Hospital management


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Hospital management

  1. 1. Public Disclosure Authorized Po-lcy, Planning, and Research WORKING PAPERS Healthand Nutrition Population HumanResources and Department TheWor;dBank July 1989 WPS173Public Disclosure Authorized Hospital Management Staffing and TrainingPublic Disclosure Authorized Issues Julio Frenk, Enrique Ruelas, and Avedis DonabedianPublic Disclosure Authorized Hospitals dominate health care, se making hospitals more effi- cient is crucial to better health care delivery. The authors suggest an agenda for research. The Policy, Planning, and Research Cxrnplcx dasinbutes PPR WorkingPapers to disseminatc the finidngs of work in progrcss and to enonurage the exchange of ideas amoangBank staff and aUothers interested in devclopmcnt issues Thesc papers carry the names of the authors, reflect only their views, and should be used and cited accordingly Thc findings interpretauons, and conclusions arc the authors own.They should not be attrbuted to the World Bank, its Board of lirectors, its management, or any of its member countrcs
  2. 2. and Research Plc,Planning, Healthand NutrtitonIHospitals dominate health care in most parts of The mostly highly recommended subjects forthe world and for a variety of reasons are likely research! in order of priority, are:to continue being a key factor in the overallperformance of the health care system. Any * Good descriptive studies of the hospitalefforts to improve this performance must there- system and the main aspects of organizationfore give greater hospital efficiency the highest design - to chart, for example, the formal andpriority. informal relations among managers and clini- cians, the frequency of different arrangements Aftcr discussing key issues of managerial, for intemal communication, types of departmen-clinical, and production efficiency, Frenk, talization, and management systems.Ruelas, and Donabedian suggest an agenda forresearch, which would include two types of * The systematic design, testing, and study ofresearch: explicit quality monitoring and assurance systems. Such studies should include the Observational studies that document levels analysis of interactions between managers andof hospital performnanceand correlate them with clinicians, especially as they constrain clinicalorganizational design and environrmental vari- autonomy and decision making.ables. It is especially imponant to devise andtest sensitive, specific indicators of managerial, * Studies to determine which social, personal,clinical, and service production efficiency. organizational, and educational factors account for managerial skill and success in managing a - Comparative intervention studies that would hospital - to get the information needed for theintroduce planned change in hospitals and assess recruitment and training of successful hospitalthe consequences - using control groups as managers.well as cost-benefit and cost-effectivenessanalyses. * Studies of the structure and dynamics of medical labor markets, to improve understand- ing of why there is an oversupply of doctors in so mary different countries. This paper is a product of the Health and Nutrition, Population and Human Resources Department. Copies are availablefree from the World Bank, 1818H Street NW, Washington DC 20433. Please contact Sonia Ainsworth, room S6-065, extension 31091 (37 pages with chans). The PPR Working Paper Series disseminates the findings of work under way in the Banks Policy, Plaruning,and Research Complex. An objectivc of the series is to get these findings out quickly, even if presentations are less than fully polished. The findings, interprctations, and conclusions in these papers do not necessarily represent official policy of the Bank. Produced at the PPR Dissemination Center
  3. 3. - l E- Table of ContentsINTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1ANALYTICAL FRAMEWORK ..... . .. . .. .. .. .. .. .... . . 4BASICISSUES . ............. .. .. ............ 11 MeasurementIssues.. . . . . . . . . . . . . . . . . . . . . . . 11 SubstantiveIssues ..... . . . . . . . . .. ...... . . . 12ISSUES RELATEDTO THE TRAININGOF HOSPITALMANAGERS . . ... . . . . . 25TOWARDS A RESEARCHAGEMDA ..... . .. ... ... . .... . .. . 29
  4. 4. ACKNOWLEDGEMENTSWe are grateful to Dr. Willy De Geyndt for his advice on thestructure and content of this paper. We would also like toacknowledge the help of Beatriz Zurita, Michal Frejka, and LuisMiguel Vidal in completing the literature search and organizing thematerial. The shortcomings of this paper are solely theresponsibility of the authors.
  5. 5. Throughoutthe world, hospitalshave come to epitomizemodern medicalcare. For many years, a major policy concern in the health arena was toprovide communitieswith enough hospitals. More recently,however, thefocus of concern has shifted to the overdominantrole of the hospitalwithinthe health system. In developed countriesthere is an excess of beds. Inmost developingcountries the concern is that, even without having fullysatisfied overall requirementsfor hospitals,they already absorb such ahigh proportionof resourcesthat they seriouslythreatenany effort toachieve full coverageof the population. Furthermore, is widely believed itthat a health care system centeredaround hospitals is intrinsicallyincompatiblewith the geographic,economic,and culturalattributesof manypopulations. In addition,the mix of servicesoffered by hospitalsemphasizingacute, episodic,and curativeactivities-- is believedtopoorly match the prevailingepidemiologicprofile and the populationneedsfor preventiveand continuouscare. This inconsistency becomingeven ismore marked as an increasing number of countr,es undergo a profoundepidemiologic transition, whereby chronic ailments are becoming moreimportant,with the ensuing requirementsfor long-termservices that mostgeneral hospitalshave traditionally had difficultysupplying(Omran 1971;Frederiksen1969). As with physician supply hospitalsseem to have movedfrom deficit to excess without ever having achievedsome kind of equilibrium(Starr 1982, pp. 421-427). Evidently,a health system dominatedby hospitals is not the onlypossible organizational model. In fact, for most of the history of health
  6. 6. 2care hospitalsrepresenteda rather marginal element. As Foucault (1978)points out, during a long period of time the hospitalwas a nonmedicalinstitution,and medicinewas not a hospital-based profession. "Thehospital as a therapeuticinstrumentis a relativelymodern concept,datingfrom the end of the eighteenthcentury" (Foucault1978). Since then, anumber of social, economic,scientific,and technologicchanges,which havebeen summarizedelsewhere (in particularby Rosen 1972), have made thehospital the "fulcrumof care" (Berki 1972, p. 8). The dominance of hospitals is one of the most striking featuresofconvergenceamong the health systems of countriesat all levels of economicdevelopmentand with all forms of politicalrepresentation (Mechanic1975;Frenk and Donabedian 1986). Togetherwith the importantprogressthat theyhave produced,hospitalshave also given rise to the set of concernsmentioned above. As the ambitious goal of achievingHealth for All by theYear 2000 is universallyadopted, it becomes increasinglycrucial tounderstandthe functioningof that segment of the health care system wheremost resourcesare spent. UNICEF has estimated that, while in manycountries 85% of the national health budget is spent in hospitals,theseserve less than 10% of the population. For example, in Mexico hospitalsrepresent less than 1% of all the health care facilitiesof the MinistryofHealth, but employ over 40% of the Ministrysphysiciansand nurses(Secretariade Salud 1985, pp. 213-319). Many countriesface, therefore,a double concentration health care: ofgeographicconcentration large urban areas and technological inconcentration large hospitals ( 1986). The problem is infurther compoundedby the effects of concentration the distribution on ofresources. For instance,in many countriesefforts at regionalization have
  7. 7. 3been bedeviledby the tendency of hospitals to mix all three levels of care.This part due to the weaknessof primary health care (PHC), whichmakes it necessary for the outpatientdepartmentsof many hospitals tobecome major providersof first-contactcare. Thus, the concentrationofresources in hospitals is both a cause and an effect of the weakness of PHC.Another reason for the mixture of levels of care is the tendency towards"tertiarization" many general hospitals. In either case, the end result ofis the lack of clear patterns of patient referral,the difficultyofassigningdefined populationbases to differenttypes of health carefacilities,the coexistencein the same facilityof cases with widevariationsof complexity,and the inefficientuse of resources. Because their central position is likely to be maintainedin theforeseeablefuture, hospitalswill continueto be major determinants the ofoverall performanceof the health system. Any efforts to improve thisperformancemust therefore give the highest priorityto hospitalefficiency.This is the perspectivethat guides the present paper. The purpose of thepaper is to discuss some fundamentalissues of hospitalmanagement,withspecial emphasison staffingand training. To achieve this, the paper isdivided into three parts. First, an analyticalframeworkis presented thathelps orient the discussion. Hospitalsare conceivedof as complexorganizations, with goals, tasks, control systems,and relationshipsofauthoritythat are articulatedin both formal and informalways (Scott1966). The performanceof the hospital is conceptualized terms of three indifferent types of efficiency:managerial,clinical,and productionefficiency. We also analyze the elementsof the internalorganizationdesign and of the externalenvironmentthat influencethe level ofperformarnce analyzed. Second, some issues that refer to each of the are
  8. 8. 4elementsof the analyticalframeworkare identified. Finally,a researchagenda that may help to better understandthe issues and thereby to improvethe performance hospitals is presented. ofANALYTICAL FRAMhWORK Figure 1 presents a schematicmodel for the study of hospitalefficiency. This model begins by positing that there are two major groupsof actors in the hospital:managers and clinicians. Each of the two majortypes has many different subgroups. Among the managers, there are distinctlevels, ranging from members of the directorate, senior executives,to tothe middle and lower echelons. Clinicians,on the other hand, compriseavariety of professions. Nevertheless, our discussionwe will focus on inphysicians,since they still constitutethe principalgroup of providers,interms of number, importance,autonomy,and economicconsequences the ofdecisionsthat they make. Insofar as the same person can have bothmanagerialand clinical functions,we speak of roles rather thanoccupationalgroups ( 1983). This is particularlyimportantfor physicians,who often occupy importantadministrative positions inhospitals. For the purposes of this paper, when a physicianassumes themanagerialrole, he or she will be considereda manager. As we shalldiscuss later on, one of the issues in health care organizationsispreciselythe convenience having physiciansperform administrative offunctions. For the time being, however,the point is that the actors areconceivedof in terms of their roles and not of their professionalorigins.
  9. 9. ... .: : ENVIRONMENT ( EPIDEMIOLOGIC, ECONOMIC, POLITICAL) . . . .... . .. . .. . . .. . . . . . . . . . . . . . . . ~ ::~ ~ ~ ~~~~~~~~... ~ ~ ~~~~~ .......... . .:: : OR A I A I N D S G ::--- ..... ............ .... ..........:... ACTOR.S I..TERVEI..G VARIABLES OCTIVES PRODUCTS Managerial Decision Making POLICIES- MANAGFIERS J~MANAGERtIAL Managerial Skills EfICIENCY SUPPORT Managerial Autonomy SERVICESS HEALTH . Design of Production SERVICE CARE-: : Process EFEICIENCY SERVICES Clinical Decision Making 1ciA p< Clinical Skills CLiiTICAL EFFICIENCY HEALTH _________________Clinical Autonomy .~~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.. ... . .. .. Figure I CONCEPTUALFRAMEWORKFOR THE STUDY OF HOSPITAL 6FFIC[ENCY
  10. 10. 6 Figure 1 shows the interaction the two basic groups of actors in the offrameworkof a complex organization,the hospital. This interactionisaffected by the specificdesign that the organizationadopts. Furthermore,the organizationitself is surroundedby an environment,where it interactswith other organizationsand with formal and informalgroups of clients.Through its environment,the organizationis shaped, as we shall see lateron, by complex epidemiologic, economic,and politicalprocesses. Within the context of specificenvironmentsand organizational designs,the core of Figure 1 portraysa dynamic conceptionof the interactionbetweenmanagers and clinicians. Through the operationof certainintervening variables,the interactiongenerates a set of products. Thequantity and quality of these products is determinedby the efficiencyofthe organization. In this respect,we propose that there are three types ofefficiency,which ought to be kept analyticallydistinct. We call theseclinicalefficiency(CE), service productionefficiency(PE), and managerialefficiency(ME). The distinctionbetween clinicalefficiencyand productionefficiencyhas been proposedby (1982). Basically,CE refers to theproductionof health, however defined,whereas PE has to do with theproductionof health services. Thus, CE is the extent to which a physician"combines,times, and sequencesservices...toproduce the greatest incrementof health, given a specifiedavailableor permissibleexpenditure"(, 1982). The combination,timirg, and sequencingofhealth services in the managementof a case is called a "strategyof care"by these authors. Hence, CE is the efficiencyof the strategiesof care.The clinicallyefficientstrategywill be the one that produces the largestimprovement health for a given amount of expenditureor, alternatively, of
  11. 11. 7the one that produces a certain level of health with the least costlyutilizationof resources. Needlessto say, the improvementin health statusmust be attributableto the strategyof care. It is clear that CE is acomponentof the quality of care. The concept has the merit of combininghealth outcomeswith resourceconstraintsin the definitionof quality. Asa componentof quality,CE is determinedby the appropriateness the ofclinical decisionsto select a certain strategyof care, by the skill withwhich the strategy is carried out, and by the degree of clinicalautonomy,i.e., the extent to which the cliniciancan control the content of his/herown work (Freidson 1970, pp. 71-84). Even when a physicianhas selectedthe optimal strategyof care, theremay be inefficiencies the process ox producingthe servicesthat form inthis strategy, leading to a waste of resources. For example,there may bedelays in processingor reportinglaboratorytests, or there may be a lowoccupancy rate, or the hospitalmay be using more costly personnel thanwarranted by the complexityof tasks. (1982) suggest thatsuch inefficiencies the productionof servicesshould not be considereda inpart of the definitionof quality, althoughthey certainlyinfluencethelevel of quality that is achievedper dollar of expenditure. As can beseen, PE is dependent,not on clinicaljudgement,but on the proper designof the service productionprocess, so that the amount of servicesspecifiedby a certain strategyof care can be produt at the lowest cost. The concepts of clinicalefficiencyand s-rvice productionefficiencyintroducea useful distinctionin the analysis of the substantivefunctionof a hospital, i.e., the productionof services that will generateanimprovement health. In a parallel fashion to the notion of clinical ofefficiency,Figure 1 proposesthe concept of managerialefficiency.
  12. 12. 8 FIGURE 2 DIMENSION TYPE OF RELATIONSHIP OF ANALYSIS Ezternal Internal Povr ad authority .slatsions vith rolationx betvoe Political the State managers and clinicians - Ovrall economic Characteristics of Economic codit t production factor markets .TYPOLOGY VARIABLES THAT AFFECTHOSPITAL PERFORMANCE OF
  13. 13. 9Dependingon the level of the manager, the product of ME are policies orsupport services: As in the case of CE, ME depends on the appropriatenessof managerialdecisions,the skill in managing the organization(asevidenced,for example, in styles of leadership,capacityto solve conflict,handling of time, financialability,etc.), and managerialautonomy,eitherfrom the cliniciansor from officialsat higher levels of decisionmaking. The two main actors in our model -- cliniciansand managers -- interactin complexways. We have already seen that each group can interferewiththe autonomyof the other. In addition,because of the characteristics ofmedical work, which is dominatedby professionals, both groups participatein the design of the productionprocess and thereforedeterminePE. The relationshipbetween managers and cliniciansdoes not occur in avacuum. It takes place in the context of an internalorganizationdesign,which in turn is surroundedby an externalenvironment. Followingthe workof Zald (1970),we can classifythe variablesthat operate inside or outsidethe organizationinto economicand political. Figure 2 presentsa frameworkfor analyzingthese relationships. There are many potentialvariables foreach cell in Figure 2. However,we have includedonly those that are mostpertinent for the analysisof the contextualfactors that affect hospitalefficiency. Let us first briefly identifythe variablesthat define the exchangesof a given hospitalwith its externalenvironment. On the politicaldimension of analysis,the main set of relationshipsrefers, in mostcountries,to those that the hospitalmust establishwith the State, eitherbecause the hospital is part of a larger network of public organizations,and hence is owned by the State, or because it derivesmost of its incomefrom social insurancefunds, or, at the very least, because the hospital is
  14. 14. 10subject to the regulatoryauthorityof the State (Frenk and Donabedian1986). The hospital also faces a complex externaleconomicenvironment. Atits highest level of aggregation,this environmentis formed by the overalleconomicsituationof a country. For example, economiccrises imposeseveral constraintsthat require creativeresponseson the part of bothprivate and public hospitals. At a more immediatelevel, the hospitalinteractswith various product and factor markets. Because this paperfocuses mainly on issues of staffing,the variable that we considermostimportantin this respect is the structureand dynamicsof the labor market,particularlythe professionallabor markets from which the hospitalmustrecruit its managersand clinicians. In additionto the politicalandeconomicvariables shown in Figure 2, the external environmentof thehospital is defined by the epidemiological context of the area. As will bediscussed later on, when this context is in rapid transitionit can severelystrain hospitalresources. Moving to the internalsituationof the hospital, the most importantpolitical aspects of organizationdesign are those that specify thelegitimatepower and authority relationshipsbetween physiciansandmanagers. In turn, the economicdimension centers around the design of theproductionprocess. There are several economicmodels attemptingtounderstandthe hospitalas a firm (Jacobs 1974). For example,Harris (1977)has presenteda model based on internalsupply and demand functions.Regardlessof which model is adopted,some of the basic variables that needto be understoodin the internaleconomicorganization the hospital ofincludethe definitionof tasks (e.g., the mix of routine and nonroutinetasks), the divisionof labor, the service productionfunctions,and thesystems for assuringthe quality of the product.
  15. 15. 11 Figures 1 and 2 should not be seen as rigid depictionsof what arereally very complex processes. They are not the only possiblerepresentation these processeseither.1 Instead,our conceptual offramework is meant simply as a guide to the identification and analysisofmore specificresearch issues.BASIC ISSUES In a first approximation, is possible to identifythree major groups itof issues that can orient the formulationof a researchagenda on hospitalmanagement. One group refers to issues of measurement. Indeed, it isnecessary to develop and test specificand sensitive indicatorsof thevarious elementsthat are shown in Figures 1 and 2, especiallythe threetypes of efficiencythat we have proposed. The second and largest group ofissues are substantive. In accordancewith our general frameworkofanalysis, these include three subsets: (a) those that refer to therelationships the hospitalwith its external context;(b) issues about ofthe internalorganizationdesign; and (c) those that have to do with thecore of organizational performance. Finally,the third large group ofissues are related to the trainingof hospitalmanagers for efficiency. Wewill next examine each group of issues, so tnat we can then proceed, in thelast section of this paper, to outline a researchagenda. Neasurin nt Issues Because of the nature of this paper, we will not go into great detailin the analysis of the issues that deal with the operationalization and For a differentthough related approach,see Kovner and Neuhauser(1983).
  16. 16. 12measurementof the conceptsproposed in our analyticalframework. It shouldbe pointed out, however, that a great amount of methodological work isrequired in order to answer such basic questionsas the following: -- What are sensitiveand specific indicatorsof managerial,clinical,and service productionefficiency? - - How can one assess such attributesas managerialor clinicaljudgement,skills, and autonomy? - - What is the appropriatemeasure of hospitaloutput? If servicesare considered,how should one account for the groups of activitiesthat gointo a hospital day? Should certain by-productsof the hospital, such asinformation,professionaleducation,research,and referral,be included?If output is conceived in terms of health status,what measures are thereavailableto solve the problem of attribution, that a change in health sostatus is validly related to hospitalcare? -- Given the multidisciplinary nature of hospital care, how can onerelate each output to the contribution distinct inputs? Conversely,how ofcan one assign specificportions of an input (e.g., time equivalentsofphysicians)to the productionof multiple outputs? These are just a few of the methodologicalissues that would need to besolved in any specificstudy of hospitalperformance. Substantive Issues External Environinnt. Whole disciplines are devoted to the study ofthe epidemiologic, economic, and political conditions that prevail in asociety. On the other hand, our main interest focuses on the performancecore of hospitals,especiallyas it is affectedby training and staffing.Hence, our analysisof the externalenvironment the hospitalwill of
  17. 17. 13necessarilybe limited. Nevertheless,it is fundamentalto keep in mindthat no research agenda on managerial,clinical,or productionefficiencycan be completewithout at least some consideration the environmental toconditionsthat shape the organization. A first problem arises in the precise definitionof what is externaland what is internal. Indeed, definingthe boundariesof any organization,and especiallyof a human serviceorganizationsuch as a hospital is not astraightforward matter (Hasenfeld1983). For instance, it could be statedthat one of the guiding principlesof the primary health care approachis to limits of health care facilitiesdeliberatelyblur the organizational sothat they outreach into the communitywith active programsof healthpromotion,disease prevention,and early detectionof cases. As (1982) point out, "the definitionof the organizations boundaryshould be consistentwith the problem under investigation." In our case,the purpose is to operationallydistinguishbetween those processesthattake place within given hospitalsand those that are externalto anyindividualhospital. Bearing the foregoingcaveats in mind, we can proceed to considersomeissues that derive from the epidemiologic, economic, and politicalenvironmentof hospitals. EpidemioloticEnvironment. The fundamental issue here refers to thecapacity of hospitals to adapt to changingpatterns of morbidity andmortality in the community. This issue is particularlysalient in somedevelopingcountries that are experiencinga complex epidemiologictransition( 1986). It is beyond the scope of this paper tomake a detailed analysisof the present characteristics and likely evolution
  18. 18. 14of this transition. Suffice it to point out the followingcriticalproblems: -- What information systems can hospitals devise to opportunelyidentify new trends in basic epidemiologicand demographicvariables? -- What economicallyfeasibleschemes are there to convert currenthospital capanityso that it respondsbetter to the aging of the populationand the emergent:s chronic ailments? What new linkagesmust hospitals ofdevelop with other health care facilitiesso that they can provide thenecessarycontinuityfor the long-termmanagementof chronic diseases? -- How must the staffingof hospitals adapt to new epidemiologic anddemographiccontexts? Is it possibleto retrain specialistsso that theycan take care of differentconditionsor age groups? What is to be donewith specialtiesthat become epidemiologically obsolete (witness,forexample, the case of phthisiologyand of tuberculosishospitals)? PoliticalEnvironment. Out of the whole gamut of politicalvariablesthat confronta hospital,we will concentrateon those that have to do withits relationshipto the States 2 In a long process that began approximatelyin the eighteenthcentury (Foucault1977; Rosen 1972), the State has becomethe largest owner, payer, or regulator in the health industryof practicallyevery country, so much so that Donnangelospeaks of the "universality" ofState interventionin medical care (1975, p. 4). In fact, it would beimpossibleto understandthe dominant role of hospitalswithout referencetothe fact that, especiallysince the 1950s, a growing number of governments >-2 itshas become increasinglycustomary in the literature, adopt the wenarrow definitionof the State as the institutions governmentproviding ofthe administrative, legislative,and judicial vehiclesfor the actualexerciseof public authorityand power, instead of the broad definitionofthe State as the total politicalorganization a society, includingits ofcitizens.
  19. 19. 15adopted and stimulateda paradigm of medical care based on specialtycare ofhigh technologicalcomplexityin hospitals (Frenk 1983). Likewise,thecurrent concern with the high cost and low coverageof hospitalshas beenlargely promptedby governmentsthat begin to shift towards a new paradigmbased on the tenets of primary health care. Even the search for formulas tostimulate private sector participationin the financingand provision ofhealth care have many times been conductedby governmentsthat seek toreduce their financialrisk in this area. In fact, those countrieshaveadopted explicit formulasto reduce State interventionhave found that thepublic vctor still remains as the principal actor in the health field (forexample see Klein 1984). There are two major spheres in which the relationshipbetween the Stateand the hospitals has direct consequencesover the performanceof thelatter. The first one refers to the reimbursementformulas,which have beenshown to affect the internalpower equilibriumbetween managers andclinicians(Young and Saltman 1983; Spivey 1984). The second deals with thelimitationsthat governmentimposes on managerialautonomy,especiallyinpublic hospitals that form part of larger bureaucracies such as ministriesof health. AAnumber of importantissues derive from these two spheres: -- What reimbursement mechanismsexist that will generate incentivesfor managerialand service productionefficiency,without reducingclinicalefficiency? 3 Actually, such limitationson managerialautonomyalso appear to takeplace in private multihospitalsystems (Weil and Stam 1986). Thus, animportantquestionfor researchwould be to find out whether the criticalvariable is the type of ownershipof the hospital -- public versus private -- or the existenceper se of an additionallayer of managersthat controlseveral hospitals.
  20. 20. 16 - - Should the State attempt to control hospital performancemostlythrough incentivesystems based on reimbursement, should it attempt more ordirect supervisionand control? What is the role of consumergroups in thisprocess? How can accountability the public be maintainedin government- torun hospitals? -- In the case of public hospitals,should goals be set by eachhospital,or should this be a functionof the larger public organizationtowhich the hospital belongs? Should ministriesof health actually runhospitals,or should their role be limited to setting,enforcing,andsupervisingstandardsof care? What mechanismsare there to increasemanagerialautonomy in public hospitals? What are the consequencesofdecentralizing goal-settingand operating authorityto hospitals in apreviouslycentralizedsystem? What formulasare there to monitorperformancein a decentralized public system? Rcono ic Environment. Issues dealing with the economicenvironmentofthe hospitalwill be approachedat two different levels. The first onerefers to the overall economicsituation of a country. The second one hasto do with the immediateenvironmentrepresentedby the markets in which thehospital must act. The fundamentalissue at the higher level of analysis is the adoptiveresponseof hospitalsto situationsof economiccrises such as the onesfaced by many developingnations. Economic crises seem to have a dualeffect on hospitals. On the one hand, health conditionstend to deteriorateso that the need for hospitalservices increases. At the same time,however, the standardpolicy response to such crises has been to cut budgetsfor social programs, includinghealth care (Brenner1979; Brenner and Mooney1983; Soberon 1986). Public hospitals face an additionalburden,
  21. 21. 17since they have to absorb part of the demand previouslysatisfied by privatefacilitiesthat a growing number of clients can no longer afford. Ashospitals in many countriesattempt to deal with this complex set ofstrains,several importantresearchquestionsemerge: -- What are the cost savings and effectiveness alternativemodes ofof providingservicesthat have traditionallybeen the domain of generalhospltals,such as normal deliveriesor minor surgery? Is it economicallyand clinicallyfeasible in developingcountriesto shift to alternativesettingsfor care that may satisfy a larger volume of demand at lower costs(e.g. "birth centers"or ambulatorysurgery centers)? -- What are the effects of new methods of financing,such ascommunityprepaymentschemes,which can be implemented deal with some of tothe consequencesof economiccrisis on the utilizationand financingofhospitals? -- What mechanismscan be designedto improve the flow and control ofmaterial resourceswithin hospitals so that waste can be prevented? -- More generally,what is the repertoireof survival strategiesthathospitalsmust employ under conditionsof economic strain? Intimatelylinked to this last questionis the whole issue of the waysin which hospitals participatein the product and factor markets that formtheir immediateeconomic environment. As we pointed out earlier,ourcurrent focus on issues of staffingmakes it necessaryto restrictthediscussionspecificallyto labor markets. The entire world has witnessed a dramatic increase in the supply ofphysicians. As Kindig and Taylor (1985) demonstrate,this increasehasoccurred in countriesat all levels of economicdevelopment. From 1950 to1979 the number of physiciansper 10,000 people grew by 96X in
  22. 22. 18industrialized countries,by 223% in centrallyplanned economies,by 164% inmiddle income nations,and even by 29% in low income countries. The growingsupply of physicianschanges the operatingenvironmentof the hospitals intwo fundamentalways. First, it gives the hospital,as an employer, greaterleverageto impose working conditionsthat are more favorableto itsinterests. Second, as the competitionfor profitableclinicalpositionsincreases,it is likely that more doctors will shift from patient care tomanagement (Tarlov 1983). Indeed, it has been shown that physicianscareerpreferencesare significantlyaffectedby their perceptionsof the medicallabor market (Frenk 1985). As the conditionsin this market become moredifficultfor doctors,they will increasinglyseek stable employmentthroughsalariedpositions,with less clinicalautonomy,larger managerialresponsibility, and greater stratification within the medical profession(Freidson1985). Furthermore,to the extent that in many developingcountriesthe increasingsupply of physicianshas not been accompaniedby asimilar growth of paramedicaland technicaloccupations,it is notunrealisticto expect that some doctors will fill less skilled positions inthe hospital, giving way to a new kind of medical underemployment. In sum,the main issues that derive from the foregoingconsideraticns can besynthesizedas follows: -- What are the implicationsof an increasingsupply of physiciansfor the hiring and staffingpractices of hospitals? Should the substitutionof physiciansfor less skilled positionsbe allowed and even encouraged?Should hospitalsexpand their staffs of residents to accommodatethe growingdemand for graduatemedical education,or should they strictlymaintainthenumber that they require to fulfill their medical care functions?
  23. 23. 19 -- In order to contain competition,practicingphysiciansare likelyto impose barriersto the attainmentof hospital privilegesby their youngercolleagues. Should managementinterveneto reduce such barriers? Should itpress for an increasein salariedpositions at the hospital? -- Faced with a choice between physiciansand administrators the assenior managers of the hospital,what criteriashould guide the higherauthoritiesin their hiring policy? Should physiciansbe preferred,as theyare in many countries,simply because they have the knowledgeabout thesubstantivefunctionsof the hospital? Or should managerialefficiencybethe guiding criterion? As can be seen, some of these issues begin to have a direct bearing onthe design of the hospital, a topic to which we turn next. OrganizationDesign. Organizationdesign has been defined as "the wayauthority,responsibility and informationare combinedwithin a particularorganization"( 1983). A design allows "to tailor theorganizationso that it can monitor its environmentand respond to theconstraintsand opportunitiespresentedby the environment..."( 1983) and to achieve coordinationand integrationof tasks acrossparts of the organization(Lawrenceand Lorsch 1967). There are two main issues that determinedifferent types of designs:how activitiesshould be grouped within the organizationand how decisionswill be made. In fact, these issues illustratetwo differentanalyticaldimensionsof the same concept. On the one hand, the organizationdesign isrepresentedby the structure,i.e., the type, number, and size of units,spans of control,and the arrangementof units along the lines of authority.On the other, one can identifythe more subtle and dynamic elementsof a standardization,design, such as degree of centralization-decentralization,
  24. 24. 20formalization, mechanismsfor coordination,communicationand control, aswell as rewards systems. This section will be focused mainly on the structuralissues. Sincethere is a more evident relationshipbetween the more dynamic elements ofthe organizationdesign and organizational performance,these will beanalyzed in the followingsection. Three types of structureshave been traditionallyidentified:functional,divisional,and matrix (Daft 1983). Functionalstructuremeansa divisionof labor into departmentsspecializedby functionalareas, i.e.,departmentsof surgery,medicine,nursing,medical records,and so on.Kimberly (1983) mention that this type of structure is more common inrelativelysmall (100-200bed) communitygeneral hospitals. On the otherhand, divisionalstructuresare organized around serviceshaving, in manycases, their own clinicaland administrative support services. This type ofstructuremay be seen more often in large teachinghospitals (Howe 1969).Finally, matrix structuresare the most infrequentones in hospitals. Theyare characterized a dual authoritysystem designed to improvelateral bycoordinationand informationflow across the organization1euhauser1972,Gray 1974). All of these possible configurations might respond to traditionalarrangementsof the structurerather than to actual environmental demands orto the need to improve organizational performance(Mintzberg1981). If oneconsidersthe possible role of hospitals in primary care provided throughoutreachprograms,one could ask which of these structuralalternativesisthe most appropriate(Shortell1984; Aday 1984). In addition, it is very importantto consider the particularcharacteristic hospital structureswhere two chains of command coexist. of
  25. 25. 21For Mintzberg (1981),hospitalsare a "professionalbureaucracy,"sincetheir structuralconfiguration who must be relies on trained professionalsgiven considerablecontrol over their own work. In this case, one canidentifyparallelhierarchies,one for the professionals and another for thesupport staff. The existence of two main chains of command in hospitals -- medical --staff and administration has been well documentedby several authors indeveloped countries (Perrow 1961; Georgopoulos1962; Bucher and Stelling1969; Engel 1969; Scott 1973; Robb 1975; Longest 1980; ShortellandEvashwick 1981; Scott 1982; Leatt 1983; Kinston 1983). However, indevelopingcountriesthe high predominance cliniciansover professional ofmanagers in hospital administration might blur the limits between the twohierarchies. This is even more so when one considersthat in mostgovernment-owned hospitalsphysiciansare salaried;therefore,they areaccountLblenot to the medical staff organizationbut to the administration. From all these aspects of the structuraldimensionof organizationdesign in hospitals,several issues can be identified: -- Since physicianspredominatein top administrative positions,cantwo chains of command still be clearly identified? Is the scope of theirexpert power clinical,managerial,or both? How is this situationinfluencingthe professionalautonomyof cliniciansand professionalmanagers? - - What structuralarrangementsare necessary to improve the balancebetween these two groups so that technicalexpertise in medicine andadministration can be better allocated? -- Within this particulartype of structure,how and by whom are thegoals of the hospital defined?
  26. 26. 22 -- Communicationbetwoenmembers of differentprofessionalgroups inhospitals has always beer a difficulttask, not only because of theirdifferent backgroundsbut also because of deficienciesin organizationdesign (Robb 1975). This is also true with regard to communicationbetweenproviders and clients. How can hospitalorganization better designed to beimprove the flow of informationbetween departments,providers,and clients?(Hasenfeld1983). -- What are the differentimplications the organizational of designof private versus public hospitals for clinical,managerial,and productionefficienc,? -- What are the advantagesand disadvantages functional, ofdivisional,or matrix structuresfor hospitals in developingcountries? -- What might be the best alternativesfor structuringthe hospitalorganizationaccordingto their external context,size, and types ofservicesprovided? -- In light of the goal of "Health for All by the Year 2000," what arethe best alternativesfor designingthe hospital organization, as to soprovide better access and utilizationof hospital resourcesby thepopulation? -- Which environmental variableshave major effects on hospitaldesign? What is their impact? How are these variablesoperatingtoinfluencehospitaldesign in developingcountries? Ortanizational Performance. Improvingorganizational performanceisperhaps the most importantchallengeto any hospitaladministrator. Shultzand Johnson (1976) have proposed some selectedmanagerialpracticesforimprovingperformance. These practiceswere grouped within three main
  27. 27. 23areas: managementof quality,managementof costs, and managementofconflict. Managementof quality involves,among other things,the implementationof assessmentand monitoringsystems and quality assurancemechanismsbasedon a sound organizationdesign. The latter includesmanagerialdecisionsregardingthe degree of standRrdization and formalization clinicaland ofnon-clinicaltasks, the degree of decentralization, and the implementationof adequate coordinationand communicationmechanismsthrough thedevelopmentof quality assurance programs. Furthermore,managerialdecisionshave to be made regarding the types of incentivesand specificcontrol mechanismsfor clinicalperformance. Another very importantaspect of the managementof quality is the issueof staffing. Several authors have studied the relationshipsbetweenhospitalmedical staff organizationand the quality of care (Shortelland LoGerfo 1981; Flood and Scott 1978; Roemer and Friedman 1971). On the other hand, staffing is also a relevantaspect of the managementof costs. Pauly (1978),Garg (1979), and Sloan and Becker (1981)have analyzed differentaspects of the relationshipbetweenmedical staffand costs. The ratio of managementto productionpersonnelas it affectsthe efficiencyof hospitalshas been studied by Rushing (1974). Scott and Shortell (1983) have made an extensivereview of theliteratureon these topics under two major areas: effectiveness(qualityofcare) and efficiency. These include the managementof quality and themanagementof costs. It is very importantto mention that both managerialpractices require a well designed informationsystem that allows managers toobtain a real image of hospitalperformanceso that decisions are made on amore solid basis. I , .
  28. 28. 24 Managementof conflict is of paramount importancein hospitalsgiventhe different professionalgroups involvedin patient care. Organizationdesign, along with goal setting and negotiatingskills, are the bestelements for managing conflict. Again, a neat organizationdesign tends toimprovecommunicationand coordinationand to prevent conflictby definingauthorityand responsibility among hospital staff. Finally,organizational performanceseems to be associatedwith alinkage to the organizational environment, appropriateorganization andesign, and the existenceof informationsystems that provide awareness oforganizational functioningand the opportunityto take correctiveaction(Scott and Shortell 1983). Many issues could be raised around organizational performance. Some ofthem have already been mentioned in other sectionsof this paper,particularlywith regard to the relationshipsbetween the organizationandits externalenvironmentand some aspects of the organizational design.Nevertheless,there are still other relevant issues that deserve someconsideration: -- Which are the most common mechanisms in developingcountriestolink hospitalswith their external environment? -- What is the role of communitymembers in the administration ofhospitals? -- What should be the compositionof hospital boards? - - Since quality assuranceexperiencesare only beginning in manydevelopingcountries,what might be the strategiesfor implementingqualityassuranceprograms? What might be the characteristics an information ofsystem in order to run an efficientand effectivequality assuranceprogram?
  29. 29. 25 - - Three types of quality assurance systems can be identifiedaccordingto the degree of decentralization and involvement hospital ofstaff: centralized,decentralizednonparticipative, and decentralizedparticipative(Ruelas 1986). What should be the degree if decentralizationfor quality assuranceactivities? What are the best mechanismsforinvolvinghospital staff in quality assuranceprograms? - - How much standardization and formalization professional ofactivitiesis necessaryto assure quality of care? - - What might be the incentivefor cliniciansto increasetheircompliancewith standardsof care? -- Who should supervisethe differentprofessionalactivitieswithinthe hospital? - - What should be the adequateratios of general practitioners/specialists,doctors/nurses, clinicalpersonnel/support personnel,accordingto case mix in developingcountries,in order to maintainan efficient levelof hospitalperformance? - - What should be the criteria for establishing medical staff/ aresidents ratio that assures adequatesupervisionand quality of care? -- How can the participation cliniciansin hospital-wide of decisionmaking be improved? -- What kind of coordinationand communication mechanismsmight beimplementatedamong hospitaldepartmentsin order to prevent ccnflictsandimprove continuityof care?ISSUES RELATED TO THE TRAININGOF HOSPITALKANAGE In accordancewith the frameworkproposedin this paper, managerialefficiencyis a result of three main components:managerialdecisionmaking,
  30. 30. 26skills, and autonomy. We have alreadymentioned several aspects ofmanagerialdecisionmaking directedat improvinghospitalperformance,aswell as some issues regardingthe relativeprofessionalautonomyof managerswithin the hospital structure. According to Katz (1974), there are three kinds of skills necessary foran effectiveadministrator adequatelyperform his or her role: toconceptual,technical,and human skills. On the other hand, there areseveral studies that attempt to elucidatethe differenttypes of roles thatadministrators perform (Mintzberg1975; Kuhl 1977; Allison 1983). The developmentof managerialskills to adequatelyperform differentroles depends on two importantaspects:experienceand training. Given thecomplexityof hospital administration, learningthrough the day to dayexperiencemight be a trial-and-error process that is very costly for theorganization. On the other hand, even though formal training cannotsubstitutefield experience,it provides a broader frame of reference fordecisionmaking and facilitatesthe learningprocess from field experiences. Ruelas and Leatt (1985) have proposed that trainingprograms should bedesignedconsideringthree aspects:the level of the executivewithin thestructure,and the kinds of roles to be performed to deal with theseproblems. At the same time, the developmentof conceptual,technical,andhuman skills should also be consideredaccordingto the hierarchicallevelof the hospital executive. Specificprogramsand contentscan then beestablished. It is interestingto mention that hospitaladministration a isrelativelynew discipline. Hospitals in North America have been under thedominationof differentgroups (Perrow 1961). At some point in timetrusteesdominated. The basis for their control was primarilyfinancial.
  31. 31. 27Then, major decisions had to be based upon a medical competencethattrustees did not posses, so physiciansbecame the dominantgroup. Whenhospitals became more complex organizationsand needed more coordination, acquired administrators This evolutionmight not be the same in developingcountries,wherephysiciansstill tend to dominateand where hospital administration not iswell establishedyet. The implications this situationare twofold: offirst, there is a need to provide clinicianswith a better understandingofhospitaladministration that they can improve their managerial so health careperformance;second, it is necessary to professionalizemanagementby developingformal trainingprograms in this field, which bynecessity will include physiciansas well as other occupationalgroups. Different alternativesfor providingadequate trainingin hospital have to be better explored in developingcountries,namely,administrationmasters, doctoral, continuingeducation,and even undergraduateprograms.Sending students to developedcountriesrepresentsa differentkind ofalternativethat must also be considered. The following issues illustratejust some of the major questionsthatneed to be answered: -- How are managerialproblemsperceived by hospitalexecutivesatdifferent levels of the hierarchy and different types of hospitals indevelopingcountries? How can trainingprograms be designed to take accountof such variation? What should be the main contents? -- As trainingprogramsfor health servicesadministratorsface one responsegrowing competitionfrom programs in businessadministration,has been to emphasizethe strictlymanagerialaspects in the curriculum,atthe expense of health contentssuch as epidemiology. If, however,hospitals
  32. 32. 28must respond to their changingepidemiologicenvironment,this trend couldhave very negative consequences. What new trainingapproachescan bedevised so that future health care managersdo receive the complex contentsof managerialscience,while at the same time preservingthe fundamentalconceptsand methods of epidemiology? If such an integrativeapproach isnot feasible,would it then be necessary to have an epidemiologist the insenior managementgroup of a hospital? -- How should existingtrainingprograms in health careadministrationrespond to the increasein the number of physicianadministrators? Should new programs,different from the traditionalmasters degrees,be designedto meet the special backgroundsand needs ofphysicians? -- Regarding the level of training,would undergraduateprograms inhospital administration useful? Should professionally be orientedoracademicallyoriented postgraduateprograms be predominantin developingcountries? Should there be a sharp distinctionbetween both types? Whatshould be the role of masters,doctoral, and continuingeducationprogramsin order to meet the need of traininghospitaladministrators developing incountries? -- How convenientare residencyperiods,under what circumstances,and for how long? -- Is there enough faculty in developingcountries to supporthighquality education in hospitaladministration? What might be the strategiesfor faculty development? -- How useful is the trainingof professionalsin foreign countries,as opposed to concentrating their nationalexperiences? What strategies onshould be consideredto assure that experiencesobtained abroad will have an
  33. 33. 29impact in the country of the traineeswhen they return? How useful areexchangeprograms between developedand developingcountries? What shouldbe done in order to take advantageof such programsso as to achieve abalance between academicquality,on the one hand, and relevanceto thecontext of the trainee,on the other?TOWARDS A RLAR AGUD Most of the issues that ve have discussed throughoutthis paperrepresent importanttopics for research. The fact that we posed them asquestionswas intended,precisely,to emphasizetheir researchability and toconvey the sense that it is necessaryto seek answers through sound studies.The problem,of course, is that the number of issues is too large toconstitutea workable researchagenda. It is necessary,therefore,toestablish priorities. In this last section of the paper we will brieflysketch what such prioritiesmight be. A first consideration designinga researchagenda on a topic such as inhospitalmanagement is to strive for a balance between relevanceto decisionmaking and excellencein the strict adherence to the norms of scientificresearch (Frenk 1986). Within this broad guideline prioritiesmustbe defined on two aspects: the type of research and the topics to beresearched. With respect to the former,we believe that the order of prioritiesshould begin with observationalstudies that document levels of hospitalperformanceand correlatethem with organizationdesign and environmentalvariables. Apart from offeringbasic descriptiorns that are much needed,especiallyin developingcountries,such studies would make it possible tooperationalize and measure the constructsthat we have proposed in our
  34. 34. 30analyticalframework. As indicatedin the section on measurementissues, itis particularlyimportantto devise and test sensitiveand specificindicatorsof managerial,clinical, and service productionefficiency. Inaddition, it is necessary to determine the internaland external correlatesof these dimensionsof performance. Observationalstudies would make it possibleto diagnosethe mostcriticalareas for the second type of research,namely, interventionstudiesthat would introduceplanned change in hospitalsand would assess itsconsequences. It is fundamentalthat interventionstudies be based oncomparativedesigns. Indeed,a problem with evaluationsof theeffectiveness specific interventions the frequent lack of control of isgroups, which makes it impossibleto attributeany observedchange to theinterventionitself, rather than to another source of variation. Thieexternalvalidity Ofthese typesof studies is also often threatenedby thechoice of highly specificsites that make it very difficultto generalizethe findingsand to truly build a body of knowledge. If the idealrandomizedtrials cannot be achieved,then quasiexperimental designs withclear control groups should be used. These kind of studies should becomplementedby cost/benefitand cost/effectiveness analysesof theinterventions(Wortman1983). Turning to the prioritieson the topics for research, it must bestated, at the outset, that any ranking of topics is doomed to seemarbitrary,unless it is based on some explicitmethod to poll theperceptionsof large numbers of experts and consumersof research.Nevertheless, will attempt to offer what we believe is a preliminarylist weof the most urgent areas for inquiry,particularlyin developingcountries.
  35. 35. 31 The first need is for good descriptivestudies of the hospital systemand of the main aspects of organizationdesign. In many developingcountrieswe are lacking the most basic information the compositionand oncharacteristics hospitals. Critical items that are often not known ofinclude the exact magnitudeof the private sector, the proportionof totalhealth care resourcesthat is absorbed by hospitals,and the unit costs forspecifichospital services,to name only a few. Furthermore,there is alack of data on the structure of hospital organization. Whereas indevelopedcountriesextensive empiricalstudies have been conductedtodefine, for example,the two lines of authority,in many developingnationswe are often ignorantof the ways in which formal and informalrelationsamong managers and cliniciansare structured. Likewise, it is necessarytoknow the frequencyof differentarrangementsfor internalcommunication,types of departmentalization, and management systems. Beyond broad descriptionsof the structureof hospitals in developingcountries,the second priorityrefers to the systematicstudy of qualitymonitoringand assurance systems. In the final analysis,hospitalsshouldbe producing improvementsin health, however we define it. The design andtesting of explicitsystems to assure the quality of care would thereforeseem to be of the utmost importance if we are to gain some understanding ofwhat exactly are hospitals contributing society and at what cost. Such tostudies should includethe analysisof the interactionsbetween managers andclinicians,especiallyas they constrainclinicalautonomyand decisionmaking. As pointed out earlier in this paper, there are several variantsofquality assurancesystems for hospitals. Assessing their relativeeffectivenessand costs should be a high-priorityitem on a research agenda.
  36. 36. 32 The third area for research centers around the social, personal,organizational, and educationaldeterminants managerialskill. Indeed, ofwe need to know what are the factors that account for different degrees ofsuccess in managinga hospital. These studies should not be limited topsychologicalvariables,although they should certainly include them. Thechallenge,however, is to ascertainthe relativecontributions managerial toskill of personalvariablesversus educationalbackgroundand organizationalstructure. Clearly,this kind of study would have major policy implicationsfor the recruitmentand trainingof hospitalmanagers,which in turn mighthelp to alleviate the critical shortageof skilledmanagementinunderdevelopedcountries. Finally, the magnitude,repercussions, visibility,and universalityofphysicianoversupplymake this a high priorityfor research. In thisrespect,we are in need of studies about the structureand dynamicsofmedical labor markets,which would allow us to understandthe origins of theoversupplyof doctors and the reasons why it has occurred in such a widevariety of countries. The coexistence,in many nations, of medicalunderemployment with lack of universalaccess to medical care is probablythe most eloquent indicatorof the shortcomings current ways of oforganizinghealth systems. Hospitalsare undoubtedlya major part of thispicture. We should thereforeunderstandthe consequencesthat theoversupplyof physicianshas for the operationand staffingof hospitals,and for the design of innovativetrainingprograms. While still incomplete,this initial researchagenda might begin toilluminatesome of the basic issues that concern policy makers, managers,clinicians,and clients in the common search for higher levels of efficiencyand equity in health care.
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