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Objective: To assess a widely recognized multihospital system taxonomy., Data Sources: The original taxonomy was based on American Hospital Association (AHA) Annual Survey Data for the years 1994 and 1995 and a reexamined version, on 1998 AHA data., Study Design: We assess the appropriateness of using data designed to capture local hospital/system interrelationships to develop a taxonomy of multihospital systems. DATA ABSTRACTION METHODS: The original and reexamined taxonomies used dichotomous measures of service availability, physician practice ownership, and managed care offerings., Principal Findings: The data and measures used to formulate the taxonomy are not appropriate for classifying multihospital systems at the company level., Conclusions: Taxonomic studies of multihospital systems are very much needed; future taxonomic studies should make clear distinctions between systems at local versus company levels.

Objective: This study examines the formation of local hospital systems (LHSs) in urban markets by the end of 1992. We argue that a primary reason why hospitals join LHSs is to achieve improved positions of market power relative to threatening rivals., Data Sources/data Collection: The study draws from a unique database of LHSs located in and around metropolitan statistical areas (MSAs). Data were obtained from the 1991 AHA Annual Hospital Survey, updated to the year 1992 using information obtained from multiple sources (telephone contacts of systems, systems lists of hospitals, published changes in ownership, etc.). Other measures were obtained from a variety of sources, principally the 1989 Area Resources File., Study Design: The study presents cross-sectional analyses of rival threats and other factors bearing on LHS formation. Three characteristics of LHS formation are examined: LHS penetration of urban areas, LHS size, and number of LHS members located just outside the urban boundaries. LHS penetration is analyzed across urban markets, and LHS size and rural partners are examined across the LHSs., Principal Findings: Major hypothesized findings are: (1) with the exception of the number of rural partners, all dependent variables are positively associated with the number of hospitals in the markets; the rural partner measure is negatively associated with the number of hospitals; (2) the number of doctors per capita is positively associated with all but the rural penetration measure; and (3) the percentage of the population in HMOs is positively associated with local cluster penetration and negatively associated with rural system partners. Other findings: (1) average income in the markets is negatively associated with all but the rural penetration measure; (2) LHS size and rural partners are both positively associated with nonprofit system ownership; and (3) they are also both negatively associated with the degree to which their multihospital systems are geographically concentrated in a single state., Conclusions: The findings generally support the argument that LHS formation is the product of hospital providers attempting to improve positions of power in their local markets.

Using a sample of 3,000 urban hospitals, this article examines the contributions of selected hospital characteristics to variations in hospital technical efficiencies, while it accounts for multiple products and inputs, and controls for local environmental variations. Four hospital characteristics are examined: hospital size, membership in a multihospital system, ownership, and payer mix (managed care contracts, percent Medicare, and percent Medicaid). Ownership and percent Medicare are consistently found to be related significantly to hospital efficiency. Within the ownership variable, government hospitals tend to be more efficient and for-profit hospitals less efficient than other hospitals. Higher percentages of Medicare payment are negatively related to efficiency. While not consistently significant across all five of the MSA size categories in which the analyses are conducted, possession of managed care contracts, membership in a multihospital system, and size all are consistently related positively to hospital technical efficiency. These variables are also all significant when the hospitals are examined in a combined analysis. Percent Medicaid was not significant in any of the analyses. Implications for policy and the need for methodological work are discussed.

The strategic behaviors of small multihospital systems have received little attention in the literature despite the fact that small systems are the predominant scale among multihospital systems. This study examines one important aspect of small-system strategic behaviors: the birth-order or evolutionary patterns of hospital acquisition. The evolutionary patterns of acquisition are compared across three strategic model types studied elsewhere: local market, investment, and historical. Using data obtained from a variety of sources, local market model systems are found, in the sequence of acquisition, to be significantly different from the other two model types in terms of relative distances of acquisitions from the initiating or parent hospital, the sizes of acquisition hospitals, the complexity of those hospitals, and the likelihood that the acquisitions are located in rural areas. Differences between parents and acquisitions are also significant, as hypothesized, for the market model system types, although they are not generally significant for the other two model types. The findings suggest that the market model represents an important strategic form that may have important implications for the restructuring of hospital markets.

Strategic behaviors of organizations can be classified along two dimensions--growth orientations, or patterns of evolution over time, and action orientations, or strategic aggressiveness in undertaking a particular growth orientation. We create measures of growth and action orientations for small multihospital systems and test the validity of the growth and action orientation typologies, using data from a sample of small multihospital systems. Growth and action orientations do appear to exist independently of each other, and they are related to the ownership status of the systems. Not-for-profit and church-other systems exhibit similar strategic orientations, unlike those of Catholic and investor-owned systems.