Acute care hospitals have increasingly been forming local strategic hospital alliances (SHAs), which consume considerable resources in forming and may affect the competitiveness of provider markets. This research shows that SHAs and market factors, which have been perceived to be threats to hospitals, are related to hospitals' financial performance. Among the findings are that SHA members have higher net revenues but that they are not more effective at cost control. Nor do the higher net revenues result in higher cash flow. However, increasing SHA penetration in a market is related to lower net revenues per case. In addition, the penetration of private health maintenance organizations in markets is associated with lower revenues and expenses.

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This study evaluates the productivity changes for the Veterans Integrated Service Networks (VISNs) that the Veterans Health Administration (VHA) created, comparing performance in 1994 with that in 2004. This represents periods before and after the VHA in 1995 reconfigured provider units into 21 regionalized delivery systems and engaged in other important system innovations. Productivity is measured using the Malmquist Index approach (a longitudinal version of the data envelopment analysis [DEA]). Results indicate that the VISN restructuring generally produced improvements in overall productivity (Malmquist scores) and in VISN adaptations to structural/technological change. They also show that the VISNs overall did not produce "changes in efficiency," reflecting challenges they may have faced in making "technical change" through management adaptations. The findings are consistent with what would be expected, given the major changes that did occur within the VHA in recent years as well as the before and after design used in this study.

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