The role of standardized management practices in improving quality of care: Evidence from healthcare chains

Quality of care is of paramount importance for private sector hospitals to differentiate their supply of care. Amongst the debated strategies to achieve this goal is the sharing of managerial practices (Bloom & Sadun, 2014; McConnell et al., 2013). In fact, healthcare organizations worldwide have largely engaged in cooperation and networking behaviours during the last decades, mainly through mergers. As such, networks owned by private-equity funds now dominate healthcare industries in most developed countries. They rely on standardized management practices across their facilities in order to improve their efficiency. These include standardizing the use of medical consumables between facilities and centralising their purchasing, optimizing the use of staff and premises, as well as developing centralized ancillary services and amenities (e.g., private rooms, premium catering, internet access) that generate additional revenues. Although hospital mergers are often driven by the goal of rationalizing resources and reducing costs (Craig et al., 2021; Schmitt, 2017), their impact on quality of care remains debated. A recent systematic review by Mariani et al. (2022) highlights that mergers produce mixed results in terms of quality of care. Moreover, whilst the role of standardized managerial practices has been largely overlooked, healthcare networks have been the subject of growing criticisms. These networks frequently rely on leveraged buyouts (LBOs) to finance external growth, pushing them to prioritize rapid profitability in newly acquired facilities. This financial pressure can sometimes compromise the quality of care provided. For example, in 2022, France's leading nursing-home group, ORPEA, faced a major scandal when managerial practices, designed and enforced by the network's top management, were linked to mistreatment of residents across its facilities. Our research attempts to clarify the link between standardization of managerial practices via network integration and quality of care by examining: whether network integration improves quality of care (H1), whether network integration fosters the standardization of managerial practices (H1a), and whether standardized managerial practices improve quality of care (H1b). To do so, we design a mixed empirical study on the French private hospital sector, where networks hold most of the market. Firstly, we rely on data from the French National Health Data System (SNDS) to examine how being integrated to a network may impact quality of care (e.g., hospital occupancy rates, readmission rates, average length of stay) through a Difference-in-Differences (DiD) method. Then, we rely on a series of qualitative semi-directive interviews with professionals from hospital networks (e.g., Head of Quality and Risk Management, Head of Information Systems, Head of Purchasing) or managers from merged hospitals to explain the role of management practices standardization in improving quality of care.