Factors Associated with Hospital Entry into Joint Venture Arrangements with Ambulatory Surgery ...

205 Pages·2016·1.23 MB·English

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Theses and Dissertations Graduate School
2011
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Reethi Iyengar
Virginia Commonwealth University
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Factors associated with hospital entry into joint venture arrangements with
Ambulatory Surgery Centers

A dissertation submitted in partial fulfillment of the requirements for the degree of
Doctor of Philosophy at Virginia Commonwealth University.

by

Reethi Narasimhan Iyengar
Master of Business Administration (M.B.A)
Radford University, Virginia, August 2006
Master of Hospital Management (M.H.M)
Osmania University, India, February 2005
Bachelor of Science: Physics Honors (B.Sc. Physics Hons.)
Sri Sathya Sai Institute of Higher Learning, India, June 2002

Director: Dr. Michael J. McCue, D.B.A.
Professor
Department of Health Administration

Virginia Commonwealth University
Richmond, Virginia
May, 2011
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ACKNOWLEDGMENTS

Growing up in a military family, I always heard the phrase, “No war was
ever won alone”. I guess it holds true for life as well. I have come to understand
that nothing significant can be accomplished without the love, encouragement
and support of family, friends and mentors. I have had the good fortune of being
surrounded by people who have helped me complete this journey successfully. I
would be remiss if I do not acknowledge their contributions in enabling me to
achieve my goals.
I would like to express my gratitude to my committee chair, Dr. Michael
McCue who patiently guided me throughout the dissertation process and
generously shared his time and insights. I offer my sincerest appreciation to him
for being a great mentor.
I am extremely grateful to all my committee members who helped provide
direction and support, right from the inception of the dissertation idea to its
completion. Dr. Dolores Clement, the kindest and most supportive mentor one
can hope for, Dr. Yasar Ozcan, a professor whose concern for his students is
commendable and inspiring, and Dr. Robert Andrews, a professor truly par
excellence who never failed to lift my spirits during the „rough times‟ of the
dissertation process. I could not thank these professors enough.
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I would also like to thank Drs. Stephen Mick, Gloria Bazzoli, Jan Clement,
Roice Luke, Kelly Devers, Janet Kellett, Mark Diana, Robert Hurley and David
Harless who contributed towards my learning from the start of my doctoral
studies.
I specially wish to thank Dr. Cathy Bradley for her generosity and
graciousness. She always lent a helping hand in times of need. She offered me a
research assistantship when I could not continue my education without monetary
support and she recommended me for research jobs which expanded and
improved my research skills. Thanks to her, I also got the opportunity to intern at
World Health Organization.
Additionally, I would like to express my gratitude to Myra Owens, Beverly
DeShazo, Carroll George, Carolyn Wells, and Rochelle Clarke for their help
whenever I needed it. They made me feel at home, away from home. I would
also like to thank Ms. Yan and Ms. Dotson (from ResDac) for their valuable help
with extracting the data for my dissertation.
I also wish to thank my fellow doctoral students: Nailya, Anna, Esther,
Jennifer, Veronica, Aizhan, Craig, Matt, Mark, Albert, Naleef and Patrick, for
never letting me give up. You all are the best!!!
On a personal note, I would like to thank my parents, the most loving and
supportive role models: Lt. Col. Narasimhan (Retd.) and Malini Narasimhan, my
brother who is also my closest friend: Maj. Vijai Narasimhan and my sister-in-law,
a steady anchor and a lovely friend: Amrita Vijai, my uncles, without whose
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support I could not have dreamt of coming to U.S. for higher studies: Dr. Prahlad
Kasturi and Narahari Babu and my little angel and lucky charm, my niece
Aashka. I am blessed to have such a family and whatever I am and will ever be, I
owe it to them.
It is so true that friends are the family one gets to choose. My friends have
made this journey extremely memorable for me. My heartfelt thanks goes out to
Zinan Chowdhury who has patiently and lovingly encouraged me throughout this
journey. My friends: Sonali, Padma, Madhav and Kiana-my strength and family
by heart; Meera, Vishnu, Smita, Srividhya, Anu, Vandy, Richie and Keshav – my
dearest friends; and my lovely Richmond group- Swati, Priyanka, Sasanka,
Ashwin, Jenson, Kangana, Ali, Paras and Vrushali, I thank them for their
friendship and for always being there. I could not have survived the last few
years without you all.
Thank you. I am indeed blessed to have all of you as my family,
friends and mentors. Your love, patience, sacrifice and guidance has seen me
through this process and I truly cherish it.
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TABLE OF CONTENTS

Page
LIST OF TABLES ..................................................................................................x
LIST OF FIGURES ..............................................................................................xii
ABSTRACT .........................................................................................................xiii
CHAPTER 1: INTRODUCTION ............................................................................1
Transitioning Health-care Industry and the Effect on Hospitals................ .5
Significance of the Study............................................................................8
Purpose of the Study..................................................................................9
Research Questions..................................................................................11
Theoretical Premise …………………………………………………………..12
Methodology …………………………………………………………………...13
Summary of Remaining Chapters ............................................................15
CHAPTER 2: LITERATURE REVIEW ................................................................17
Growth in Outpatient Surgeries vis-à-vis Inpatient Surgeries ..................18
History of Ambulatory Surgery Centers (ASCs)........................................20
Volume …………………………………………………………………22
Financial ………………………………………………………………..22
Staffing …………………………………………………………………24
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TABLE OF CONTENTS (CONTINUED) Page
Facility ………………………………………………………………….24
Impact of ASCs on Hospitals ………………………………………………...25
Competition for Labor ………………………………………………...25
Competition for Patients ……………………………………………...26
Cream-skimming Healthier Patients ………………………………...26
Financial Impact ……………………………………………………….27
Integration Strategies: Acquisitions, Mergers and Joint Ventures ……….28
Similarities and Differences ………………………………………….28
Acquisitions and Mergers …………………………………………….29
Joint Ventures …………………………………………………………32
Types of Joint Ventures in Health Care Industry …………………………..33
Jointly owned corporations / groups of corporations /subsidiary
Corporations …………………………………………………………...34
Partnership …………………………………………………………….35
Limited Liability Company (LLC) …………………………………….35
Contractual- (non equity) arrangements ……………………………36
Regulatory Environment Pertinent to Hospital-Physician Relationships ..38
Hospital-ASC Joint Ventures – Hospitals Perspective ……………………44
Hospital-ASC Joint Ventures – ASC/Physician Perspective ……………..45
Response of Hospitals: Competition to Collaboration - Joint Ventures …46
Summary of Chapter 2 ……………………………………………………….50
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TABLE OF CONTENTS (CONTINUED) Page
CHAPTER 3: MULTI-THEORETICAL PERSPECTIVE.......................................55
Resource Dependency Theory.................................................................56
Neo-Institutional Theory .......................................................................... 60
Cognitive Pressure.........................................................................61
Regulatory Pressure.......................................................................62
Joint Venture Arrangements between Hospitals and ASCs......................63
Conceptual Model............................................................................ …….67
Hypotheses ..............................................................................................69
Summary of Chapter 3 ............................................................................ 80
CHAPTER 4: METHODOLOGY .........................................................................86
Research Design ......................................................................................86
Study Population Inclusion/Exclusion Criteria ………………….….86
Analysis Design ……………………………….………………………87
Data Sources and Sampling Process.......................................................92
Measurement of Dependent Variables.....................................................97
Measurement of Independent Variables ………………………………….100
Market Factors ……………………………………………………….100
Regulatory Factors …………………………………………………..104
Organizational Factors ……………………………………………...105
Operational Factors …………………………………………………106
Financial Factors …………………………………………………….107
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TABLE OF CONTENTS (CONTINUED) Page
Control Factors ………………………………………………………110
Analytical Methods …………………………………………………………..110
Univariate (Descriptive) Analysis …………………………………..111
Multivariate Analysis (Logistic Regression) ………………………112
Summary of Chapter 4 ……………………………………………………...114
CHAPTER 5: RESULTS ...................................................................................116
Analyses………………………………………………………………………116
Outlier Analysis ...........................................................................117
Correlation Analysis ….................................................................119
Descriptive Analysis …………………………………………………121
Multivariate Analysis ………………………………………………...122
2006 Hospital-ASC Joint Venture Study Period .....................................123
Descriptive Findings ………………………………………………...123
Multivariate Findings ………………………………………………...125
2007 Hospital-ASC Joint Venture Study Period .....................................129
Descriptive Findings …………………………………………….......129
Multivariate Findings …………………………………………..…....132
Pooled Model of 2006 and 2007 Hospital-ASC Joint Venture Study …..135
Descriptive Findings …………………………………………………135
Multivariate Findings ……………………………………………......137
Summary of Findings of the Three Analytical Models …………………...141