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change, environmental uncertainty, health care environments, health care organizations, strategic planning



  1. Begun, James W.
  2. Kaissi, Amer A.


Abstract: Health care leaders and analysts typically describe the health care environment as dynamic, complex, and highly uncertain. This study conceptualizes environmental uncertainty as an individual perception that blends subjective and objective realities derived from the complexity and dynamism of the organizational task environment. Exploratory judgments of the complexity and dynamism of the environment of health care organizations are included.


Descriptions of the health care environment as increasingly uncertain and turbulent are almost a requisite prelude to studies of health care organizations. For example, Richardson and Schneller1(p.90) describe the "complexity and chaos of the health system," and Stefl2(p.1) argues that in health care, "change has been swift and often unpredictable." It is typical to read such expressions in health care journals and to hear them from health care leaders. Health care management textbooks do not escape this trend, beginning with introductions that highlight "discontinuous change, characterized by turbulence, volatility, and uncertainty"3(p.vii) and argue that "the health care environment has shifted from a level of reasonable predictability to one that is unpredictable and highly volatile."4(p.xi)


Most health care leaders and analysts perceive themselves as working in or studying a sector that is unpredictable and turbulent, as well as complex and confusing, "uncertainty" is one of several terms often used to describe this critical feature of the health care environment. This discussion is confined confine to the concept of uncertainty to be more specific about its definition and to advance the discussion toward empirical research.


The manner in which the health care environment is perceived and characterized is important for several reasons. In general, better organizational performance has been associated with a greater match between perceived and objective environments.5,6 Structural contingency theory argues that organizations able to respond appropriately to varying levels of environmental uncertainty will be more effective.7 Shortell et al.8 argue that higher-performing health care delivery organizations are those that are, among other characteristics, able to perceive and manage uncertainty and ambiguity in their environments.


More specifically, perceived environmental conditions are related to choice of organizational structures. In environments that are more uncertain, organizations are more likely to benefit from flexible rather than bureaucratic organizational forms.9 Transaction cost theory predicts that the probability of internal market failure for organizations is increased under conditions of environmental uncertainty.10,11 At the organizational level, when environments are perceived as uncertain, greater amounts of time and resources are spent on environmental scanning and forecasting, at least until scanning and forecasting are viewed as futile.12-14 At that point, perceptions of extreme chaos and uncertainty can discourage constructive action to alter circumstances. Perceptions of environmental events directly affect the content and timing of strategic changes.15 The range of solutions to be considered, the amount of resources to be committed, and the steps to be taken toward organizational change are all affected by how managers perceive environmental issues facing their organizations.16-18


At the individual employee level, the stress resulting from high perceived uncertainty can have serious effects on the quality of decision making and job satisfaction, possibly jeopardizing the survival of the organization. Moreover, high perceived uncertainty could lead to low morale, feelings of helplessness, and high likelihood of withdrawal from the organization.19


Academic researchers can contribute to the improvement of practice by specifying the environment with more clarity and empirical validation. We offer several challenges and refinements to the notion that the health care environment is highly uncertain and recommend that academics and practitioners more carefully and objectively assess the nature of the environment before labeling it. We speculate on reasons that health care analysts and practitioners are prone to exaggerate the degree of uncertainty in the health care environment and we end by suggesting several ideas for investigation.