Defense Date


Document Type


Degree Name

Doctor of Philosophy


Health Administration

First Advisor

Michael J. McCue



This research focuses on the relationship between hospital acquisition and operational performance, market factors, and organizational factors following the Balanced Budget Act of 1997. Resource dependence and financial theory guided the methodology. According to resource dependence theory, organizations desire to remain autonomous until they are faced with scarce resources. This scarcity of resources is caused by the dynamic interaction with the external environment. Financial theory recognizes the organizations ability to be successful by ensuring access to capital through profitability, strong bond ratings, lines of credit, and equity financing. The Balanced Budget Act of 1997 reduced hospital Medicare reimbursement and will have an influence on hospital acquisition.

The following research questions guide this study:

• What are the market, operational, and organizational factors that profile the characteristics of hospitals acquired after the Balanced Budget Act?

Underlying research questions evaluate whether acquired hospitals are inefficiently managed and operate financially at a loss. They become targets for takeover because they lack the capital to modernize their plant and to expand their size and services. However, acquired hospitals may have a strong market position.

• Do acquired hospitals operate at a financial loss?

• Do acquired hospitals own aging plant and equipment and lack the financial capital to replace their plant and equipment?

• Do acquired hospitals have facilities located in markets with less competition and fewer HMOs?

• Do acquired hospitals have smaller facilities and provide fewer services?

Given the results of the descriptive statistics and logistic regression, it may be concluded that reductions in Medicare reimbursement have reduced hospital return on assets, and have resulted in fewer hospital acquisitions. On an individual hospital basis, those facilities with lower occupancy rates, fewer services, older facilities and for-profit status are likely targets for hospital acquisition.


Scanned, with permission from the author, from the original print version, which resides in University Archives.


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