TY - JOUR
T1 - The effect of lean on performance
T2 - a longitudinal study of US Hospitals
AU - Zhang, Huilan
N1 - Funding Information:
The author is grateful to the Editor, Dr. Zahirul Hoque, and an anonymous reviewer for their insightful and detailed comments.
Publisher Copyright:
© 2021, Emerald Publishing Limited.
PY - 2021/10/27
Y1 - 2021/10/27
N2 - Purpose: There has been little empirical research focused on the effect of lean on hospital performance in the form of a consolidated methodology. This paper aims to apply a more sophisticated approach to examine whether hospitals’ decision for lean implementation is endogenous and test the effects of lean on hospital performance. Design/methodology/approach: This study uses a publicly available data set of hospitals across the USA from 2002 to 2019 and performs two-stage least squares (2SLS) analysis. In the first stage, a probit model is used to estimate hospitals’ decision to implement lean. The fitted probability values from the first stage are used in the second stage to test the relationship between lean and hospital performance. Ordinary least squares (OLS) regression results are compared with those of the 2SLS approach. Findings: The decision to implement lean is significantly associated with hospital-specific characteristics (the complexity of care, size and cost-to-charge ratio), indicating hospitals’ decision for lean implementation is endogenous. Moreover, there is strong evidence that lean implementation is positively associated with hospital financial and operational performance. The Hausman F-tests confirm the presence of endogeneity and this, in turn, suggests that OLS regressions result in unreliable estimates. Practical implications: The findings of this study can help hospital managers benchmark performance and explore opportunities for profit and efficiency improvement. The findings are also relevant to policymakers who strive to lower health-care spending. Originality/value: This study is motivated by the challenges facing the health-care industry. This study is among the first to investigate endogeneity in lean implementation and the association between lean and hospital performance using large-scale archival panel data. The use of the 2SLS approach provides more confidence in statistical findings.
AB - Purpose: There has been little empirical research focused on the effect of lean on hospital performance in the form of a consolidated methodology. This paper aims to apply a more sophisticated approach to examine whether hospitals’ decision for lean implementation is endogenous and test the effects of lean on hospital performance. Design/methodology/approach: This study uses a publicly available data set of hospitals across the USA from 2002 to 2019 and performs two-stage least squares (2SLS) analysis. In the first stage, a probit model is used to estimate hospitals’ decision to implement lean. The fitted probability values from the first stage are used in the second stage to test the relationship between lean and hospital performance. Ordinary least squares (OLS) regression results are compared with those of the 2SLS approach. Findings: The decision to implement lean is significantly associated with hospital-specific characteristics (the complexity of care, size and cost-to-charge ratio), indicating hospitals’ decision for lean implementation is endogenous. Moreover, there is strong evidence that lean implementation is positively associated with hospital financial and operational performance. The Hausman F-tests confirm the presence of endogeneity and this, in turn, suggests that OLS regressions result in unreliable estimates. Practical implications: The findings of this study can help hospital managers benchmark performance and explore opportunities for profit and efficiency improvement. The findings are also relevant to policymakers who strive to lower health-care spending. Originality/value: This study is motivated by the challenges facing the health-care industry. This study is among the first to investigate endogeneity in lean implementation and the association between lean and hospital performance using large-scale archival panel data. The use of the 2SLS approach provides more confidence in statistical findings.
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U2 - 10.1108/JAOC-05-2020-0062
DO - 10.1108/JAOC-05-2020-0062
M3 - Article
AN - SCOPUS:85107741674
VL - 17
SP - 728
EP - 752
JO - Journal of Accounting and Organizational Change
JF - Journal of Accounting and Organizational Change
SN - 1832-5912
IS - 5
ER -