A new study says layoffs may put hospitals at risk for closing. In addition to downsizing, changes at the most senior level of management-the chief executive officer's job-also may be detrimental.
Researchers at the University of Illinois at Chicago and the University of Michigan conducted the study, which was published in the October edition of Health Services Research, the journal of the Washington-based Association for Health Services Research.
"The frequent occurrence of downsizing and CEO succession suggests that many community hospitals may overlook the potential negative consequences of organizational change in their enthusiasm for organizational renewal," the study said.
But Shoou-Yih Lee, a study author and an assistant sociology professor at the University of Illinois at Chicago, cautioned that although downsizing and CEO turnovers may occur at failing hospitals, they may not be the reasons the hospitals fail; they may just be part of the process.
Another factor that needs to be considered is a hospital's ability to implement changes, such as downsizings.
For example, the study said downsizing may be a good survival strategy for larger hospitals with "more slack resources," but it may not work at smaller community hospitals that "may lack the scale economies to absorb such reduction."
The study used data from various American Hospital Association sources, including its annual survey of hospitals. The study followed all general acute-care hospitals from 1981 to 1994. In 1981, there were 5,744 hospitals, compared with 4,521 in 1994.
The study also concluded that a core organizational change, such as a hospital switching its medical service specialty, didn't encourage hospital closure.
"It may be that moving into a different specialty area, although disruptive to hospital operations and structure, helps hospitals avoid even more serious consequences stemming from regulatory pressures or intense competition in its former domain," the study said.