Growing pains: twelve lessons from corporate restructuring

Corporate reorganization is a realignment of resources to enhance competitive strength and can follow one of two lines, vertical or horizontal. Whichever strategy is used, the reason for it remains unchanged: to provide a structural hierarchy through which strategic market niches are acquired and resources are economically deployed throughout the system. Healthcare corporate restructuring, however, is encountering growing pains, some of which were inevitable and others avoidable. When the healthcare organizational landscape is surveyed, 12 lessons can be learned about corporate reorganization: 1. Reorganization should be based on anticipated market and environmental conditions. 2. Form follows function. 3. Interdependence among multiple corporate units must be clearly acknowledged. 4. Reorganization is much more costly and politically charged than it appears at first. Reserved rights must be clearly defined. 6. The purpose and composition of the parent governing board must be distinguished from those of subsidiary boards. 7. Clarification of roles and relationships between the parent and subsidiaries is critical. 8. Unrealistic expectations of success should be confronted through up-front planning, negotiation, and creative problem solving. 9. False assumptions about corporate staffing needs create internal system warfare. 10. Physician support is crucial for success. 11. Hospital-based management skills and understanding may be inadequate for making personnel decisions in subsidiaries other than the hospital. 12. Competitive strategies must be strategically determined and must not be taken gamesmanship.