Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The effect of lean on performance: a longitudinal study of US Hospitals

The effect of lean on performance: a longitudinal study of US Hospitals There has been little empirical research focused on the effect of lean on hospital performance in the form of a consolidated methodology. This paper aims to apply a more sophisticated approach to examine whether hospitals’ decision for lean implementation is endogenous and test the effects of lean on hospital performance.Design/methodology/approachThis study uses a publicly available data set of hospitals across the USA from 2002 to 2019 and performs two-stage least squares (2SLS) analysis. In the first stage, a probit model is used to estimate hospitals’ decision to implement lean. The fitted probability values from the first stage are used in the second stage to test the relationship between lean and hospital performance. Ordinary least squares (OLS) regression results are compared with those of the 2SLS approach.FindingsThe decision to implement lean is significantly associated with hospital-specific characteristics (the complexity of care, size and cost-to-charge ratio), indicating hospitals’ decision for lean implementation is endogenous. Moreover, there is strong evidence that lean implementation is positively associated with hospital financial and operational performance. The Hausman F-tests confirm the presence of endogeneity and this, in turn, suggests that OLS regressions result in unreliable estimates.Practical implicationsThe findings of this study can help hospital managers benchmark performance and explore opportunities for profit and efficiency improvement. The findings are also relevant to policymakers who strive to lower health-care spending.Originality/valueThis study is motivated by the challenges facing the health-care industry. This study is among the first to investigate endogeneity in lean implementation and the association between lean and hospital performance using large-scale archival panel data. The use of the 2SLS approach provides more confidence in statistical findings. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting & Organizational Change Emerald Publishing

The effect of lean on performance: a longitudinal study of US Hospitals

Zhang, Huilan
Journal of Accounting & Organizational Change , Volume 17 (5): 25 – Oct 27, 2021
Download PDF
25 pages

Loading next page...
 
/lp/emerald-publishing/the-effect-of-lean-on-performance-a-longitudinal-study-of-us-hospitals-gGZgbSuzMA
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1832-5912
DOI
10.1108/jaoc-05-2020-0062
Publisher site
See Article on Publisher Site

Abstract

There has been little empirical research focused on the effect of lean on hospital performance in the form of a consolidated methodology. This paper aims to apply a more sophisticated approach to examine whether hospitals’ decision for lean implementation is endogenous and test the effects of lean on hospital performance.Design/methodology/approachThis study uses a publicly available data set of hospitals across the USA from 2002 to 2019 and performs two-stage least squares (2SLS) analysis. In the first stage, a probit model is used to estimate hospitals’ decision to implement lean. The fitted probability values from the first stage are used in the second stage to test the relationship between lean and hospital performance. Ordinary least squares (OLS) regression results are compared with those of the 2SLS approach.FindingsThe decision to implement lean is significantly associated with hospital-specific characteristics (the complexity of care, size and cost-to-charge ratio), indicating hospitals’ decision for lean implementation is endogenous. Moreover, there is strong evidence that lean implementation is positively associated with hospital financial and operational performance. The Hausman F-tests confirm the presence of endogeneity and this, in turn, suggests that OLS regressions result in unreliable estimates.Practical implicationsThe findings of this study can help hospital managers benchmark performance and explore opportunities for profit and efficiency improvement. The findings are also relevant to policymakers who strive to lower health-care spending.Originality/valueThis study is motivated by the challenges facing the health-care industry. This study is among the first to investigate endogeneity in lean implementation and the association between lean and hospital performance using large-scale archival panel data. The use of the 2SLS approach provides more confidence in statistical findings.

Journal

Journal of Accounting & Organizational Change – Emerald Publishing

Published: Oct 27, 2021

Keywords: Lean implementation; Lean hospitals; Hospital performance; Financial performance; Operational performance; Endogeneity

References

  • Readiness factors for lean implementation in health-care settings – a literature review
    Al-Balushi, S.; Sohal, A.S.; Singh, P.J.; Hajri, A.; Farsi, Y.M.; Abri, R.
  • An analysis of hospital productivity and product change
    Ashby, J.; Guterman, S.; Greene, T.
  • The effects of environmental complexity and environmental dynamism on lean practices
    Azadegan, A.; Patel, P.C.; Zangoueinezhad, A.; Linderman, K.
  • How do board size and occupational background of directors influence social performance in for-profit and non-profit organizations? Evidence from California hospitals
    Bai, G.
  • Do hospitals without physicians on the board deliver lower quality of care?
    Bai, G.; Krishnan, R.
  • The role of performance measure noise in mediating the relation between task complexity and outsourcing
    Bai, G.; Coronado, F.; Krishnan, R.
  • Lean as a learning system in a hospital ward
    Ballé, M.; Régnier, A.
  • Hospital financial performance in the recent recession and implications for institutions that remain financially weak
    Bazzoli, G.J.; Fareed, N.; Waters, T.M.
  • National health expenditures 2018 highlights
  • The influence of ownership on hospital board governance and strategic cost management
    Chang, K.
  • Lean management in academic surgery
    Collar, R.M.; Shuman, A.G.; Feiner, S.; McGonegal, A.K.; Heidel, N.; Duck, M.; McLean, S.A.; Billi, J.E.; Healy, D.W.; Bradford, C.R.
  • Hospitals, market share, and consolidation
    Cutler, D.M.; Morton, F.S.
  • Lean in health-care: a comprehensive review
    D'Andreamatteo, A.; Ianni, L.; Lega, F.; Sargiacomo, M.
  • Changes in hospital competitive strategy: a new medical arms race?
    Devers, K.J.; Brewster, L.R.; Casalino, L.P.
  • Use of lean in the emergency department: a case series of 4 hospitals
    Dickson, E.W.; Anguelov, Z.; Vetterick, D.; Eller, A.; Singh, S.
  • The effect of experience, ownership and focus on productive efficiency: a longitudinal study of US hospitals
    Ding, D.X.
  • Technology implementation, experience and hospital focus – a longitudinal analysis of electronic medical records in acute care hospitals
    Ding, D.X.; Peng, D.X.; Devaraj, S.
  • Determinants and performance effect of TQM practices: an integrated model approach
    Duh, R.R.; Hsu, A.W.H.; Huang, P.W.
  • Public versus private governance: a study of incentives and operational performance
    Eldenburg, L.; Krishnan, R.
  • The influence of ownership on accounting information expenditures
    Eldenburg, L.; Krishnan, R.
  • Earnings management using real activities: evidence from nonprofit hospitals
    Eldenburg, L.; Gunny, K.A.; Hee, K.W.; Soderstrom, N.
  • Governance, performance objectives and organizational form: evidence from hospitals
    Eldenburg, L.; Hermalin, B.E.; Weisbach, M.S.; Wosinska, M.
  • Georgia tech helps piedmont newnan improve accuracy, decrease turnaround times
    Fullbright, N.
  • Management accounting and control practices in a lean manufacturing environment
    Fullerton, R.R.; Kennedy, F.A.; Widener, S.K.
  • Adaptation of lean methodologies for health-care applications
    Hagg, H.; Scachitti, S.; Workman-Germann, J.; Suskovich, D.
  • Lean in 2010: are health-care systems there yet?
    Haile, N.
  • Effects of organizational context on lean implementation in five hospital systems
    Harrison, M.; Paez, K.; Carman, K.; Stephens, J.; Smeeding, L.; Devers, K.; Garfinkel, S.
  • The measurement of efficiency and productivity of health-care delivery
    Hollingsworth, B.
  • Team admission: changing the way we work
    Homolo, R.; Fuller, J.
  • The association between activity-based costing and manufacturing performance
    Ittner, C.D.; Lanen, W.N.; Larcker, D.F.
  • Lean manufacturing improves emergency department throughput and patient satisfaction
    Kane, M.; Chui, K.; Rimicci, J.; Callagy, P.; Hereford, J.; Shen, S.; Norris, R.; Pickham, D.
  • Improving emergency department efficiency by patient streaming to outcomes-based teams
    Kelly, A.M.; Bryant, M.; Cox, L.; Jolley, D.
  • How can standardizing surgery tools prevent adverse events?
    King, R.
  • RFID in the health-care supply chain: usage and application
    Kumar, S.; Swanson, E.; Tran, T.
  • Adoption and spread of new imaging technology: a case study
    Ladapo, J.A.; Horwitz, J.R.; Weinstein, M.C.; Gazelle, G.S.; Cutler, D.M.
  • Lean service operations: reflections and new directions for capacity expansion in outpatient clinics
    Laganga, L.R.
  • An interdisciplinary approach to safer blood transfusion
    LaRocco, M.; Brient, K.
  • Determinants of market share of for-Profit hospitals: an empirical examination
    Lee, S.; Chung, C.Y.; Sul, H.K.; Lee, Y.
  • Factors of US hospitals associated with improved profit margins: an observational study
    Ly, D.P.; Cutler, D.M.
  • Assessing self-selection and endogeneity issues in the relation between activity-based costing and performance
    Maiga, A.S.
  • Assessing JIT performance: an econometric approach
    Maiga, A.S.; Jacobs, F.A.
  • Lean interventions in health-care: do they actually work? A systematic literature review
    Moraros, J.; Lemstra, M.; Nwankwo, C.
  • Applying toyota production system techniques for medication delivery: improving hospital safety and efficiency
    Newell, T.L.; Steinmetz-Malato, L.L.; Van Dyke, D.L.
  • Analysis and evaluation of reviews on lean and six sigma in health care
    Peimbert-García, R.E.
  • Lean, six sigma management becoming more popular at hospitals
    Pizzi, R.
  • Lean management and US Public hospital performance: results from a national survey
    Po, J.; Rundall, T.G.; Shortell, S.M.; Blodgett, J.C.
  • Implementing lean in health-care: making the link between the approach, readiness and sustainability
    Radnor, Z.
  • Lean in health-care: the unfilled promise?
    Radnor, Z.J.; Holweg, M.; Waring, J.
  • Uncompensated care burden may mean financial vulnerability for rural hospitals in states that did not expand medicaid
    Reiter, K.L.; Noles, M.; Pink, G.H.
  • Learning to be lean: one hospital's staff discovers improving efficiency isn’t easy
    Rice, S.
  • Improving patient flow using lean methodology: an emergency medicine experience
    Rutman, L.; Stone, K.; Reid, J.; Woodward, G.A.T.; Migita, R.
  • Health-care cost associations of patients who use illicit drugs in Florida: a retrospective analysis
    Ryan, J.L.; Rosa, V.R.
  • An empirical investigation of the performance consequences of nonfinancial measures
    Said, A.A.; HassabElnaby, H.R.; Wier, B.
  • Lean manufacturing: context, practice bundles, and performance
    Shah, R.; Ward, P.T.
  • Hospital ownership and financial performance: what explains the different findings in the empirical literature?
    Shen, Y.C.; Eggleston, K.; Lau, J.; Schmid, C.H.
  • Use of lean and related transformational performance improvement systems in hospitals in the United States: results from a national survey
    Shortell, S.M.; Blodgett, J.C.; Rundall, T.G.; Kralovec, P.
  • Predicting inpatient hospital payments in the United States: a retrospective analysis
    Smith, M.W.; Friedman, B.; Karaca, Z.; Wong, H.S.
  • Instrumental variables regression with weak instruments
    Staiger, D.; Stock, J.H.
  • Effects of admission to a teaching hospital on the cost and quality of care for medicare beneficiaries
    Taylor, D.H.; Whellan, D.J.; Sloan, F.A.
  • Competition among hospitals in the United States
    Thomson, R.B.
  • Evaluation of an emergency department lean process improvement program to reduce length of stay
    Vermeulen, M.J.; Stukel, T.A.; Guttmann, A.; Rowe, B.H.; Zwarenstein, M.; Golden, B.; Nigam, A.; Anderson, G.; Bell, R.S.; Schull, M.J.; Afilalo, M.
  • Nursing annual report 2014
  • The impact of system level factors on treatment timeliness: utilizing the toyota production system to implement direct intake scheduling in a semi-rural community mental health clinic
    Weaver, A.; Greeno, C.G.; Goughler, D.H.; Yarzebinski, K.; Zimmerman, T.; Anderson, C.
  • Transforming a plant to lean in a large, traditional company: Delphi saginaw steering systems, GM
    Woolson, D.; Husar, M.A.
  • Evaluation of the clinical process in a critical care information system using the lean method: a case study
    Yusof, M.M.; Khodambashi, S.; Mokhtar, A.M.
  • The relationship between safety net activities and hospital financial performance
    Zwanziger, J.; Khan, N.; Bamezai, A.
  • The impact of competition on management quality: evidence from public hospitals
    Bloom, N.; Propper, C.; Seiler, S.; Van Reenen, J.
  • Lean thinking in emergency departments: a critical review
    Holden, R.J.
  • An exploratory analysis for lean and six sigma implementation in hospitals: together is better?
    Lee, J.Y.; McFadden, K.L.; Gowen, C.R.
  • Rapid improvement event: an alternative approach to improving care delivery and the patient experience
    Martin, S.C.; Greenhouse, P.K.; Kowinsky, A.M.; McElbeny, R.L.; Petras, C.R.; Sharbaugh, D.T.
  • Hospital market concentration, pricing, and profitability in orthopedic surgery and interventional cardiology
    Robinson, J.C.