Institutional and economic influences on the adoption and extensiveness of managerial innovation in hospitals: The case of reengineering.

In the recent past, a number of managerial innovations--including product line management, total quality management, and reengineering--have swept through the hospital industry. Given their pervasiveness and their cost, understanding the mix of factors that influences their adoption is of theoretical interest and practical relevance. The research reported here focuses on this general question by examining influences on the adoption and extensiveness of a particular managerial innovation, hospital reengineering. The results suggest that while economic and institutional factors have influenced the adoption and extensiveness of hospital reengineering, institutional forces play a more important role. The greater influence of institutional forces may be attributed to the high degree of uncertainty in health care, the causal ambiguity of the innovation, and the anticipatory actions of hospitals attempting to position themselves in a rapidly changing environment.

Does reengineering really work? An examination of the context and outcomes of hospital reengineering initiatives.

OBJECTIVE: To examine the effect of reengineering on the competitive position of hospitals. Although many promises have been made regarding outcomes of process reengineering, little or no research has examined this issue. This article provides an initial exploration of the direct effects of reengineering on the competitive cost position of hospitals and the modifying effects of implementation factors. DATA SOURCES/STUDY SETTING: Obtained for primary data from a 1996/1997 national survey of hospital restructuring and reengineering sponsored by the American Hospital Association and the Leonard Davis Institute for Health Economics. Responses from approximately 30 percent of all U.S. acute care hospitals with 100 or more inpatient beds in metropolitan service areas were combined with American Hospital Association annual survey and InterStudy HMO data in this study. STUDY DESIGN: A first-difference multivariate regression was utilized to examine the effects of reengineering and other explanatory variables on the change in the cost position of a hospital's expenses per adjusted patient day relative to its market's costs per adjusted patient day. DATA COLLECTION/EXTRACTION METHODS: The survey of hospital restructuring and reengineering was mailed to hospital chief executive officers. The CEOs identified reengineering and restructuring hospital activities over the previous five years. The extensiveness and components of reengineering and internal restructuring were identified and used in the empirical analysis. PRINCIPAL FINDINGS: Results suggest that reengineering without integrative and coordinative efforts may damage an organization's cost position. The use of steering committees, project teams, codification of the change process, and executive involvement in core changes modifies the results of reengineering to improve an organization's competitive position. CONCLUSIONS: In a national sample of hospitals, reengineering alone was not found to improve the relative cost-competitive position. Organizations attempting to improve their cost competitiveness must consider the way in which change is implemented. This research suggests that the process of change may be as important as the change instrument. Additional research is needed to explore differences between early and late adopters.

Reengineering hospitals: evidence from the field.

Current estimates suggest that over sixty percent of all U.S. hospitals are involved in reengineering initiatives. The level of investment is staggering; literally billions of dollars are being spent in the name of reengineering. Surprisingly little research has been reported, however, aimed at clarifying how this money is being spent (i.e., the content of reengineering) or identifying the management practices that facilitate or impede implementation. This paper summarizes extensive field research from fourteen hospitals across the country aimed at developing a clearer picture of reengineering. The research identifies seven components of hospital reengineering present in various configurations in the hospitals examined. Methods for facilitating reengineering are explored and eight major barriers recognized. Site specific examples are provided to illustrate how the facilitators and barriers work in practice.

Owned vertical integration and health care: promise and performance.

This article examines the alleged benefits and actual outcomes of vertical integration in the health sector and compares them to those observed in other sectors of the economy. This article concludes that the organizational models on which these arrangements are based may be poorly adapted to the current environment in health care.

Hospital adoption of medical technology: an empirical test of alternative models.

OBJECTIVE: This study examines hospital motivations to acquire new medical technology, an issue of considerable policy relevance: in this case, whether, when, and why hospitals acquire a new capital-intensive medical technology, magnetic resonance imaging equipment (MRI). STUDY DESIGN: We review three common explanations for medical technology adoption: profit maximization, technological preeminence, and clinical excellence, and incorporate them into a composite model, controlling for regulatory differences, market structures, and organizational characteristics. All four models are then tested using Cox regressions. DATA SOURCES: The study is based on an initial sample of 637 hospitals in the continental United States that owned or leased an MRI unit as of 31 December 1988, plus nonadopters. Due to missing data the final sample consisted of 507 hospitals. The data, drawn from two telephone surveys, are supplemented by the AHA Survey, census data, and industry and academic sources. PRINCIPAL FINDING: Statistically, the three individual models account for roughly comparable amounts of variance in past adoption behavior. On the basis of explanatory power and parsimony, however, the technology model is "best." Although the composite model is statistically better than any of the individual models, it does not add much more explanatory power adjusting for the number of variables added. CONCLUSIONS: The composite model identified the importance a hospital attached to being a technological leader, its clinical requirements, and the change in revenues it associated with the adoption of MRI as the major determinants of adoption behavior. We conclude that a hospital's adoption behavior is strongly linked to its strategic orientation.

How important is the scientific literature in guiding clinical decisions? The case of magnetic resonance imaging.

Little is known about how information diffuses to clinicians and influences their purchase and use of new technology. This is especially true about the role of the scientific literature. As a case study, we examined the literature for magnetic resonance imaging (MRI) during the years preceding and the first five years following its clinical introduction. Using a computerized retrieval system, we identified approximately 1,700 citations in which MRI was the major topic. The clinical literature on MRI was heavily concentrated in radiology journals. Less than 28% of articles compared MRI with alternative diagnostic technologies. During the first five years of clinical availability, the diffusion patterns of scientific articles and operational units mirrored the example set by computerized tomography (CT), in that a substantial number of units were purchased in both research and nonresearch settings before studies were available comparing them to alternative diagnostic technologies. These patterns of diffusion, combined with other studies of the MRI literature's content and methodology, suggest that less comprehensive and objective sources of information were important in early purchasing decisions. This study also suggests that the present readership and publication patterns of professional journals may not facilitate effective, rapid information dissemination about innovations to a broad spectrum of clinicians.

Hospital boards and the decision to renew the full service management contract.

Precious research has been unable to establish a clear association between "full service" management contracts and improvements in hospital performance, but it has shown that hospital board members are highly satisfied with the arrangement. Presented here are findings from a recent survey of board members in contract-managed hospitals that confirm a strong and consistent pattern of board member satisfaction with contract management. However, it is argued that board satisfaction and intentions to renew cannot be explained by improvements in objective measures of hospital performance. It is further suggested that board perception may be influenced by retrospective rationality and that intentions to renew may result room growing dependence on the contractor and an imperfect market for substitutes.

The managers are coming: administrative rationality and life in tomorrow's laboratory.

In 1980, ASMT-CMU students and alumni established the John C. Lang Memorial Trustee Award for Administration and Management to "recognize outstanding performance in the communication of ideas and information in administration and laboratory management and to encourage individuals to disseminate their information to the profession." Winners of this award are commissioned to prepare a manuscript for publication in the American Journal of Medical Technology. This article is the second in the John C. Lang Memorial Series. Its author, John R. Kimberly, PhD, is Associated Professor of Management and Health Care Systems at the Wharton School of the University of Pennsylvania. In the following article Dr. Kimberly takes a long, cold look at the impact that a number of current trends, both in the medical world and outside it, are likely to have on the nature of work and working relationships in the clinical laboratory.

HMOs don't have to fail.

One of the bright spots in the sometimes black picture that is painted of our national health care system is HMOs. Health maintenance organizations provide health services to an enrolled group of patients for a fixed, prepaid fee. This arrangement induces HMOs to try to keep patients healthy for a competitive rate. Because of its special nature, however, an HMO cannot be managed like a fee-for-service hospital or group practice. And because few managers fully understand them, more and more HMOs are failing. The authors of this article say, however, that some failures can be avoided. Good management techniques can help HMO managers-whether they are community-spirited citizens or seasoned executives-overcome many of the problems that plague HMO plans: out-of-control utilization rates, growth that can occur overnight, conflict between the values of HMOs and of the physicians that staff them, and competitors in the health field.

Private and public initiatives in health maintenance organizations.

Public policy controversies about the cost-containing potential of HMOs and the failures of many plans should not overshadow the fact that HMOs will be forces in the health care sector in the 1980s, largely as the result of increasing private investment. There is a large, stable segment of the prepaid industry that developed as a result of private sector and community concern long before the federal HMO Act of 1973, and it is their initiatives along with increasing investment activity by insurance companies and management companies in particular, that will serve as a base for consolidation and growth of HMO plans. HMOs have not proved to be the miraculous cost-containing mechanism of the future, but their impact will be felt even more for the changes they stimulate in the customary organizational forms, in financing, and in the role of business in health care.

Managerial innovation and health policy: theoretical perspectives and research implications.

Stimulated by a variety of external pressures, managerial innovation is likely to become more common in health care organizations. Relatively little is known, however, about the phenomenon. This paper develops a framework for the analysis of managerial innovation in health care organizations, based on the premise that control is at the heart of effective managerial practice. Physician control over the production process in health care is likely to be increasingly challenged, partially as a consequence of the ascendency of managerial ideology. Opportunities for managerial innovation will be created, but are likely to be successful only to the extent that physician expertise is incorporated into rather than excluded from the resulting changes.

Issues in family practice: medical student and practicing physician perspectives.

The elevation of Family Medicine to the status of a recognized specialty is designed, at least in part, to enhance the attractiveness of family practice as a career alternative for physicians. This paper examines the attitudinal orientations of group of medical students and physicians toward family practice in an attempt to highlight some of the issues that might be anticipated as this new specialty develops. Based on the results, it is concluded that fundamental change in the nature of the medical education experience will be needed if greater numbers of physicians are to be involved in primary care.