This study confirms and extends previous research by providing a detailed longitudinal examination of the strategic group and performance relationship in the hospital industry from 1983 to 1993. Based on a deductive approach using Porter's (1980) typology, we find that matching strategy to environment affects hospital performance, that the appropriate match between strategy and environment changed over the 1983 to 1993 time period, and that hospitals combining a low cost and differentiation strategy (i.e., a best-cost approach) performed well during most of the time period examined. We also find significant movement between strategic groups, thus calling into question the degree to which mobility barriers affect between group performance differences. Finally, our research suggests the existence of multiple groups following the same strategic approach, a result that calls into question the view that groups within an industry are monolithic.