A wave of reorganizations is washing over the hospital industry.
Both not-for-profit and for-profit systems are rejiggering operations, streamlining governance, remaking executive ranks or unwinding partnerships.
Since last month, at least six systems stretching from coast to coast have an-nounced major reorganization plans.
"It's fairly predictable, because in business when you go through a period of growth and expansion-analogous to the development of these integrated systems-that is ordinarily followed by a period of reorganization and restructuring," said Alan Zuckerman, a director at the Philadelphia-based consulting firm Health Strategies & Solutions. "Digestion is followed by indigestion."
The systems that belched are:
* Money-losing Catholic Healthcare West, San Francisco, which has unveiled a sweeping corporate reorganization plan that eliminates its regional structure and centralizes management and governance at the corporate level.
* Debt-laden University of Pennsyl-vania Health System, Philadelphia, which the University of Pennsylvania plans to spin off into a wholly owned subsidiary with its own chief executive officer and governing board.
* Ascension Health, St. Louis, which is undergoing an organizational restructuring three months after a new CEO took the reins (See story opposite page).
* HCA-The Healthcare Co., Nashville, and the Sisters of Charity of St. Augustine Health System, Cleveland, which announced a deal whereby HCA will sell its half-interest in a partnership it has with the Roman Catholic system in South Carolina.
* Health Midwest, Kansas City, Mo., which grouped some of its hospitals under a central regional management team to cut costs and improve governance.
Zuckerman predicted that more reorganizations would follow.
The hospital industry, he said, is six to 12 months into a period of restructuring that could last two to three years. During that time, Zuckerman said, systems will shed units, downsize and reorganize how they do business.
"Then we'll be ready for the next period of growth," he said.
For some systems, reorganizing is a way to clean up a financial mess.
That's the case at CHW, which has a new CEO, Lloyd Dean, and a roster of new senior managers, said Wanda Jones, president of New Century Healthcare Institute, a San Francisco-based consulting firm.
CHW is hoping its reorganization, launched last month, will turn around the finances of the ailing system, which has had four years of operational losses totaling more than $878 million.
In other cases, reorganization is about leadership change. Ascension welcomed a new CEO in January when Douglas French took the reins of the nation's largest not-for-profit healthcare system.
"You get a new CEO, and he's looking to form his management team," said Lisa Martin, an analyst at Moody's Investors Service.
Ascension plans to add new senior management positions, such as a first-ever chief medical officer and a chief information officer. Ascension also will hire a new chief financial officer to replace Jerry Widman, who plans to leave.
Martin said reorganizations also are about instilling a greater sense of accountability, which is the case with CHW and with the UPHS spinoff.
But mishandled reorganizations can do more harm than good, said Tom Atchison, head of Atchison Consulting Group in Oak Park, Ill.
Reorganizations can sink employee morale, especially among caregivers, and induce what Atchison calls the "FUD reaction"-fear, uncertainty and doubt.
"How enthusiastic are you to reach out and improve care when you're frightened, uncertain and doubtful?" Atchison said.
Atchison said hospitals and systems can minimize negative effects by bringing in early in the process the personnel who are most affected by a reorganization.
Atchison said he has worked with clients who cut staff but saw employee morale rise because employees realized change was necessary and were involved in the process.
Atchison's motto for organizational change is: "It's never what you do; it's always how you do it.
"You don't have to like the outcome, but you can like the way it was achieved," he said.