All in the name of change: effects of organizational change on performance measures of customer service in the health care industry

Abstract

This research examines the effects of organizational change (i.e., change of the hospital name, chief executive officer (CEO), and ownership) on objective performance measures of customer services (hospital beds, payroll, full-time employees, and patients served) in the health care industry. Archival data were collected from 155 Hospitals in the State of Tennessee for four consecutive years. During that time period, there were a lot of mergers and acquisitions (M&A) and organizational changes in the health care industry in Tennessee. Results suggested that there was a significant reduction of hospital beds and a significant increase of payroll during the four-year period. These changes were more significant in urban hospitals than in rural hospitals. In the four-year period, a change of the hospital name resulting from a merger had increased the efficiency of serving customers (patient/FTE ratio), while those without the change had decreased the efficiency. Our results reveal some evidences that acquisitions may be related to short-term financial benefits as expected