Longitudinal analysis of high-technology medical services and hospital financial performance

Background: U.S. hospitals have been investing in high-technology medical services as a strategy to improve financial performance. Despite the interest in high-tech medical services, there is not much information available about the impact of high-tech services on financial performance. Purpose: The aim of this study was to examine the impact of high-tech medical services on financial performance of U.S. hospitals by using the resource-based view of the firm as a conceptual framework. Methodology/Approach: Fixed-effects regressions with 2 years lagged independent variables using a longitudinal panel sample of 3,268 hospitals (2005-2010). It was hypothesized that hospitals with rare or large numbers (breadth) of high-tech medical services will experience better financial performance. Findings: Fixed effects regression results supported the link between a larger breadth of high-tech services and total margin, but only among not-for-profit hospitals. Both breadth and rareness of high-tech services were associated with high total margin among not-for-profit hospitals. Neither breadth nor rareness of high-tech services was associated with operating margin. Although breadth and rareness of high-tech services resulted in lower expenses per inpatient day among not-for-profit hospitals, these lower costs were offset by lower revenues per inpatient day. Practice Implications: Enhancing the breadth of high-tech services may be a legitimate organizational strategy to improve financial performance, especially among not-for-profit hospitals. Hospitals may experience increased