Understand how we got here — and how to move forward.

Our Take

Leading service rationalization decisions

15 Minute Read

Health system growth requires a distribution of services across sites that aligns with community needs and patient utilization. But closing or consolidating services to create a better service footprint is never easy; it requires buy-in from a full team of system and site executives.

Too often, decisions stall in early stages or endless debate. Leaders get bogged down in risks without fully appreciating opportunities. Executive teams encounter persistent resistance from stakeholders as they attempt to push decisions forward. Often, leaders opt for half-measures that fail to solve the core consequences of irrational service distribution—suboptimal quality and financial unsustainability.

Service line rationalization requires a carefully orchestrated decision pathway to avoid these challenges. In this resource, we provide our take on how to reach the right conclusion on service rationalization as a leadership team.


The conventional wisdom

Service rationalization—defined as service closure or consolidation—can support growth, boost quality, and improve financial sustainability by directing resources to where they will be most valuable. But even when rationalization supports those goals, it may also disrupt care patient care, change provider practice, or lead to community distrust.

Because of those risks, system executives, site leaders, and board members all need to support or at least understand the need for closure. To achieve consensus, leaders usually pitch the need for service rationalization with analysis to back up the decision. We identified two missteps in that approach:

  • Leading with the decision to rationalize, which stifles meaningful debate about alternatives and puts skeptical leaders on the defensive.
  • Overwhelming with data, which diverts the discussion into defending the methodology rather than discussing the core insights that show the need for change.

The result is that leaders often miss opportunities to make decisions. This leads to tabled discussions that delay corrective actions necessary to improve quality and growth.


Our take

System leaders need to engage all of the stakeholders involved in a service rationalization decision in a series of problem-solving discussions. Rather than leading with a pitch for rationalization and overwhelming with data to support the case, the process should create consensus around the core problem that needs to be solved, allow stakeholders to self-identify the best solutions, and connect to larger strategic objectives.

Throughout each of those steps, leaders need to include only the most relevant and meaningful data to avoid sidetracking into a conversation about data skepticism. Underlying that story is a comprehensive review of system performance. You don’t need to share all of the analysis you’ve done; you do need to be ready to dive deep when questions arise.

This should also open the door to productive debate—the right answer is not always closure. By structuring the case around your core challenges and problem-solving together, you are more likely to have meaningful conversations about potential solutions rather than distracting asides about unrealistic alternatives.

By coming to the right conclusion about service rationalization together, system leaders can make appropriate closure decisions and achieve the benefits of rationalization.


Four elements to building a business case for service rationalization

Coming to a decision on rationalization will take more than a single meeting. At each touchpoint, you should build a story that grounds your leadership team in the need for change and pushes toward a common solution.

We break that process into four elements, outlined below. Ultimately, your leadership team should agree on the need for change, the problem you are trying to solve, which option will best address that problem, and what to do next.

  • Element

    Make the case for change

    Read More Collapse
  • Element

    Identify your root problems

    Read More Collapse
  • Element

    Rank the different solutions

    Read More Collapse
  • Element

    Address the risks and reinforce your goals

    Read More Collapse

Parting thoughts

The leadership team’s decision to close or consolidate a service is only the start. To achieve the full potential of rationalization, you will need support from the affected physicians, staff, and communities.

You will need a plan to communicate with all of those constituencies and enfranchise them in addressing the risks and realizing the benefits of consolidation.

After your leadership team reaches the decision to close or consolidate a service, you need to cascade the message to internal and external groups. That starts with leaders of the most affected internal constituents: usually local service line and physician leaders. With their support, you should then communicate to the rest of the physician and staff teams. Just like facility executives involved in the original decision to close, these groups will feel anxiety related to identity shift—and you’ll need them to attach to the changed role of their program to make the change a success.

The community comes next. Depending on your market, that might mean partnerships with local government or community groups to partner on mitigating the impact on local patients. Recognize that communities will worry about their ability to access important care and worry about being left behind, especially if you’re closing services in an otherwise disadvantaged area.

As with site leadership, each of these constituencies should be enfranchised in the change. They may anticipate new challenges and see clever solutions that the centralized leadership may not.

For further support, please access our additional resources on service rationalization listed on the related content page of the PDF.

Have a Question?


Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.