Management Rationalisation

Management Rationalisation

Management Rationalisation Project description Essay Question:

For an organisation looking to cut costs, what would be the advantages and disadvantages of rationalisation?

Discuss your answer by comparing and contrasting rationalisation with insights which focus on one of the following topic areas:

“ The social organisation (Hawthorne studies/Groups and Teams) -Psychological perspectives (personality/motivation) -Knowledge and Learning -Organisational culture “ Leadership, Power, Politics “ Globalisation -Service and Leisure Industries “ Corporate Social Responsibility Apply answer to running case study, Junction Hotel in the text ˜Organisational Behaviour’ by Daniel King and Scott Lawley.


The problem with the damaged organizational structure of the company.

Starting point is rationalisation, compare and contrast rationalisation with following themes:

  • The social organisation,
  • Managing the individual,
  • Managing the organisation,
  • Contemporary trends and Organisations and society.

Focus on one theme but combine with other themes.


. Build cultural readiness: Perhaps the biggest challenge is motivating leaders, providers, and staff to think beyond their separate facilities. Here are a few strategies that can help shift thinking to the big picture:

  • Demonstrate the connection to other system-wide initiatives that have already garnered support, such as population health
  • Establish a service line governance model that encourages stakeholder leadership and influence across multiple organizations within the system
  • Focus conversations about executive compensation on system or regional performance instead of individual hospital performance

If hospitals within the system are competing, rationalization cannot succeed, so these efforts should be prioritized.

2. Apply a transparent, collaborative process: Take the time at the outset to develop guiding principles, communicate the intent behind them to stakeholders, and obtain their long-term buy-in. These up-front efforts will lay the groundwork for evaluation and approval of specific initiatives. While it is not necessary or even useful to involve all stakeholders in initial discussions, it is important that all stakeholders are well represented when the health system decides to pursue a rationalization strategy. When it comes to consolidating specific services, be sure to create mechanisms for local stakeholders to provide guidance and feedback.

3. Gain physician support: Steps 1 and 2 of this framework are designed to cultivate executive support. Physician support is no less important, as rationalization efforts are likely to have a direct impact on physicians’ daily operations. The case for rationalization must be supported with credible clinical and financial data so that physicians do not see new cost allocations as arbitrary or unfair. It is also critical to explain how new, rationalized service structures can benefit physicians, bringing them more money, greater control, improved efficiency, better patient outcomes, and even new gadgets. Assure physicians that they will retain control over quality and safety standards.

4. Prioritize key opportunities: Rather than going after the opportunity with the highest ROI right out of the gate, look for low-hanging fruit in programs that can discretely consolidate a set of services (e.g., high-acuity procedures that benefit from combined volumes) and have the support of strong physician leadership—these programs have the best chance of success. Racking up some early wins will build support for rationalization efforts. More politically charged opportunities, which also often have greater potential for value, can come later, after the system has gained momentum and the culture has embraced the rationalization efforts.

5. Adhere to a well-developed implementation plan: Create a work plan that defines the who, what, where, when, and how to ensure all stakeholders have a common understanding of the process. To avoid delays from competing interests, hold key stakeholders accountable by asking them commit to a schedule at the outset. There is no such thing as over-planning or over-communicating a rationalization initiative, so also invest the time to develop risk management processes and contingency plans.

There is a common misperception that rationalization is code for service reduction. Instead, think of efficient utilization of resources. Rationalization allows organizations to better optimize their resources and enhance patient access across a health system. If approached thoughtfully, thoroughly, and inclusively—as mapped out in this framework—rationalization can transform a health system into an exemplar of value-based care.