Institutional Change and Healthcare Organizations: From Professional Dominance to Managed Care - Book Review

Administrative Science Quarterly,  June, 2002  by Elizabeth Goodrick

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W. Richard Scott, Martin Ruef, Peter J. Mendel, and Carol A. Caronna. Chicago: University of Chicago Press, 2000. 427 pp. $58.00 cloth, $25.00 paper.

Scott et al.'s book is a sophisticated and ambitious attempt to understand the transformation of the healthcare sector in the United States since World War II. Oriented toward organizational and institutional scholars as well as others interested in healthcare, the authors provide a richly textured, detailed, and at times fascinating analysis of the changes in organizations and institutions in the San Francisco Bay Area. The analysis is multileveled (organization, population, field) and utilizes multiple research methods (quantitative and qualitative) and a variety of types of data (e.g., archival materials obtained from annual surveys, reports, and directories as well as from individual organizations and Web sites, periodicals, and interviews).

While theoretically rich, the book is organized around the central aim of documenting change in the healthcare sector. The authors' objective was to illuminate developments in healthcare systems generally by focusing on how organizations in one geographic region responded to both local forces and those at the broader societal level. The empirical analysis met this objective by focusing on the changes in the density, size, ownership, accreditation, and activities of organizations and the interconnections between them. Specifically, the authors examined changes over time in five populations of healthcare organizations: hospitals, health maintenance organizations (HMOs), home health agencies (HHAs), end-stage renal disease centers, and integrated healthcare delivery organizations.

The most noteworthy of the population-level analyses is reported in chapter 4, where the authors differentiate between ecological change (due to exit and entry processes) and adaptive change (change in structural features of existing organizations). Defining structural inertia in terms of the relative rates of adaptive and ecological change, they find evidence that overall core characteristics are more likely to have been modified by ecological than adaptive processes. They also investigate the ecological assumption that some organizational features are more resistant to change than others. While they provide empirical support for the existence of an inertial hierarchy of organizational attributes, they find that the magnitude of the effect differs across types of organ izations. They find less fundamental change occurring among hospitals and older, more institutionalized form of healthcare delivery than among newer, more specialized organizational populations.

While the population-level data trace the evolution of medical care organizations in the Bay Area, the authors balance this structural emphasis with four case studies that allow them to observe varying capacities for social agency as specific organizations responded to change and, at times, attempted to initiate change. The case analyses also provide the reader with many interesting historical tidbits, such as the fact that in the 1940s and 1950s, Kaiser Permanente had to build or acquire hospitals to treat its own members because local medical societies refused to grant privileges to Permanente physicians in community hospitals.

Although the study draws on multiple theoretical perspectives, primacy is given to institutional theory, which is viewed as a framework integrating other approaches. The major theoretical issue the authors address is the nature and causes of profound institutional change. They nicely lay out their criteria in the first chapter for when change is profound and summarize their analyses in terms of these criteria in the last chapter. Basically, institutional change is profound when existing stable fields are destabilized through destructuration processes, together with restructuration processes, which create a new social order through competition and struggle among new types of actors.

The book's greatest strength is its field-level analyses. In chapter 6, the authors document changes in the institutional environment using qualitative "thick description" supplemented by a few quantitative tracer variables. Imaginatively employed, the tracer variables provide some empirical support for the authors' main argument that American healthcare has been characterized by three institutional eras: professional dominance (1945-1965), federal involvement (1966-1982), and managerial control and market mechanisms (1983-present). These institutional eras represent specific combinations of the three components--logics, social actors, and governance structures--that the authors use in documenting changes in the institutional environment in the healthcare sector. They argue that changes in logics occurred first, because logics are largely based on ideas, and new types of actors require a supportive ideological base. Because changes in governance structures require the buildup of pressure and political will, t hey tend to lag the introduction of new ideas. Scott and colleagues use governance structures, dates denoting significant legislation affecting the healthcare field, to delineate the periods. The chapter then describes the principal factors shaping each period, as well as the ideas and actions that came to undermine existing beliefs and practices, showing how all three institutional logics have been present since at least the beginning of the study period.