The Human Cost of a Management Failure: Organizational Downsizing at General Hospital

By Seth Allcorn; Howell S.Baum et al. | Go to book overview

Chapter 2

Case Study Context, Development, and Analysis

The healthcare industry is faced with changing technological, social, ethical, legislative, judicial, and marketplace agendas that demand the utmost from the management and employees of hospitals. How hospitals run is changing; as are how they relate to each other, physicians, employers, insurance companies, managed care organizations, and government programs (Medicare and Medicaid). Survival hinges on reducing the cost per unit of service while maintaining quality, access, and user friendliness. The need to change has created a wave (often consultant led) of downsizing, restructuring, and reengineering to become more cost effective as well as minimize the consumption of clinical resources by physicians.

The pace of change is quickening. In the 1990s, the leaders of hospitals are faced with the prospect of faster-paced marketplace consolidation, which is creating local and regional horizontally and vertically integrated healthcare delivery organizations. These huge networks endeavor to combine hospitals, nursing homes, multilevel long-term care facilities, freestanding surgical and diagnostic centers, ambulatory clinics, home healthcare delivery organizations, and physicians into an integrated and balanced whole. The resulting systems must then rationalize capacity by eliminating duplicated resources and services to lower cost. Governing boards and senior management of hospitals are faced with the prospect of engulfment by a large system where their identity and autonomy are lost. Those who have labored hard to build their hospital into a fine full-service institution may suddenly be obliged to close beds and cut hard-won programs in order to optimize the system. Inevitably, these huge, monolithic utility-like healthcare delivery organizations promise to transform the healthcare

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