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As competition in Taiwan's healthcare sector has increasingly become severe, hospital innovation has become well recognised as an important resource for gaining competitive advantage. This study proposed a new research model for investigating the impact of hospital innovation on customer-perceived quality of care. Hospital innovation includes both medical and administrative innovation. The measures of quality of care are defined as a process-based evaluation concept with three components: structure, process, and outcome of care. Specifically, this research intends to explore two important issues. First, we explore the impact of hospital innovation on quality of care. Next, we examine the process-based evaluation concept for its practical validity. A sample survey was conducted for collecting data from the customers of larger hospitals. The structural equation model was used to examine the data. The results showed hospital innovation indicating a great predictive power in explaining perceived quality of care. Specifically, the process of care was found to be an important mediator for creating the ultimate outcome of care from the initial structure of care.
