Rural hospitals use of strategic adaptation in a changing health care environment

Rural hospitals are examples of small organizations that have seen their environment change rapidly in the last decade. The purpose of this study has been to examine these changes and the abilities of small rural hospitals to adapt to these changes. Hospitals are organizations whose abilities to adapt to the stresses of change are enhanced by the use of strategic planning and strategic adaptation. This study used Shortell et al.\u27s (1990) model of strategic adaptation to examine the conditions under which rural hospitals utilize the precepts of strategic adaptation to change to meet the demands of the rapidly changing health care environment. A survey and personal interviews of rural hospital administrators were used in this evaluation process. Environmental changes identified by the rural administrators included inadequate health care funding by the federal and state governments, low rates of occupancy, uncollectible health service payments, hospital cost increases, inadequate private reimbursement, and increased regulation. Hospitals with adequate resources were able to change their strategic orientation from a defender to proactive analyzer. Other rural hospitals remained in the analyzer or prospector orientation. Few rural hospitals had a formal plan of strategic adaptation, but their behaviors exhibited the ability to change to meet environmental stresses. A large number of the surveyed and interviewed administrators identified areas of public policy that were creating environmental stress and making it difficult to develop adaptations. Inadequate funding by Medicare and Medicaid were problematic at the time of the study. The regulatory demands of state and federal government were burdensome in terms of requirements for services and staffing. This was particularly true with the limited financial and personnel resources in rural areas. The development of state and federal regulations and policies that allow flexibility in providing health care was identified as a critical need to ensure the survivability of rural hospitals