Factors associated with interorganizational relationships among outpatient drug treatment organizations 1990-2000

Health Services Research, Oct, 2005 by Rebecca Wells, Christy Harris Lemak, Thomas A. D'Aunno

Much of health care policy now revolves around decisions about when and how to foster competition and cooperation, understanding that care providers typically offer the best services at the lowest prices when there is a blend of both factors. The current study focuses on the cooperative aspect of this balance, specifically within the substance abuse treatment sector. Interorganizational cooperation offers great promise for improving care delivery, especially for clients with complex needs such as those with chemical dependence. At the same time, relationships with other providers inevitably entail risk and take up substantial staff time. What factors facilitate such alliances, despite these costs?

Cooperative arrangements among health care organizations can lead to improved access, enhanced service quality, and reduced costs. Recent analyses indicated that people living in areas with more public health collaboration reported fewer problems with access to care (Hendryx et al. 2002). In addition, evidence from case studies showed benefits for access to care from interorganizational coordination (e.g., Lambrew, Ricketts, and Morrissey 1993). Partners in clinical collaborations have also reported reductions in morbidity and mortality (Lasker 1997; Boex and Cooksey 1998). Finally, although findings about financial effects of interorganizational cooperation have been mixed (cr., Bazzoli et al. 2000), higher levels of coordination have sometimes been associated with subsequent performance gains (Nauenberg et al. 1999). Many participants in collaborations between public health and medicine have also cited cost-effectiveness as an outcome (Lasker 1997), and some health partnerships have used their leverage to reduce costs for the underserved (Shortell et al. 2002).

In the current study, we examine the factors associated with the formation of interorganizational relationships (IORs) by a particular type of health care organization--outpatient drug abuse treatment organizations. In this context, cooperative arrangements may help relatively small organizations meet a variety of medical, mental health, and social client problems that necessitate substantial coordination. Such resource leveraging is especially vital for substance abuse treatment, given severe capacity constraints in this sector (SAMHSA 2003).

CONCEPTUAL APPROACH

Oliver defines IORs as "the relatively enduring transactions, flows, and linkages that occur among or between an organization and one or more

A previous version of this paper was presented at the Academy of Management 2003 annual meeting in Seattle.

organizations in its environment" (Oliver 1990, p. 241). Within this broad definition, we focus on voluntary relationships in which two or more otherwise independent organizations jointly pursue goals (Longest 1990). We argue that two factors must be present for IORs to occur: motivation and opportunity (Eisenhardt and Schoonhoven 1996). Within these categories, the current study identifies specific factors predicting IOR formation by drug abuse treatment centers and thus makes two distinct contributions to the literature.

First, this study empirically tests the effects of a range of factors on IOR formation; we use a large national sample of organizations rather than relying on anecdotal information about managerial motivations (cf., Zuckerman et al. 1995). Second, by focusing on drug abuse treatment centers, these analyses broaden the range of organizations examined relative to cooperative strategies. Among health care service providers, drug abuse treatment facilities are generally smaller than acute care facilities; treatment emphasizes care seekers' behavioral change rather than provider interventions; and the populations served are stigmatized. These factors make the generality of findings from, for instance, hospitals, uncertain. At the same time, the societal importance of drug abuse mitigation makes it vital for policy makers and managers to ascertain what factors promote treatment centers' ability to leverage resources cooperatively.

HYPOTHESES

Motivations to Cooperate

By cooperating, organizations seek to achieve common strategic and learning goals at reduced individual cost (Harrigan 1986; Kogut 1988; Mays, Halverson, and Kaluzny 1998). For example, cooperation could include a joint venture with another treatment center to provide a particular type of treatment, a partnership with a social service agency to address a specific addiction problem or client type (e.g., pregnant substance abusers), or an alliance of treatment providers that jointly lobby state and federal policy makers to enhance substance abuse benefit packages or seek increased funding for treatment programs, among other objectives.

In general, two types of motivations may promote IORs. First, such cooperative relationships may be necessary to increase the range of services offered or markets served, given limits to the resources available to any one organization. Second, given competition and payers' emphasis on cost-effectiveness, we expect centers to form cooperative relationships both to reduce costs in actuality and to maintain the appearance of doing so. Meeting Diverse Client Needs. Previous research has found that as organizations expand their breadth of services, they will be more likely to form IORs to manage the resulting interdependencies (Aiken and Hage 1968; Whetten and Aldrich 1979; Powell and Brantley 1992). In addition, organizations may form relationships to acquire client-related knowledge not easily transferred through arms-length transactions (Berg and Friedman 1977).