<span>Academic Medical Centers (AMC), despite their research and educational prowess, are in a financial crisis. Increasing costs, stiffer competition, and anticipated tightening of budgets have created new levels of urgency among medical school deans and hospital CEOs to increase the efficiency of the clinical enterprise. This study models an AMC as a loosely coupled system and examines why interdisciplinary teams—comprising administrators, physicians, and nurses—struggle to successfully reengineer healthcare processes. Semi-structured interviews in an U.S. AMC were the basis for the development of a grounded theory framework. The findings suggest that: (a) the ambivalent culture of an AMC alternately supports and block reengineering, efforts, (b) improved patient outcomes must drive, and will result in, organizational </span><span>efficiencies, (c) successful reengineering efforts share several common characteristics, and (d) good planning is important, but insufficient to drive change. The accompanying conceptual model suggests that the hospital-focused and patient-focused reengineering goals act as independent variables. The reengineering process is mediated by an iterative convergence of the sensemaking and meaning-arbitrage dyad that results in equifinal meaning. Subsequent actions result in organizational performance. The process is moderated by the psychological safety afforded to the team as well as the resources provided to implement the changes. Implications for both scholars and practitioners are presented. Key words: Loosely coupled systems, reengineering, sensemaking, meaning arbitrage, equifinal meaning, psychological safety.Doctorate of Management Programs</span>
