Consequences of Organizational Change in U.S. Hospitals

Organizational change has become the norm rather than the exception among U.S. hospitals. Downsizing, service diversification, and affiliation with healthcare systems are but a few notable examples. In this paper, we review the rationale and consequences of organizational change in U.S. hospitals. Our focus is on organizational change that occurs in hospital ownership, authority structure, administrative arrangements, operational capacity, products/service areas, and scope and composition of services. Specifically, three areas of organizational change are selected for in-depth review and comparison: (1) the development of new multi-institutional arrangements; (2) change in traditional ownership and management configurations; and (3) diversification in organizational products/services and consolidation of organizational scale. Empirical articles on hospital organizational change published between 1980-1999 in health services research, social science, and business journals are included in our review. We show that existing empirical findings are inconclusive regarding the financial and survival outcomes of organizational change in hospitals. Furthermore, we summarize the strengths and weaknesses of current hospital change research, and provides specific suggestions for future research in this area