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Hughes RG, editor. Patient Safety and Quality: An Evidence-Based Handbook for Nurses. Rockville (MD): Agency for Healthcare Research and Quality (US); 2008 Apr.

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Patient Safety and Quality: An Evidence-Based Handbook for Nurses.

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Chapter 24Restructuring and Mergers


Bonnie M. Jennings, D.N.Sc., R.N., F.A.A.N.; Colonel, U.S. Army (Retired); and health care consultant. E-mail: ten.xoc@sgninnejmb


During the first half of the 20th century, there was a huge increase in the number of free-standing general hospitals in the United States.1 At that time, registered nurses (RNs) typically practiced in hospitals. Consequently, there are strong parallels between the evolution of the nursing profession and the growth of hospitals as the central structure in the U.S. health care system.2 By the 1980s, however, a variety of initiatives were implemented for the purpose of curtailing the rapid rise in health care costs.3, 4 Based upon the assumption that hospital care was very expensive, cutting inpatient care was a central strategy in the attempt to control the cost of health care.5 Moreover, the focus on fiscal challenges shifted the health care industry into a business mode that substantially altered the experiences of patients, as well as the roles of health care personnel.6

Cost-cutting initiatives over the past 20-odd years contributed to tremendous turmoil in health care. The initiatives were often introduced concurrently and without empirical evaluations to determine their effectiveness. Among the early initiatives was a prospective payment system based upon Diagnosis Related Groups (DRGs), which differed from the historical system of retrospective payments that covered all services rendered. DRGs established fixed prices for care based on set criteria, such as diagnosis, therapy, and discharge status. These fixed prices altered hospital reimbursements, which in turn changed their incentives. As a result, for example, lengths of stay were shortened. Patients with complex care needs moved through the inpatient care setting much more rapidly than in the past, giving rise to the phrase “sicker and quicker” to reflect this dramatic change. In addition, preauthorization was implemented to reduce hospital use. Together, DRGs and preauthorization provided the impetus to shift care from the hospital to the outpatient setting and the home.

Fewer inpatients required fewer staff. Reductions in hospital personnel helped to reduce labor costs; they also raised concerns about the effects of staffing on quality of care and nurses’ job satisfaction.7 By the year 2000, although the hospital remained the primary place of employment for RNs, 40 percent of RNs worked in other settings.8 This represented a significant shift over 25 years.

Also contributing to the turmoil in health care during the 1980s was the rapid growth in managed care. All types of managed care programs attempted to control costs by decreasing unnecessary use of health care. To support this goal, primary care physicians assumed a more dominant role in health care by becoming “gatekeepers,” allocating health care resources such as referrals to specialists.

Managed care also prompted the integration of health services and providers. Through horizontal integration, free-standing hospitals merged into multihospital systems owned by central organizations (e.g., Humana), and physicians in private practices joined group practices. Through vertical integration, a broad array of services covering the care continuum—from ambulatory care to long-term care—were pulled together into comprehensive delivery systems.4 Ideally, these mergers helped to streamline functions, reduce administrative redundancy, and negotiate reduced rates when purchasing supplies, equipment, and pharmaceutical products.

These often radical changes proceeded, however, with little empirical evidence to guide them. Evaluations were uncommon, and those that were conducted could not keep pace with the speed of changes resulting from restructuring and mergers. A report from the Institute of Medicine9 concluded that despite enormous organizational turmoil, little progress was made toward restructuring health care systems in ways that meaningfully addressed quality and cost concerns. Likewise, a critical review of restructuring studies found mixed signals about what was accomplished through these organizational changes.3 According to Aiken and colleagues10 (p. 463), “What we know about changes in organization and structure and the potential for those changes to affect patient outcomes pales by comparison to what we do not know.”

Assessments about how restructuring and mergers affected patients and staff are more a look through the rearview mirror because they occurred after the fact. Nonetheless, the findings are informative, especially when considered in the context of current changes such as recent growth in hospital construction.11 Today, ongoing change, not stability, is the order of the day for health care. Lessons from the past can be used as a platform for more proactive responses to future changes.

Research Evidence

The findings from studies of restructuring can be grouped in numerous ways. A summary of the findings is presented in Table 1. These studies represent work conducted internationally, but predominantly in the United States and Canada. Most of the evidence came from assessments of restructuring in acute care settings.10, 12–48 Although hospital restructuring altered care delivered in other settings, little research was found that looked outside acute inpatient care. Exceptions were assessments of outpatient care following restructuring in the Department of Veterans Affairs (VA), 49, 50 an evaluation of increasing home care needs in Canada,51 and an examination of overcrowding in an emergency department following restructuring.52



Table: Summary of Research Evidence Related to Restructuring and Mergers

Studies typically addressed employee perceptions of restructuring. Overall, the changes that occurred through restructuring processes were viewed unfavorably. Most studies considered the effect of restructuring on staff nurses.10, 12–21, 23, 25–27, 29–31, 34, 35, 38–44, 47, 48 Other health care professions such as physical therapists33 and social workers36 also explored how restructuring affected their respective roles. A few investigations considered restructuring from the perspective of nurses in administrative positions at the patient unit and executive levels.12, 22, 24, 32, 38, 43 One investigation examined the views of top and middle managers from various disciplines at one VA hospital, as well as physicians and patients.53 A pair of related investigations considered restructuring as viewed by chief executive officers.45, 46 An important finding among these studies was that although strong leadership is essential in times of change, staff nurses’ assessment of nurse managers’ abilities declined considerably between 1986 and 1998, as did the perception of nurse executive power.10

Few studies explored ways to mitigate the deleterious effects of restructuring. There is beginning evidence, however, that empowerment32 and leadership style20 may reduce burnout and increase job satisfaction. One study explicitly examined rebuilding after restructuring.24 Staffing changes were central to the rebuilding efforts, especially increases in licensed personnel and senior support staff, and decreases in part-time, temporary, agency, and contract nurses. In three studies that examined cost, results reflected increased costs at both the unit level13 and the hospital level45, 46 suggesting that restructuring did not achieve its intended purpose.

The majority of studies examined the relationship between restructuring and job satisfaction. Regardless of professional discipline, there was a decline in job satisfaction after restructuring.13, 15, 18–21, 23, 30, 32, 33, 36, 45 Aspects of burnout were also frequently explored.19–21, 32, 48 Findings consistently showed burnout was increasing, particularly emotional exhaustion, which is viewed as the core feature of burnout. Along with evaluating psychological health, studies began to detect a relationship between restructuring and increased musculoskeletal injuries.14, 29, 42

Restructuring can occur within a single institution, while mergers involve integrating two or more institutions. A cluster of studies explicitly addressed various aspects of mergers.54–62 Findings from three studies verified that the success of mergers was enhanced by engaging staff from the merging institutions in the process.54, 56, 57 Other investigations evaluated various responses of nursing staff to mergers.58–60 In a merger involving three hospitals, for example, Jones59 found that uncertainty about job status and feeling unappreciated minimized nurses’ organizational commitment. Other studies examined mergers from the standpoint of factors effecting financial performance,61 midwifery practice,62 and the integration of two emergency departments.55

A number of investigations relied exclusively on qualitative methods to explore restructuring and mergers.16, 17, 25, 27–29, 32, 34, 40, 53, 54, 60, 62 Themes across these studies help to edify potential sources of job dissatisfaction and burnout. For example, participants commented that restructuring altered work relations in undesirable ways,16, 25, 27, 53, 62 including relations with management,32 that contributed to staff distrust of the employing organization.25, 54 Participants also identified changes in work life related to increased responsibilities, decreased resources, and overall busyness.25, 27, 29, 32, 34, 62

In two studies, themes emerged indicating that staff viewed restructuring as detrimental to the quality of care.27, 32 In another two investigations, in which both patients and health care professionals were interviewed, findings indicated that patients had fewer complaints about the changes than did the hospital staff.34, 53

A few studies considered the effects of restructuring on quantifiable patient outcomes;10, 13, 18, 30, 37, 42, 49, 50 two of these investigations related to outpatient care.49, 50 The paucity of studies exploring patient outcomes related to restructuring illustrates that staff response has been the focus of most restructuring and merger studies. Although no causal connections have been demonstrated, beliefs and assertions hold that staff characteristics do affect patient outcomes. For example, recent findings show emotional exhaustion among nurses is associated with higher patient morality.63

Nevertheless, the staff-focused studies do not help to inform patient care per se. Moreover, the concerns addressed a decade ago by Ingersoll26 persist—many studies are reported in journals geared to audiences that are more interested in application than scientific rigor. There is a continued need for studies with more sophisticated designs to better inform the science of patient safety. These needs expose the potential for better informing practice by combining health services research techniques with nursing research inquiries.

Evidence-Based Practice Implications

The 11 studies in Table 2 illustrate findings pertinent to patients as well as staff regarding likely connections between restructuring and patient safety. The setting for studies that met inclusion criteria was most often acute care,10, 18, 20, 21, 32, 43, 46, 48 with research focused on outpatients40, 50 and home care51 also represented. Overall, however, the evidence is scattered and, at times, inconsistent. As a consequence, there are few solid implications for practice.

Evidence Table. Restructuring and Mergers.

Evidence Table

Restructuring and Mergers.

Patient mortality showed conflicting results. Increases in mortality were found in aggregated data from hospitals throughout the United States,10 and decreases were found based on data from more than 2,000 patients at a single hospital.18 A study of VA outpatients showed no statistically significant differences in mortality between patients who saw a physician for symptoms and patients who were not seen.50

Indicator data for falls, medication errors, nosocomial infections, and intravenous complications were examined in an 18-month longitudinal study of four medical-surgical units at one hospital.18 The four indicators were assessed for more than 2,500 patients at four points in time. Although descriptive data reflected patternless variations in the indicators, all indicators were increasing at 18 months. The investigators noted, however, that when indexed by rate of occurrence per 100 patients, all four indicators either improved or remained unchanged.

Sovie43 collected data from 29 university teaching hospitals in eight of the nine U.S. census regions. More than findings about the individual patient outcomes, this study illustrated important variations depending upon how data were aggregated. That is, data aggregated at the hospital level differed from data at the unit level. More striking, findings varied by unit type—medical or surgical. For falls, pressure ulcers, and urinary tract infections (UTIs), the rates were always lower on surgical units than medical units. This may have important implications for practice related to staffing considerations.

Berlowitz49 led a study of pressure ulcers among residents of long-term care units at 150 VA medical centers nationwide. This study illustrated that, as care shifted from a focus on hospital-based specialty care to outpatient primary care, pressure ulcers increased, even after risk adjustment. Conversely, in a study from a single VA facility in California, Rubenstein and colleagues50 demonstrated that the shift to outpatient care yielded improvements in continuity of care and preventive care related to smoking, exercise, detection of depression, and the number of individuals with hypertension receiving treatment.

The final study involving a patient focus examined home care needs for patients after hospitals closed beds.51 Not only did more patients need care after discharge, but service intensity also increased. The intensity diminished in the second week after discharge. Although findings from single studies do not warrant practice changes, the effects of restructuring on home care needs remains an important consideration for patient safety.

The studies that evaluated various staff response to restructuring displayed a much clearer pattern to their findings—restructuring was associated with negative effects on staff.21, 32, 48 Interested in mitigating these effects, Cummings and colleagues20 tested a model that examined leadership style. Empathy was a critical leadership competency that served to offset the negative effects of restructuring. It was characterized by individuals who listened and responded to employee concerns.

Finally, Walston and colleagues46 evaluated changes in hospital costs during restructuring efforts. They found that restructuring altered work processes by changing the workflow and job responsibilities. This exerted a negative influence by increasing hospital costs relative to competitors.

Research Implications

Given the current evidence, we know that reducing inpatient care as the central strategy for controlling the cost of health care has not succeeded. We know that staff report being dissatisfied with their job conditions. We also know there is no consistent pattern in the few studies that have examined the effect of organizational change on patient outcomes. Furthermore, we know that change in health care organizations is likely to continue.

Consequently, there are large gaps in knowledge about restructuring and mergers. It is not feasible to provide a comprehensive list of areas for future study. However some general notions can be outlined. A fundamental premise is that health care leaders must seriously consider which changes to implement and the best processes for introducing changes into their organizations. In addition, they need to evaluate changes—not just implement them. The evaluations need to be sufficiently comprehensive so that organizational goals (e.g., costs) do not overshadow examination of the effects of change on staff and patients. These studies also need to be longitudinal, to track the effects of restructuring over time. This strategy will help to fill the void about the effects of restructuring on patient safety.

Moreover, if existing care delivery structures are not effective, then a central question concerns how best to organize care. For example, if the Institute of Medicine’s aims for the 21st-century health care system are still appropriate,9 then what structures will lead to care that is safe, effective, patient-centered, timely, efficient, and equitable? Continuity of care before and after restructuring and mergers is an aspect of care that could benefit from in-depth exploration because it could contribute to improvements in each of the desired aims. Acute care, outpatient care, and home care have all been affected by restructuring. What mechanisms could be introduced to enhance continuity from unit to unit and across the care continuum?

Many studies of restructuring follow a sociological view of organizations; a psychological framework has been used less often. Human relations—among both staff and patients—are central to caregiving organizations. Kahn64 asserts that interpersonal transactions are at the core of caregiving organizations. He believes that resilient organizations have members who are able to learn and grow, even in difficult environments. Resilient organizations are better able to absorb stress and maintain the capacity to function effectively. Therefore, regardless of the structure, health care organizations would benefit from investigations that examine interpersonal conditions at work. Interventions could then be developed to help staff improve relationships with one another and work together more effectively. To date, studies have not examined the effects of restructuring on the dynamics among caregivers and between caregivers and patients. In addition, leadership as a linchpin of relationships between staff and administrators begs to be better understood.

From the perspective of patient outcomes, however, we know very little. There is no discernible pattern in existing findings; there is no meaningful statement that can be made. The impact of restructuring on patient safety remains unknown. Measurement and methods questions are important considerations to enhance that understanding—which indicators to use, how they are defined, how they are measured, what the unit of analysis is. Decreased resources, including sufficient staff, surfaced as a concern in studies of restructuring. It would be beneficial to assess different care structures, determine the work that needs to be done, determine who needs to do it, provide the proper type and number of staff to do the work, and then assess which organizational structures yield the best opportunity for providing safe care to patients.

It would also be extremely useful to pursue a series of qualitative studies to better depict the current state of health care organizations. Data could be collected from staff at all levels of individual organizations as well as vertically and horizontally integrated systems of care. Data could also be collected from patients getting care in different venues, including the home. Family member perspectives would be valuable, too. Such studies would be very complex and difficult, but they could elucidate key issues and concerns. These could then be used to construct interventions or guide future restructuring efforts.

This is just the beginning of an almost endless list of ideas that could be studied to advance the understanding of restructuring and mergers. Future endeavors need to be more proactive in assessing organizational change early in the change process. They also need to approach questions over time, using a comprehensive set of variables, as well as sophisticated methodological and statistical techniques, to truly advance the understanding of restructuring on the staff as well as patient safety.


As reflected in the Table (see above), most studies of restructuring and mergers have been conducted in acute care settings. Many of these studies have examined the effects of restructuring and mergers on cost, staff nurses, and patient outcomes. In the aggregate, restructuring and mergers did not achieve the desired reductions in cost. However the upheaval accompanying restructuring efforts and mergers can be related to lower job satisfaction among nurses and increased burnout. The effects of restructuring and mergers on patient care, however, are more difficult to understand because the evidence varies over time, by hospital or unit, and by unit type.

There is convergence in findings about sources of job dissatisfaction and burnout related to restructuring and mergers. Organizational and unit leaders would be wise to carefully assess work relations, work responsibilities, and the availability of resources, all of which may be sources of dissatisfaction and burnout. It would also behoove the leaders to consider the evidence that illustrates ways to minimize the undesirable effects of restructuring and mergers. These include empowerment, empathetic leadership, and staffing changes that increase the number of licensed nurses who are employed by the institution.

Search Strategy

A reference librarian assisted in running database searches in both MEDLINE® and CINAHL® to identify literature for this review. Both databases were searched from 1995 to 2005, using the same two MESH headings: hospital restructuring and health facility mergers. The searches were limited to research reports published in the English language. A total of 149 potential publications were identified, 56 in MEDLINE® and 93 in CINAHL®. Based upon an assessment of the abstracts, 67 of the publications were regarded as being suitable for inclusion in this review. The 82 papers that were omitted were a combination of brief reports or abstracts, topics not suitable to this review (i.e., mental health triage tools), and doctoral dissertations.

After reading the 67 publications in their entirety, 14 were omitted from further consideration. Some of these papers, for example, were only tangentially related to restructuring and mergers, a few were redundant publications, and others were about instrument development. This review is therefore based on 53 research reports.


Tremendous gratitude is expressed to the staff of the Armed Forces Medical Library, Falls Church, VA, for their considerable support of this work. They conducted the database searches and assisted in acquiring numerous papers considered in this review.


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