising intensity amplified these effects. Although service orientation had a negative direct effect, it showed a positive indirect effect through relationship investment. Practice Implications: health care managers may enhance organizational performance by aligning financial strategies with targeted advertising and relationship-building initiatives that strengthen patient engagement and organizational reputation. Conclusions: This study demonstrates that value appropriation mechanisms play a central role in translating financial resource management into improved firm performance in health care organizations.