Worth a Second Look
Who wants to live forever? Organizational decline in health care
Journal of Health Services Research & Policy 2015, Vol. 20(3) 189–191 ! The Author(s) 2014 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/1355819614564813 jhsrp.rsmjournals.com
Iestyn Williams
Charles Levine. Organizational decline and cutback management. Public Administration Review 1978; 38: 316–325. Charles Levine. More on cutback management: hard questions for hard times. Public Administration Review 1979; 39: 179–183. We tend to look upon any attempt at managed decline of health care organizations with suspicion bordering on hostility. Researchers rarely theorize on the topic, administrators typically have little or no experience of handling decline processes, and citizens invariably oppose proposals for closure that are put forward, irrespective of their merits. All of which means that health care organizations have an unusually long projected shelf life and in many cases can expect to survive indefinitely. In a context of economic growth and increases in public spending, we might think this to be reasonable, and this certainly seems to be the tacit position of much scholarship in health policy and management. However, in the context of public sector retrenchment, the assumption of resource fecundity has come under challenge, as is evident for example in the English health care system where local leaders are increasingly considering options for service reduction and closure.1 This is new territory for many of those involved and not surprisingly has proven to be both demanding and frustrating, with much of the ‘low hanging fruit’ already picked and the rest proving stubbornly hard to reach. Although some savings have been achieved, these have yet to be of the magnitude required, and some basic questions remain unaddressed such as: What management strategies are likely to be most effective in leading downsizing or closure? What happens to the patients and staff implicated in such changes? And, how should the politics be handled? Re-reading the work of the public management academic, Charles Levine reminds us that this is not the first period of retrenchment and constraint in history. Writing in the US in the 1970s and 1980s, Levine posed the question: ‘Without growth, how do we manage our public organizations?’ He proclaimed the influence of political and economic conditions on management in public organizations and sought to examine these
effects and their appropriate responses. His understanding of ‘organizational change toward lower levels of resource consumption and organizational activity’ was longitudinal and highly sensitive to context, thereby anticipating much subsequent scholarly development whilst remaining relevant and accessible to managers of the day.2,3 The richness and scope of Levine’s work was in large part due to his simultaneous application of the wide-angle lens (e.g. what are the lifecycles of public organizations?) and the microscope (e.g. what is the impact of decline on work habits, incentive structures and relationships of compliance and control?). Although Levine noted that is ‘nearly impossible to get elected officials, public managers, citizens or management theorists to confront cutback and decremental planning situations’, a more sustained exploration of this inertia can be found in the policy termination literature.4,5 The impediments identified in this work remain stubbornly in place and include: institutional permanence; ‘dynamic conservatism’; coalitions of opposition and legal/financial obstacles.4,6 Of more interest to Levine were the dynamics played out in situations where organizational decline is either proposed or enacted, and the management strategies available to those involved. Underpinning this interest was a belief that public administrators have a legitimate and active role to play, and that decline should not be left entirely to other parties to determine: managers, Levine argued, should play an integral role in shaping and leading responses to the prospect of organizational downsizing or closure. Levine underlined the importance of understanding the causes of organizational decline which he grouped into four categories. The most common of these he considered to be ‘problem depletion’ resulting from factors such as changes in demography or shifts in the way population needs are understood – neatly exemplified by changing health needs and the Health Services Management Centre, University of Birmingham, UK Corresponding author: Iestyn Williams, 40 Edgbaston Park Road, B15 2RT, UK. Email: [email protected]
Downloaded from hsr.sagepub.com by guest on November 16, 2015
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Journal of Health Services Research & Policy 20(3)
accompanying call for a rebalancing from secondary towards primary and self care. Second, ‘political vulnerability’, is linked to the time-in-life of organizations, with maturity considered a strong predictor of survival chances: again redolent of the contemporary health care landscape and the vulnerability of its new entrants. Third, ‘environmental entropy’, emerges when factors such as economic stagnation and reduced tax revenues threaten organization’s viability. And the final driver, ‘organizational atrophy’, relates to performance and is therefore the only factor understood to be within the direct control of the threatened organization. All four notional drivers of decline are present in contemporary public health care systems, and it is perhaps reasonable to deduce from this that contextual factors are more influential than organizational performance. And yet there is a strong tendency to infer from decline some organizational culpability, or else to present evidence of high performance as a defence against threat of closure. This indicates a lack of due recognition of the environment in which health care organizations operate and of the need to be responsive to changes. The danger then is that organizations are themselves seen as a good to be defended, irrespective of the interests of the communities they are intended to serve or the individuals they employ. The study of management behaviour has arguably mirrored this imbalance. As Bozeman notes: ‘The decline or cutback literature would benefit from an intellectual transformation, focusing not on strategies for mitigating decline but rather on the role of decline in organizational life cycles and its implications for devising resilient, longterm managerial strategies’.2 A lifecycle approach suggests the inevitability of organizational expansion, contraction and death, and the need to attend to the management of workforce transition and to protect both job security and intrinsic motivation associated with public organizations.7, 8 As well as attending to causes of decline, Levine’s approach directs us to persistent challenges relating to resources, ethics and processes in the implementation of decisions to downsize. The paradox of the shrinking organization is that it requires additional funds to facilitate the shift to a state of reduced spending and activity, for example, through investments in leadership, information, facilitation and review. These resources are hard to come by and health-care organizations are often constrained in the additional revenues they can generate. Levine also warned against simplistic models of the divisible (or divestable) components of the contracting organization, noting that ‘organizations cannot be cut back by merely reversing the sequence of activity and resource allocation by which their parts were originally assembled’.
In cautioning against strategies based on natural attrition (e.g. imposing recruitment freezes) or salami slicing of departmental budgets, Levine appears to anticipate the efficiency-based budgeting tools later propagated by health economics.9 However, despite the rational instrumentalism of such prescriptions, Levine is acutely aware of the plurality of goals and interests contained within public organizations, and the politics at play in decisions over whether and how to either resist or smooth the decline. What’s more, in the postinitiation phase, programmes of managed decline are often characterized by subversion, resistance and competition from units within the organization. Whilst public ethics require that the politically disenfranchized are not always first in line to face the budget axe,8 Levine notes that ‘retrenchment politics dictate that organisations will respond to decrements with a mix of espoused and operative strategies that are not necessarily consistent’. Commonly, survival tactics are employed as management tiers and units are pitted against each other, diluting altruism and encouraging bureau shaping. This places unusual pressures on envoys sent to deliver the bad news of decline and the behaviours of those facilitating such change remain under-theorized and under-nurtured.10 What’s more, the options for incentivization are narrow: Levine notes the perversity of being seen to reward those who oversee the depletion of an organization’s resource. Despite the insights he generated, Levine’s legacy has proven to be somewhat modest. Whilst work has continued in other areas of organizational analysis, cutback management has largely disappeared as a motif in the public administration literature, perhaps as a direct result of the receding ‘environmental entropy’.11 Recently, the spectre of decline has been brought back into view by economic stagnation and depletion of health care budgets, making it timely to reflect on this earlier literature. For those designing services, there are valuable insights relating to the causes of decline and the need for compatibility with context. For those managers on the receiving end, Levine counsels astuteness when responding to the threat of decline or death, and the peculiar conditions and demands of decline imply the need for specific, tailored implementation strategies. Of course, Levine’s work has flaws. For example, at times he appears to underplay the role of national political actors for whom ‘almost always, retrenchment is an exercise in blame avoidance’12 and, in this light, his calls for governmental patronage for cutback management can appear naı¨ ve. Overall, however, his investigations into organizational decline remain instructive for contemporary policy and debate in health care. No more sophisticated analysis of the organizational, relational and political issues at play has been put forward.
Downloaded from hsr.sagepub.com by guest on November 16, 2015
Williams
191
References 1. Daniels T, Williams I, Robinson S, et al. Tackling disinvestment in health care services: the views of resource allocators in the English NHS. J Health Organ Manage 2013; 27: 762–780. 2. Bozeman B. Hard lessons from hard times: reconsidering and reorienting the ‘managing decline’ literature. Publ Admin Rev 2010; 70: 557–563. 3. Robert G and Fulop N. The role of context in successful improvement. London: The Health Foundation, 2014. 4. deLeon P. Public policy termination: An end and a beginning. Pol Anal 1978; 4: 369–392. 5. Geva-May I. ‘When the motto is till death do us part’ The conceptualisation and the craft of termination in the public policy cycle. Int J Publ Admin 2001; 24: 263–288. 6. Robinson S, Dickinson H, Freeman T, et al. Disinvestment in health: the challenges facing general practitioner (GP) commissioners. Publ Money Manage 2011; 31(2): 145–148.
7. Sutton RI. The process of organizational death: disbanding and reconnecting. Admin Sci Q 1987; 32: 542–569. 8. Pandey SK. Cutback management and the paradox of publicness. Publ Admin Rev 2010; 70: 564–571. 9. Williams I. Allocating resources for healthcare: setting and managing priorities. In: Walshe K and Smith J (eds) Healthcare management. Basingstoke: Open University Press/McGraw Hill, 2011. 10. Ashman I. The face-to-face delivery of downsizing decisions in UK Public Sector Organizations. Publ Manage Rev 2013; DOI: 10.1080/14719037.2013.785583. 11. Boyne GA. A ‘3Rs’ strategy for public service turnaround: retrenchment, repositioning, reorganization. Publ Money Manage 2004; 24: 97–103. 12. Pierson O. Dismantling the welfare state? Cambridge: Cambridge University Press, 1994.
Downloaded from hsr.sagepub.com by guest on November 16, 2015
Who wants to live forever? Organizational decline in health care
Journal of Health Services Research & Policy 2015, Vol. 20(3) 189–191 ! The Author(s) 2014 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/1355819614564813 jhsrp.rsmjournals.com
Iestyn Williams
Charles Levine. Organizational decline and cutback management. Public Administration Review 1978; 38: 316–325. Charles Levine. More on cutback management: hard questions for hard times. Public Administration Review 1979; 39: 179–183. We tend to look upon any attempt at managed decline of health care organizations with suspicion bordering on hostility. Researchers rarely theorize on the topic, administrators typically have little or no experience of handling decline processes, and citizens invariably oppose proposals for closure that are put forward, irrespective of their merits. All of which means that health care organizations have an unusually long projected shelf life and in many cases can expect to survive indefinitely. In a context of economic growth and increases in public spending, we might think this to be reasonable, and this certainly seems to be the tacit position of much scholarship in health policy and management. However, in the context of public sector retrenchment, the assumption of resource fecundity has come under challenge, as is evident for example in the English health care system where local leaders are increasingly considering options for service reduction and closure.1 This is new territory for many of those involved and not surprisingly has proven to be both demanding and frustrating, with much of the ‘low hanging fruit’ already picked and the rest proving stubbornly hard to reach. Although some savings have been achieved, these have yet to be of the magnitude required, and some basic questions remain unaddressed such as: What management strategies are likely to be most effective in leading downsizing or closure? What happens to the patients and staff implicated in such changes? And, how should the politics be handled? Re-reading the work of the public management academic, Charles Levine reminds us that this is not the first period of retrenchment and constraint in history. Writing in the US in the 1970s and 1980s, Levine posed the question: ‘Without growth, how do we manage our public organizations?’ He proclaimed the influence of political and economic conditions on management in public organizations and sought to examine these
effects and their appropriate responses. His understanding of ‘organizational change toward lower levels of resource consumption and organizational activity’ was longitudinal and highly sensitive to context, thereby anticipating much subsequent scholarly development whilst remaining relevant and accessible to managers of the day.2,3 The richness and scope of Levine’s work was in large part due to his simultaneous application of the wide-angle lens (e.g. what are the lifecycles of public organizations?) and the microscope (e.g. what is the impact of decline on work habits, incentive structures and relationships of compliance and control?). Although Levine noted that is ‘nearly impossible to get elected officials, public managers, citizens or management theorists to confront cutback and decremental planning situations’, a more sustained exploration of this inertia can be found in the policy termination literature.4,5 The impediments identified in this work remain stubbornly in place and include: institutional permanence; ‘dynamic conservatism’; coalitions of opposition and legal/financial obstacles.4,6 Of more interest to Levine were the dynamics played out in situations where organizational decline is either proposed or enacted, and the management strategies available to those involved. Underpinning this interest was a belief that public administrators have a legitimate and active role to play, and that decline should not be left entirely to other parties to determine: managers, Levine argued, should play an integral role in shaping and leading responses to the prospect of organizational downsizing or closure. Levine underlined the importance of understanding the causes of organizational decline which he grouped into four categories. The most common of these he considered to be ‘problem depletion’ resulting from factors such as changes in demography or shifts in the way population needs are understood – neatly exemplified by changing health needs and the Health Services Management Centre, University of Birmingham, UK Corresponding author: Iestyn Williams, 40 Edgbaston Park Road, B15 2RT, UK. Email: [email protected]
Downloaded from hsr.sagepub.com by guest on November 16, 2015
190
Journal of Health Services Research & Policy 20(3)
accompanying call for a rebalancing from secondary towards primary and self care. Second, ‘political vulnerability’, is linked to the time-in-life of organizations, with maturity considered a strong predictor of survival chances: again redolent of the contemporary health care landscape and the vulnerability of its new entrants. Third, ‘environmental entropy’, emerges when factors such as economic stagnation and reduced tax revenues threaten organization’s viability. And the final driver, ‘organizational atrophy’, relates to performance and is therefore the only factor understood to be within the direct control of the threatened organization. All four notional drivers of decline are present in contemporary public health care systems, and it is perhaps reasonable to deduce from this that contextual factors are more influential than organizational performance. And yet there is a strong tendency to infer from decline some organizational culpability, or else to present evidence of high performance as a defence against threat of closure. This indicates a lack of due recognition of the environment in which health care organizations operate and of the need to be responsive to changes. The danger then is that organizations are themselves seen as a good to be defended, irrespective of the interests of the communities they are intended to serve or the individuals they employ. The study of management behaviour has arguably mirrored this imbalance. As Bozeman notes: ‘The decline or cutback literature would benefit from an intellectual transformation, focusing not on strategies for mitigating decline but rather on the role of decline in organizational life cycles and its implications for devising resilient, longterm managerial strategies’.2 A lifecycle approach suggests the inevitability of organizational expansion, contraction and death, and the need to attend to the management of workforce transition and to protect both job security and intrinsic motivation associated with public organizations.7, 8 As well as attending to causes of decline, Levine’s approach directs us to persistent challenges relating to resources, ethics and processes in the implementation of decisions to downsize. The paradox of the shrinking organization is that it requires additional funds to facilitate the shift to a state of reduced spending and activity, for example, through investments in leadership, information, facilitation and review. These resources are hard to come by and health-care organizations are often constrained in the additional revenues they can generate. Levine also warned against simplistic models of the divisible (or divestable) components of the contracting organization, noting that ‘organizations cannot be cut back by merely reversing the sequence of activity and resource allocation by which their parts were originally assembled’.
In cautioning against strategies based on natural attrition (e.g. imposing recruitment freezes) or salami slicing of departmental budgets, Levine appears to anticipate the efficiency-based budgeting tools later propagated by health economics.9 However, despite the rational instrumentalism of such prescriptions, Levine is acutely aware of the plurality of goals and interests contained within public organizations, and the politics at play in decisions over whether and how to either resist or smooth the decline. What’s more, in the postinitiation phase, programmes of managed decline are often characterized by subversion, resistance and competition from units within the organization. Whilst public ethics require that the politically disenfranchized are not always first in line to face the budget axe,8 Levine notes that ‘retrenchment politics dictate that organisations will respond to decrements with a mix of espoused and operative strategies that are not necessarily consistent’. Commonly, survival tactics are employed as management tiers and units are pitted against each other, diluting altruism and encouraging bureau shaping. This places unusual pressures on envoys sent to deliver the bad news of decline and the behaviours of those facilitating such change remain under-theorized and under-nurtured.10 What’s more, the options for incentivization are narrow: Levine notes the perversity of being seen to reward those who oversee the depletion of an organization’s resource. Despite the insights he generated, Levine’s legacy has proven to be somewhat modest. Whilst work has continued in other areas of organizational analysis, cutback management has largely disappeared as a motif in the public administration literature, perhaps as a direct result of the receding ‘environmental entropy’.11 Recently, the spectre of decline has been brought back into view by economic stagnation and depletion of health care budgets, making it timely to reflect on this earlier literature. For those designing services, there are valuable insights relating to the causes of decline and the need for compatibility with context. For those managers on the receiving end, Levine counsels astuteness when responding to the threat of decline or death, and the peculiar conditions and demands of decline imply the need for specific, tailored implementation strategies. Of course, Levine’s work has flaws. For example, at times he appears to underplay the role of national political actors for whom ‘almost always, retrenchment is an exercise in blame avoidance’12 and, in this light, his calls for governmental patronage for cutback management can appear naı¨ ve. Overall, however, his investigations into organizational decline remain instructive for contemporary policy and debate in health care. No more sophisticated analysis of the organizational, relational and political issues at play has been put forward.
Downloaded from hsr.sagepub.com by guest on November 16, 2015
Williams
191
References 1. Daniels T, Williams I, Robinson S, et al. Tackling disinvestment in health care services: the views of resource allocators in the English NHS. J Health Organ Manage 2013; 27: 762–780. 2. Bozeman B. Hard lessons from hard times: reconsidering and reorienting the ‘managing decline’ literature. Publ Admin Rev 2010; 70: 557–563. 3. Robert G and Fulop N. The role of context in successful improvement. London: The Health Foundation, 2014. 4. deLeon P. Public policy termination: An end and a beginning. Pol Anal 1978; 4: 369–392. 5. Geva-May I. ‘When the motto is till death do us part’ The conceptualisation and the craft of termination in the public policy cycle. Int J Publ Admin 2001; 24: 263–288. 6. Robinson S, Dickinson H, Freeman T, et al. Disinvestment in health: the challenges facing general practitioner (GP) commissioners. Publ Money Manage 2011; 31(2): 145–148.
7. Sutton RI. The process of organizational death: disbanding and reconnecting. Admin Sci Q 1987; 32: 542–569. 8. Pandey SK. Cutback management and the paradox of publicness. Publ Admin Rev 2010; 70: 564–571. 9. Williams I. Allocating resources for healthcare: setting and managing priorities. In: Walshe K and Smith J (eds) Healthcare management. Basingstoke: Open University Press/McGraw Hill, 2011. 10. Ashman I. The face-to-face delivery of downsizing decisions in UK Public Sector Organizations. Publ Manage Rev 2013; DOI: 10.1080/14719037.2013.785583. 11. Boyne GA. A ‘3Rs’ strategy for public service turnaround: retrenchment, repositioning, reorganization. Publ Money Manage 2004; 24: 97–103. 12. Pierson O. Dismantling the welfare state? Cambridge: Cambridge University Press, 1994.
Downloaded from hsr.sagepub.com by guest on November 16, 2015
