| Reengineering was widely adopted by hospital CEOs as a performance improvement strategy during the mid to late 1990s. My research involved 200+ hospitals that responded to two CEO surveys on reengineering; the first in 1996, the second in 1999. Using survey data, as well as 13 years of financial data from the American Hospital Association, I did an interrupted time series analysis to ascertain if reengineering altered the pre-reengineering trend in financial performance as measured by relative market share, relative cost per admission, and relative cost per patient day. Findings from four hospital site visits served as case studies and added depth to the quantitative analyses.; Overall results showed that reengineering, on average, improved relative market share but not relative costs. Thus, reengineering appears to be a more effective growth, rather than cost reduction, strategy. However, some hospitals were able to accomplish improvements in both relative cost and market share, but only when post reengineering improvement was preceded by deterioration in performance during reengineering implementation. This suggests that hospitals undergoing major organization change such as reengineering need to have “slack resources” that serve as investments to facilitate the sustainability of the change effort. Finally, hospitals that implemented broad and multiple reengineering initiatives also improved financial performance in both relative costs and market share following reengineering. This may have been a proxy for organizational commitment to the change effort or represent a better alignment between organizational culture and strategy and reengineering. Hospitals not meeting the above criteria may have implemented reengineering for mimetic reasons, thus diminishing the opportunity to achieve significant economic benefits from this change initiative.; The four case study hospitals experienced a variety of quantitative and qualitative outcomes from their reengineering efforts. Two of the four hospitals experienced statistically significant improvement in financial performance following reengineering. Major facilitators included leadership stability and a commitment to measurement of processes and outcomes during all phases of reengineering. Apparent obstacles to success included an over-reliance on consultants and insufficient support for implementation activities. |
