Defense Date


Document Type


Degree Name

Doctor of Philosophy


Health Administration

First Advisor

Dr. Ramesh Shukla


Healthcare is an organizational field that has undergone profound change in the last few decades, an era characterized by market reform. Healthcare production has revealed both economic and quality problems in past eras, and reporting on these problems can be seen to have contributed to pressures for social reform. Yet, the move toward more market-oriented governance structures and design solutions also reflects a wider isomorphic institutional tendency for organizing social order.The conceptual frame work of this study takes a pessimistic stance on whether the market reform has achieved the intended goals with respect to advancing organizational quality performance. The framework draws on institutional theory and complementary collective action notions in organization theory concerned with boundedly rational decision-making to reason that healthcare evidences certain contextual characteristics that are not a good fit with the market enterprise model of organizing organizations. Specifically, hazards to the efficient market thesis were considered to include uncertain outcomes, a high degree of technical and coordination complexity, and the need to account for intertemporal process transformations of significant duration.A longitudinal design was used to test efficient market thesis propositions. Inpatient administrative data was used to develop two latent hospital quality performance variables, a Mortality quality indicator and an Errors quality indicator. The two latent variables were derived from three selected AHRQ patient safety indicators and an inpatient mortality rate. The measurement model was validated as evidencing significant systematic between-hospital variation. Audited survey data, along with inpatient discharge data was used to develop hospital economic performance variables and process control variables.A set of predictive supply-and-demand models were used to test: 1) whether there is evidence of any trend in quality performance, and how market competition relates to observations of improvement; 2) whether quality cost more; and, 3) whether preferences for better quality outcomes related to hospital economic performance. A hierarchical linear model growth-curve design was employed to assess the predicted relationships and to account for unmeasured organizational dependent relations determinant of hospital quality performance. The unaccounted for systematic between-hospital variance was taken to estimate an "unspecified" hospital-specific institutional effect, independent of material-resource factors. The measurement model results for each of the quality indicators selected evidenced construct validity for patient-level risk-adjustment. Each quality indicator demonstrated a significant systematic between-group variance component in all of the four years studied. The two latent hospital quality performance variables also demonstrated systematic between-hospital variance in growth trajectories in the linear growth-curve model.The predictive models evidenced no significant growth rate trend for either of the quality indicators, indicating the competitive bar on quality performance was unaffected during this period of market reform. Neither was there any evidence that pricing mechanism were able to price the utility of better outcomes, as higher quality did not cost more. Neither was there evidence that consumer preferences for better quality related to better hospital economic performance, as measured by hospital operating margins.


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