We define a hospital’s portfolio strategy across two dimensions:
- focus, which is the depth of expertise within a category and
- related focus, which is the breadth of expertise across related categories.
While the effects are significant and substantive, it is also important to know why they are so. We demonstrate that portfolio strategy can act as a strong signal of clinical quality, which patients care deeply about. Put differently, our results highlight the value of reputation/competence signaling by hospitals (through their service portfolios), in particular for patients with complex needs.
Lessons for Chief Marketing Officers
In a new Journal of Marketing study, we assess the impact of a hospital’s portfolio strategy on patient demand. A growing trend in healthcare in recent years centers on hospital portfolio strategy—hospitals making key portfolio decisions such as expanding or contracting emphasis on care delivery within select departments. For example, Sanford Health, one of the largest rural health systems in the U.S., expanded its emphasis on cancer care services with an allocation of a new dedicated center with specialists, facility, and technology. These portfolio decisions call for significant resource investments, often running into millions of dollars.
Sriram Thirumalai is Associate Professor of Information Systems and Supply Chain, Texas Christian University, USA.