Developing a Strategic Group Typology for Home Health Care Agencies

Abstract

Considering the growing interest in Home Health Care, an important area of examination relates to the strategic decisions made by home health agency leaders. The purpose of this study is to explore the existence of strategic groups in the home health industry using Porter’s generic strategies. A secondary analysis of data on agency resource deployment and scope characteristics were combined with secondary agency market and organizational characteristics. Hierarchical cluster analysis was used to examine the existence of strategic groups. The relationship between group membership and organizational and market characteristics was examined using chi-square and analysis of variance (ANOVA). Data from 7,715 home health agencies were explored in this analysis. A four-cluster solution emerged yielding sizes of cluster 1 = 1,682, cluster 2 = 1,731, cluster 3 = 3,763, and cluster 4 = 539. Cluster 1 was classified as the cost leaders with the lowest resource deployment and lowest scope. Cluster 2 was classified as the differentiator group with the highest scope and second highest resource deployment. Cluster 3 was classified as the both cost leader and differentiator group with the second highest scope and second lowest resource deployment. Cluster 4 was classified as the stuck-in-the-middle group with the second lowest scope and highest resource deployment. Using Porter’s generic strategies, the results showed evidence that strategic groups exist in the home health industry. Furthermore, home health agency strategic groups are significantly different based on market characteristics.