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CORVINUS UNIVERSITY of BUDAPEST Faculty of Economics, Phd Program Csaba László Dózsa Strategic Responses of Hospitals in Hungary to the Changing Environment in the Early 21st Century Institute of Management Sciences Controlling Department Supervisor: Viktória Bodnár Ph.D. © Csaba László Dózsa CORVINUS UNIVERSITY OF BUDAPEST Faculty of Economics, PhD Program Strategic Responses of Hospitals in Hungary to the Changing Environment in the Early 21st Century Ph.D. Thesis Csaba László Dózsa Budapest, 2010 Table of contents 1 INTRODUCTION ........................................................................................................... 12 1.1 Subject matter ....................................................................................................................... 12 1.2 The structure of the dissertation ........................................................................................... 13 1.3 Limitations of the analysis of the hospital sector ................................................................... 14 1.4 Survey of literature, databases .............................................................................................. 15 2 ANALYSIS OF EXTERNAL ENVIRONMENTAL FACTORS .................................. 18 2.1 Demographic environment – changes in need and demand factors ...................................... 20 2.2 Changes in the regulatory environment of hospitals between 1998 and 2008 ....................... 21 2.2.1 Antecedents – separation of extensive hospital development and the insurance and service systems ..................................................................................................................................... 22 2.2.2 Strengthening the public purchaser’s role as strategic purchaser ......................................... 24 2.2.3 Cost-containing and cost-decreasing policies effective from 2004 ....................................... 27 2.3 Changes in the financial and financing environments ............................................................ 29 2.3.1 The system of social insurance based public financing – the introduction of HDG system and experiences of its use .................................................................................................................... 30 2.3.2 Hungarian hospital sector in the shadow of health-care reforms ......................................... 34 2.3.3 Central governmental earmarked investments and EU developments and investments ..... 36 2.4 Labour market and human resources in health care .............................................................. 40 2.5 Summary assessment of external environmental changes .................................................... 44 3 ANALYSIS OF THE INTERNAL ENVIRONMENT OF HUNGARIAN HOSPITALS ............................................................................................................................. 48 3.1 Internal structure of Hungarian hospitals .............................................................................. 48 3.1.1 Ownership forms and privatisation in the hospital sector ..................................................... 48 3.1.2 Impact of ownership relations on hospital efficiency ............................................................ 51 3.2 Size of hospitals ..................................................................................................................... 55 3.2.1 Characteristic data of the Hungarian hospital sector in international comparison ............... 55 3.2.2 The composition of Hungarian hospital sector according to size .......................................... 61 3.2.3 Changes in the concentration of the hospital section in Hungary ......................................... 63 3.3 Changes in professional profile (specialities) ......................................................................... 66 3.3.1 Analysis of hospital capacity, case number and performance in major medical specialties . 66 3.3.2 Analysis of the spread of one-day surgery ............................................................................. 74 3.4 Technological characteristics in hospitals .............................................................................. 75 4 STRATEGIC DECISION SITUATIONS AND CHOICES IN THE HUNGARIAN HOSPITAL SECTOR .............................................................................................................. 79 4.1 Analysis of strategic decision situations in the literature on strategic management .............. 79 4.2 Decision situations in the Hungarian hospital sector ............................................................. 84 5 4.2.1 Size/capacity of hospitals ....................................................................................................... 86 4.2.2 Professional profile, range of activities, care types ................................................................ 88 4.2.3 Technological content of inpatient care ................................................................................. 89 4.2.4 Change of structure and types of reorganisation in the Hungarian health-care scheme ...... 92 4.2.5 Typifiable strategic choices according to types of institutions ............................................... 94 5 EMPIRICAL ANALYSIS OF THE HUNGARIAN HOSPITAL SECTOR: ANALYTICAL METHODS, HYPOTHESES AND RESULTS .......................................... 96 5.1 Empirical analysis of the hospital sector ............................................................................... 96 5.1.1 Database to the empirical analysis ......................................................................................... 98 5.2 Classification of hospitals by cluster analysis ........................................................................ 99 5.2.1 Theory – progessivity levels of hospitals ................................................................................ 99 5.2.2 Types of cluster-analysis and presentation of the variables ................................................ 100 5.2.3 Cluster-analysis results ......................................................................................................... 103 5.2.4 Summary of the cluster analysis of the hospital sector and hypothesis testing .................. 109 5.3 Analysis of hospital efficiency: operational efficiency, economies of scale. Method: Data Evelopment Analysis ........................................................................................................................ 112 5.3.1 Theoretical background of efficiency analysis and DEA method .......................................... 112 5.3.2 DEA analysis in the Hungarian hospital sector ..................................................................... 115 5.3.3 Results and analysis of efficiency in county hospitals .......................................................... 120 5.3.4 Summary of the DEA-based analysis of efficiency and hypothesis testing........................... 126 5.4 Analysis of hospital indebtedness and the soft budget constraint in the Hungarian hospital sector .................................................................................................................................. 127 5.4.1 Review of international literature on SBC analysis ............................................................... 128 5.4.2 Analysis of the SBC syndrome in the Hungarian hospital sector .......................................... 128 5.4.3 General analysis of hospital indebtedness ........................................................................... 129 5.4.4 Detailed analysis of the indebtedness of hospitals in the light of government measures ... 132 5.4.5 Summary of the analysis of Soft Budget Constraint and hypothesis testing ........................ 140 5.5 Analysis of the strategic management of the hospitals ....................................................... 142 5.5.1 The importance of the analysis on strategic management .................................................. 142 5.5.2 The method for analysing hospital management and the sample ....................................... 143 5.5.3 Detailed analysis of strategic documentation and interviews .............................................. 147 5.5.4 Summary of institutional strategies and hypothesis testing ................................................ 156 6 CONCLUSIONS ............................................................................................................ 159 APPENDIX ............................................................................................................................ 165 BIBLIOGRAPHY .................................................................................................................. 261 LIST OF RELEVANT PUBLICATIONS OF THE AUTHOR .......................................... 273 6 List of tables and figures 1.1. Table Strategy of searches in literature .................................................................... 16 2.1. Table Collation of the environmental factors of business organisations with specific factors in the hospital sector .............................................................................. 19 2.2. Table Major areas of strengthening the strategic purchaser role ............................. 25 2.3. Table Characteristic data of the HDG system – extract from Appendix 3 of Welfare Ministry Decree No. 9/1993 .............................................................................. 31 2.4. Table Number of environmental factors and speed of their change .......................
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