The Effects of Reengineering: Fad or Competitive Factor?

Healthcare organizations have often participated in managerial innovations that have promised to revolutionize their operations (e.g., management by objectives, quality circles, total quality management, and reengineering). Historically, such managerial innovations began with a few devout adherents, snowballed into widespread acceptance, and then faded as their popularity waned. This cycle of managerial adoption generally has been complicated by a lack of a consistent, clear definition of the innovation and little or no evaluation of its organizational effects. This article examines a current managerial innovation, reengineering, that after widespread adoption has now begun to fall out of favor with many executives. A clear, practical definition of reengineering is first offered, followed by an evaluation of the effect of reengineering on competitive hospital costs. Finally, factors that influence the results of reengineering are explored. Overall, reengineering did not statistically improve a hospital's cost position; however, we suggest that providing clear and consistent feedback, codifying the reengineering process, and involving executives in core changes are key means for improving reengineering outcomes. Specific examples of how these factors may be used to facilitate reengineering are provided. Reengineering may still be beneficial if it is properly implemented.