Scholars have recently suggested the reorganization of general hospitals into organizationally separate divisions for routine and non-routine services to overcome operational misalignments between the two types of services. We provide empirical evidence for this proposal from a quality perspective, using over 250,000 patient records from 60 German hospitals across 39 disease segments, and focusing on in-hospital mortality as outcome. First, routine patients in the sample benefit from a high relative volume (focus) of their disease segment in their hospital, suggesting that routine services division should be organized as a set of diseasefocused units (hospitals-within-hospitals). Second, after controlling for focus effects, mortality of routine patients is statistically unaffected by their hospitals volume in their disease segment, while mortality rates for complex patients are lower in hospitals that have a low volume in the patient’s disease segment. This suggests that the reduced patient volume in the two separate divisions, relative to the whole hospital, will not impede quality for routine patients and may increase quality for complex patients. Finally, we provide evidence that non-routine service divisions can improve service quality for complex patients by adopting a disease-based rather than medical specialty-based departmental routing strategy for newly arriving patients. A counterfactual analysis, based on a simultaneous equations probit model that controls simultaneously for endogeneity of volume, focus, and routing suggests that the proposed reorganization could have reduced mortality in the sample by 13:43% (95% CI [6:87%; 18:95%]) for routine patients and by 11:66% (95% CI [6:13%; 16:86%]) for non-routine patients.

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Keywords healthcare management, hospital, patient complexity, volume, focus, routing, solution shop, value-adding process, service quality, mortality
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Journal Management Science
Kuntz, L., Scholtes, S, & Sülz, S. (2018). Separate and Concentrate: Accounting for Patient Complexity in General Hospitals. Management Science. doi:10.1287/mnsc.2018.3064