Downsizing and Organizational Restructuring: What Is the Impact on Hospital Performance?

Abstract

In recent years, hospitals have radically restructured their operations while significantly downsizing their workforces. To date, little is known about the combined effect of these change processes on organizational functioning. There have been few large‐scale studies investigating how hospitals have performed when both organizational restructuring and downsizing are used concurrently. The research reported here sets out to separate and isolate the independent and combined effect of organizational restructuring and downsizing on hospital performance. In particular, it aims to address the following question: Do hospitals which undergo significant organizational restructuring while maintaining their workforce complement perform any better than hospitals that institute significant restructuring while heavily downsizing, and any better than hospitals which heavily downsize but undertake little or no organizational restructuring? Categorical regression analysis results from a sample of 285 Canadian acute care hospitals suggest that organizational restructuring and downsizing have differential impacts on organizational performance. Hospitals which undertook significant organizational restructuring while heavily downsizing were perceived to perform better than hospitals that heavily downsized but conducted little or no organizational restructuring, but performed worse than hospitals that undertook significant restructuring while maintaining their workforce complement. However, when the method of conducting the change management process was controlled for, these performance differences were reduced or eliminated.