Inside Organizational Change: Puzzling across Permeable Boundaries

The notion that the perfect method of organizing people and tasks is just around the corner seems to be part of public administration's heritage from the progressive era. Although the literature gives mixed marks to efforts at planned change (Kotter 1995; Robertson and Seneviratne 1995), the Veterans Health Administration (VHA), one of the largest agencies in the federal government, has overcome substantial obstacles to make progress through organizational transformation (Young 2000). The VHA, a primary component of the Department of Veterans Affairs, is a nationwide health care system comprising 172 hospitals and 132 nursing homes; in 1999, it provided services to 3.6 million veterans--approximately 14 percent of the more than 25 million U.S. veterans. Most veterans who use VHA services meet at least one of two criteria that qualify them for priority status under the agency's patient eligibility rules: disability connected to military service, or low income. Additionally, the VHA conducts extensive research and teaching activities. For example, the agency provides financial support and clinical training to approximately one-third of the country's medical residents. The agency's workforce, which has undergone substantial reductions in recent years, now consists of approximately 180,000 individuals. Systemwide Changes When the VHA began its restructuring in 1995, past initiatives made its programs incongruent with health care trends, such as: 1. The general market-based restructuring of American health care and the rise of managed care; 2. The expanding medical ability to treat injury and illness on an outpatient basis, whereas the VHA had most of its resources invested in inpatient care; 3. The relatively older age and greater disease burden of veterans compared to the overall U.S. population; 4. Changing views about the role and size of government in general and the federal government in particular, a trend exemplified by the National Performance Review and the Government Performance Review Act; and 5. Growing fiscal constraints on the agency. In response to these stimuli, the VHA set out to reengineer itself, from the top down and from the bottom up. According to a recent evaluation of efforts during 1995-99, the top-down strategy has had some success (Young 2000). A clear vision with aggressive leadership by Dr. Kenneth W. Kizer guided the changes. The VHA's leadership implemented a totally new structure by reorganizing all VHA operating units into 22 networks, known as Veterans Integrated Service Networks. The networks replaced hospitals as the primary planning and budgeting units within the VHA, and much of headquarter's decision making was transferred to the networks. An accountability system with performance contracts was established for network directors, and reforms to agency rules and regulations allowed more flexibility to shift patient care to outpatient settings. These four initiatives--creation of a vision, adoption of a new organization structure, establishment of an accountability system, and modification in agency rules and regulations--formed the basic transformation framework for the agency from a top-down perspective (Young 2000). What, then, happened in the hospital units themselves? Field-based efforts were dramatic and focused on implementing a structure based on "service lines of care" or "product lines." Service lines attempt to link treatment facilities, caregivers, clinical services, and administrative support by functional purpose. The subject of this study, the Veterans Administration Medical Center (VAMC) in Salem, Virginia, opted to reorganize around a structure of six service lines: medicine, primary care, mental health, spinal cord injury, extended care, and surgery. According to the literature, a service line of care attempts to achieve optimal sharing of resources, ideas, and information in an effort to improve access, enhance quality, optimize efficiency, and minimize service satisfaction. …