The impact of structured strategic, marketing and management information system planning on the performance of hospitals in northern New England

Today's business environment for hospitals is very competitive due to significant financial pressures placed upon them. Porter (1979) advocated the use of a strategic planning process for competitive industries. The creation of a strategic plan requires a major commitment of time and managerial resources. It is therefore important for hospital executives to be able to substantiate this resource commitment through increased financial performance.; A study that reported a correlation between structured planning and financial performance in hospitals was conducted by Layton (1991). That study recommended the use of structured planning and also suggested that further research be conducted on the marketing component of the plan. The hospital industry has had many changes since the original study was completed including different reimbursement methodologies, reduced patient utilization, cost containment measures, horizontal integration and vertical integration. These developments have created a different organizational climate for this industry, making it important to again validate this correlation.; The study was replicated in four northern New England states to retest the original hypothesis. Additional hypotheses were added to the study to test the inclusion of marketing, management information systems and the increased use of Medicare as components of the structured plan.; Results showed that the correlation between structured planning and profitability could not be proven statistically, although there was evidence to support that a positive relationship does exist. Of the other hypotheses the only one that was supported was that pertaining to marketing. Hospitals with written plans who dedicated between 35% and 50% of the structured plan to marketing and competitive analysis had higher profitability. This finding was even more significant when applied to long-term strategic planning as opposed to short-term operational planning.