The Relationship between Strategy and Hemodialysis Performance: The Moderating Role of Competitive Intensity

This paper adopts transaction cost theory and the competitive dynamics perspective to examine the effects of three operating strategies-namely vertical integration, cooperation, and outsourcing to hemodialysis performance respectively. This study proposes that regional competitive intensity may moderate the strategy-performance relationship. Empirical data are collected from the National Health Insurance Database, which is maintained by Taiwan’s Ministry of Health and Welfare. We obtain 1,588 records from regional and district hospitals, which contain information regarding their hemodialysis-related management strategies and performance outcomes in 2012 and 2013. The results of our empirical analysis indicate that cooperation and outsourcing strategies are more efficient than vertical integration strategies. The difference in efficiency achieved between hospitals adopting the cooperation strategy and outsourcing strategy is insignificant; however, we find that hospitals that adopt the outsourcing strategy tend to provide higher quality in hemodialysis than those that adopt cooperation or vertical integration strategies. Using the Herfindahl-Hirschman index as a proxy for competitive intensity, this investigation reveals that competition is the highest in southern Taiwan and lowest in central Taiwan. The results of this study support the moderating effect of competitive intensity on the strategy-performance relationship of the hemodialysis operations.