Modular organization and hospital performance

The concept of modularization represents a modern form of organization, which contains the vertical disaggregation of the firm and the use of market mechanisms within hierarchies. The objective of this paper is to examine whether the use of modular structures has a positive effect on hospital performance. The empirical section makes use of multiple regression analyses and leads to the main result that modularization does not have a positive effect on hospital performance. However, the analysis also finds out positive efficiency effects of two central ideas of modularization, namely process orientation and internal market mechanisms.