Rural hospitals' viability and strategic responses

In 1989 the Catholic Health Association, in conjunction with the University of Iowa Center for Health Services Research, surveyed chief executive officers (CEOs) of rural hospitals regarding their hospital's viability and strategic behaviors and orientations. An extensive questionnaire was sent to the CEOs of all Catholic, all other religious not-for-profit, and all investor-owned rural hospitals, as well as to a 50 percent random sample of government and other not-for-profit rural hospitals. CEOs on average perceived that their hospital's viability relative to that of other rural hospitals was higher in 1989 than it had been in 1987. Ninety-four percent of hospitals whose CEOs perceived an increase in viability had been medium- or low-viability hospitals two years earlier. Thus, despite reports of deteriorating conditions for rural hospitals, rural hospital CEOs appeared to be relatively optimistic regarding their institution's viability. Changes in strategic direction accompanied these perceived increases in viability. The predominant strategic orientation adopted by rural hospitals in 1987 was that of the defender, but many hospitals that used this approach switched to the analyzer orientation by 1989. Significant shifts also occurred toward the reactor orientation from the analyzer and defender orientations. A greater percentage of hospitals with a perceived increase in viability between 1987 and 1989 altered their organizational role. The most common change for these hospitals was from limited care to basic care.