Industrial rationalization of a cottage industry: multi-institutional hospital systems

The environment facing hospitals, generally supportive until the 1970s, may now be characterized as complex, turbulent, and constrained. In response to such environmental conditions, hospitals have adopted new strategies and structures. The strategies, described as corporate rationalization, have led away from the traditional structure of freestanding, autonomous hospitals and toward the formation of multi-institutional systems. These systems are designed to provide sufficient strength to cope with the environment, to acquire scarce and valued resources, to allow organizational stability, to achieve organizational purpose, to enable growth and/or survival, and to enhance market position. The impact of multi-hospital systems is viewed in two major areas: acquisition, retention, and utilization of economic and human resources, and organizational, political, and social factors.