Market Competition, Political Constraint, and Managerial Practice in Public, Nonprofit, and Private American Hospitals

Abstract

A rich literature focuses on how the external environment constrains managerial practice in large service organizations, much of which overlooks the differences between public, nonprofit, and private organizations. The present study identifies important distinctions between sectors and theorizes how managerial practices differ across sectors under external constraints from the market and politics. Using a national survey of almost 1,000 toplevel managers in public, private, and nonprofit hospitals in the United States, this study finds differences in the practice of public, nonprofit, and private managers under market competition and political constraint. Facing market competition, private managers prioritize the management of service efficiency more than their nonprofit and public counterparts. Market competition is also found to be associated with divergent managerial priorities on controlling per patient treatment costs. With political constraint, public and nonprofit managers engage in greater preparation for the 2010 national health care reform than their private counterparts. These findings, taken together, highlight the importance of institutional context and cross-sector differences for understanding managerial practice.