Community Orientation, Strategic Flexibility, And Financial Performance in Hospitals‪.‬

EXECUTIVE SUMMARY The objective of this study was to examine how community orientation and strategic flexibility affect accounting measures of financial performance in acute care hospitals. This cross-sectional study used organizational data from the American Hospital Association, environmental data from the Area Resource File, and financial data from the Healthcare Cost Report Information System. We tested our hypotheses on 1,779 hospitals using OLS regression models that controlled for organizational and environmental factors that might affect financial performance. The community orientation of a hospital had a negative impact on its short-term financial performance. However, the strategic flexibility of a hospital with regard to structure and resources was significantly and positively associated with hospital performance.