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Commentary: slack resources in health care organizations--fat to be trimmed or muscle to be exercised?

Article Excerpt
In this issue, Hussey et al. (2009) at RAND summarize their results of a systematic review of ways to identify and evaluate health care efficiency. Their approach was deliberately broadly inclusive in that they did not require that the studies reviewed simultaneously measure quality as well as costs or resources consumed when assessing "efficiency."

Hussey and colleagues argue that there are important reasons to take a broad perspective of the measures of efficiency in health care at this juncture. First, they want to portray the wide variation in the methods that policy makers and researchers are currently using to draw implications about efficiency. Second, they argued that it is often reasonable to assume that products or outcomes are similar across the organizational units being compared and, when true, variation in quality does not need to be measured. The third set of reasons is based on the practical reality of where we are today: there is little consensus about how to measure efficiency in health care (especially between practitioners and researchers). Very few studies include "quality" when they address concerns about efficiency and so much relevant work of necessity would be overlooked. Yet the political need to act to control costs while maintaining or improving quality in our health care system has never been more urgent or complex.

Hussey and colleagues' article raises many important issues regarding efficiency. While focusing on the methods employed to measure efficiency, their conclusions illustrate that the more fundamental problem is the lack of consensus on underlying theory and models--let alone methods--that provide the context for understanding efficiency and the existence of slack resources in organization.

In this commentary, we highlight the widely divergent views about slack resources in health care organizations. These views range from perceiving slack resources as incontrovertible evidence that our health care system has too much "fat," that is, using resources inappropriately or wastefully, to under some circumstances as an indicator that health care organizations have the "muscle" needed to improve our health care system by promoting innovation, allowing needed flexibility, and devising ways to improve "value" in health care services. The latter view suggests that slack resources should be "trimmed" judiciously rather than always assumed to be "inefficient."

DEFINITION OF ORGANIZATIONAL SLACK

Slack is a pool of organizational resources in excess of the minimum necessary to produce a given level of organizational output. Slack resources can provide a cushion that allows organizations to adjust successfully to internal pressures as well as to initiate strategy with respect to the external environment (Oviatt 1988). These excess resources may take the form of redundant employees, excess capacity, or excess labor or capital (Nohria and Gulati 1996). For example, employers may hire individuals with seemingly underutilized skills as a form of organizational slack in order to expedite upgrades or respond to demand surges when circumstances warrant. Payment to members of the internal competing coalition in excess of what is required to maintain the organization is also a form of slack (March and Simon 1958). Slack resources can be immediately...

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