Prof. dr hab. Aldona Frączkiewicz-Wronka[1]
Dr Agata Austen[2]
System approach to
effectiveness of public sector organisations
i. e. health care[3]
Introduction
Public
sector organisations including health care operate within a complex, dynamic
system involving many groups of stakeholders, coupled with informational and
resource material flow and behaviours characterized by inertia. Therefore
system thinking provide a useful framework for considering effectiveness
[Boland & Fowler, 2000].
Effectiveness is one of the most often used and misused terms concerning
organisation. There is no one universal and accepted definition of
organisational effectiveness. Effectiveness is a broad concept that reflects relations between
effects, aims and expenditures in both structural and dynamic approach [Day
& Wensley, 1988]. Large number of definitions has been presented n the
literature and they can be grouped into three categories: aim approach,
resource approach and stakeholders approach [Rollinson, 2002]: As organisations are established to meet differentiated
goals, precursors of management sciencies proposed to measure effectiveness as
an extent to which organisation meets its goals [Barnard, 1938]. Thus measuring
effectiveness is complex due to the multiple goals. According to the second
approach, that is perceived as panacea to limitations of the previous one,
organisation is perceived as a system that is open to current interactions with
the environment [Gorgopolous
& Tannebaum, 1957]. Yet this approach does not
offer explanation of term of scarce resources and is focused only on gaining
resources, not their allocation. Finally, effectiveness may be explained using
stakeholders approach that merges achieving outcomes and interactions with the
environment. Although stakeholders approach includes multiple perspectives of
different stakeholders it is based on a simple assumption that all stakeholders
require benefits for themselves. That explains different expectations: each
group of stakeholders prefers these organisational behaviours that meet their
own goals (Table 1).
Table 1:Groups of stakeholders and sample criteria
for measuring effectiveness
|
Stakeholders |
Sample effectiveness criteria |
|
Heatlth professional and employees |
level of remuneration, job conditions,
satisfaction, security |
|
Patients |
quality of care, location of health care
organisation, time of waiting for the service |
|
Suplliers |
date of maturity, reliability, level of
future orders |
|
Government and Health authorities |
number of health promotion programs, level of health investments,
cooperation beween self-governments and NGOs |
|
Local community |
prevention programs for the society, health
education, addictions prevention, disease prevention |
Source:
Own study
When assessing effectiveness of
any public organisation using presented approaches one must be aware of the
fact that particular organisations are unique entities that operate in specific
context [Hoy, Van Fleet, & Yatley, 1984]. In result assessing effectiveness
requires considering specificity of examined organisation.
Due to variety of
effectiveness models and approaches, measuring effectiveness of organisation
requires understanding effectiveness as a multifacet notion and designing set
of criteria that are tailor-made. Applying system approach it is possible to
point at five components of effectiveness that are basic elements of management
system: goals, output, costs, effects and value for the customer subsystems
[Day & Wensley, 1988]. Designing internal structure and relations of
mentioned subsystems in terms of integrating these components in the context of
management system constitutes a considerable challenge for the managers.
Taking into
consideration multiple aims of health care organisations, system approach may
be very helpful while discussing effectiveness. According to this concept
effectiveness should be examined together including three levels:
organisational, process and position [Rummler & Bracie, 2000]. At the
organisational level effectiveness may be understood as an extent to which the
organisation meets its goals (Table 2). The basis for assessing organisational
effectiveness is achieving high medical standards, improving financial
situation and achieving aims of patients,
health professionals and personnel satisfaction.
Table 2:
Effectiveness at the organisation’s level
|
Sample strategic aims |
Sample operational activities |
Sample measures of goal
achievement |
|
achieving high aim of
medical standards |
·
Broadening co-operation between units in order to improve quality of
health care ·
Providing
security for patients |
·
Unplanned
readmission rate ·
Mortality rate ·
Dangerours
abbrieviattions ·
Number of
medical standards |
|
achieving high aim of
patients, health professionals and personnel safisfaction |
·
Improving patients’ satisfaction according to pain relief ·
Improving patients’ satisfaction according to their rehabilitation ·
Increasing the participation of employees in the management process |
·
Patients
loyalty ·
Patiemts
complaints ·
Employee
turnover ·
Health proffessionals
satisfaction ·
Personnel
satisfaction ·
Level of employee identification with the company |
|
financial situation improvement |
·
Growth in financial inputs and reducing costs ·
Increasing the productivity of employees ·
Improving the processes of management ·
Improving cash flow |
·
Net revenue
per physician ·
Expenditures
per 1 patient ·
Costs of
particulat treatments ·
Liquidity
factor ·
Liability
factor |
|
improving infrastructure |
·
Increasing number and quality of medical equipment ·
Renovation and extension of buildings |
·
Number of beds ·
Distance between home and outpatients clinics ·
Improving the process of giving service from technical point of view |
Source:
Own study
Appropriate goals
formulation is a starting point for all managerial activities. The next step is
designing performance measurement for these goals, resource allocation and
providing effectiveness of co-operation between different departments.
Achieving goals requires also building appropriate organisational structure
which includes all necessary departments, ensures optimal workflow and supports
strategy. The whole organisation must be managed in appropriate way which means
acting in four domains: aims, resources, effectiveness and relationships
between mentioned areas.
The whole organisation
is effective to an extent to which processes that take place are effective.
Process can be understood as series of activities which result in creating a
product or a service. We can distinguish three groups of processes: core
processes which result are services (medical treatment), supporting processes
which may not be recognized by the patients yet influence the effectiveness and
management processes which aim is to provide basis for operating.
The aim of managing
the workplace is creating such work conditions for the workforce that let
people to meet the goals for each stand. Aims of stands much be connected with
discussed processes that in turn arise from organisational goals. Each stand
must be designed precisely so that employees are aware of their
responsibilities and have necessary resources for taking actions. Sequence of
actions, feedback, politics and procedures for each stand should be known on
each stand.
Performance measurement in the
health care organizations – chances and treats
An important aspect of any model of governance is the
possibility to assess the success of implemented policies and the degree in
which it meets expectations of citizens. Outcome-based management is not new in the
public sector. It has been applied since 80’s in the United States, Great
Britain, Australia, and New Zealand with the New Public Management Reform. These core principles of NPM are performance
centered. Thus it would be very difficult to justify major reforms in
the public sector, without performance management. In this light Ševic
[Ševic, 2003] proposes to view problems associated with NPM from to
contradictory perspectives. First, performance measurement systems can be seen
as logical consequence of NPM being implemented. Second, NPM can be a result of
‘obsession’ with performance measurement. Thus, performance measurement and NPM are
linked. We believe that the need for improving performance in the public sector
caused development of NPM practices.
Many public
managers and scholars believe that performance measurement systems can enhance
the professional management in the public sector. Interest in performance
measurement arose at the turn of the last century. The first budgetary system
has been developed shortly before World War II by the New York Bureau of
Municipal Research [Gianakis, 2002]. Although performance measurement in the
public sector is relatively new a significant development has been made in this
area. Nowadays performance measurement became more then only a budgetary
system. The first attempts at evaluating public sector performance were focused
in the financial issues. A whole range of measures and indicators of
performance arose in attempt to assess poor and good resource allocation
practices. More recently, the performance literature has shifted towards establishing
standards to be achieved and the audit of organisational systems to ensure
adjustment [Boland & Fowler, 2002].
The field of
performance improvement has evolved over the past 40 years. Early studies
focused in training and providing employees with additional knowledge and
skills so that they would be able to improve performance. Second stage, Human
Resource Development was continuation of pervious one. HRD went beyond
training, it includes integrated use of training and development, organisation
development, and career development to improve not only individual, but also
group and organisational effectiveness. The third stage – Human Performance
Improvement emphasized shared responsibility. According to this idea, everybody
in the organisation should contribute to improving performance. The recent
stage is workplace learning and performance (WLP) that stand for integrated use
of learning and other interventions for improving human performance and
organisational needs. WLP consists in progressive changes in organisations by
balancing human, ethical, technological, and operational issues [Wallick,
2002].
Performance
assessment is inevitable for promoting effectiveness of public sectors
organisations. Additionally performance measurement fulfill a purpose of
accountability of public expenditures, the production of comparative
information that serves as a basis for customer choices in public services and
improvement of professional practice and program management [Courty, Heinrich,
& Marschke, 2005]. The meaning of performance
measurement for the realization of public policy has been emphasized by many
scholars. Benefits for the organisations are undeniable: what gets measured gets done, if you don’t
measure results you cannot reward it, if you cannot see success, you cannot
reward it, if you cannot recognize failure, you cannot correct it and on the
positive side, if you can demonstrate results, you can win public support, if
you cannot measure it, you do not understand it, if you cannot understand it you
cannot control it, if you cannot control it you cannot improve it, if they know
you intend to measure it, they will get it done, if you do not measure results
you cannot tell success from failure, if you will not recognize success you may
not be able to sustain it, If you cannot see success/failure you cannot learn
from it, if you cannot recognize failure, you will repeat old mistakes and keep
wasting resources, if you cannot relate results to consumed resources you do
not know what is the real costs. if you do not know the actual costs you cannot
tell whether or not you should do it in-house or resource it. if you cannot
tell the full cost you cannot get the best value for money when contracting
out, if you cannot demonstrate results, you may undermine your ability to
communicate with important stakeholders and you cannot win public because you
provide value for money [Greiling, 2005: 55].
National
governments contain many multi-program systems which they are more or less
fragmented. Some realized programs overlap public and private sector which
makes defining a core set of measures that consider effectiveness of the whole
system difficult. Even the local governments are characterized by
multidimensionality of service delivery systems. This multidimensionality
implies the necessity of alignment of outcomes measures. There is also a need
to link performance management systems with the management systems like Total
Quality Management or Management by Objectives. Thus there is a need to develop
also management functions and systems in the organisations [Gianakis, 2002].
There is no
consensus in the field literature according to the term for measuring
organisation’s performance: some scholars use terms effectiveness,
productivity, work measurement synonymously with performance measurement [A
Brief Guide for Performance Measurement in Local Government]. Several types of
performance indicators that are often used in performance measurement systems
may be distinguished:
·
Input indicators – they are designed to report the
amount of resources that have been used for a specific service or program.
These indicators are usually presented in budget submissions and sometimes
external management reports.
·
Output/Workload indicators – they report units
produced or services provided by a program. Workload indicators show the amount
of performed work or the amount of services.
·
Outcome/effectiveness indicators – they suggest the
results (including quality) of the service. In reference to health care,
effectiveness measurement is a method for examining how well health care system
is meeting the public purpose it is intended to fulfill. Effectiveness includes
both quantitative and qualitative aspects of a service.
·
Efficiency (and cost-effectiveness indicators) –
show how well health care system is performing the things it is doing without
regard to whether those are the right things for the government to do.
·
Productivity indicators – they link dimensions of
efficiency and effectiveness (A Brief Guide for Performance Measurement in Local Government ).
Information on performance is essential for
taking up most decisions. This information is necessary for patients, doctors,
managers that lead health care organisations but also governments that must
assess the performance of health care providers using different criteria that
seem to be important for assuring public interest [Kanji & Sa, 2003]. In
public sector literature performance management literature it is common
practice to talk about 3 “E”: economy, efficiency, and effectiveness which is
based on input-process-output model of organisation [Boland & Fowler,
2000].
Input
resources are human, physical and financial assets. Many measures used in the
public sectors focus on this input perspective called “economy”. They are
expressed in terms of costs, budget and staffing totals. They can then be
translated into specific measures such as cost per patient, staff-patient
ratios, skilled and professional employees, etc. Changes in these measures
reflect just the “economy” with which the organisation utilize resources.
Outputs of
the process can be easily measured in quantifiable terms such as patients
treated, patients who died etc. Unfortunately these measures tells little about
the real success of the organisation as they demonstrate only how efficiently
is the organisation in converting inputs into outputs giving no information
about effectiveness.
Finally,
effectiveness is concerned with the extent to which the outputs meet
expectations. Projecting effectiveness measures for the health care constitutes
a big challenge. First effectiveness measures must apply to needs and
requirements of many stakeholders such as patients, doctors, medical staff and
government. Second, the health care
system is highly complex and the effectiveness is related to three areas:
medical, economic and organisational.
In general,
the typical measures used for the economic evaluation of health services are as
follows:
·
opportunity costs- the value of the worse or the
most preferred possible but lost alternative
·
input –
different assets that may be used to operating
·
output objective – the final situation or conditions
that are expected to be achieved under particular inputs
·
effectiveness – the degree to which the goal has
been accomplished, e.g. change in the state of health
·
efficiency – the function of effectiveness and
outputobjective
·
productivity – the relation of effects and inputs
·
marginal costs – change in total costs resulting
from a one unit change in output [Evans, 1984].
There are
four functions of performance indicators in the health care systems:
facilitating accountability; monitoring health care systems and services as a
regulatory responsibility; modifying the behaviors of professionals and
organisations at both a macro (population) and micro (patient) level; and
forming policy initiatives. Public demand for accountability of health care
sector is ubiquitous. OECD countries generally apply three models of
accountability in health care - professional, economic and political. The
professional accountability has been the dominant model in many countries for a
long time. According to this model, physician is the key to controlling quality
and uses certification, accreditation, licensing and litigation as instruments
for enforcement. Currently it is regarded as insufficient unless accompanied by
one of the other two. The economic model regards the competitive market to be
the mean of enforcing accountability. In turn, the political model views the
citizen as receiving public goods and thus it describes the government's role
as acting as an agent of change on behalf of the public. Objective measures of
performance can dramatically influence policy. Clear and transparent data may
sharply visualize the need for e.g. investing significant new resources in the Health
care Systems. Performance indicators can also help to make policy priorities
explicit, for example by defining national priorities and then identifying
specific performance targets within those priorities [Leatherman, 2001].
The literature survey, including 125 articles published between January 1985 and July 2001
in peer-reviewed journals that was carried by
Freeman shows two traditions in using performance indicators to improve health
care quality. The first tradition is practice oriented, prescriptive and
optimistic in regards of value and use of performance indicators, the second is
more criticizing, it includes adjustment and modeling of clinical outcome data
[Freeman, 2002].
Discussing
performance of health care systems it is necessary to notice the specificity if
the public sector which comprises structures and processes guiding public
activity that create constraints and controls and that confer or allow autonomy
and discretion on the part of public actors, all toward fulfilling the purposes
of the enacting coalition. This logic can be presented as a hierarchy of
relationships between:
·
citizen preferences and interests expressed
politically and legislative choice;
·
legislative preferences and the formal structures
and processes of public agencies;
·
formal authority and the structure and management of
organisations, programs, and administrative activities;
·
organisation, management, and administration and the
core technologies and primary work of public agencies;
·
primary work and outputs or results, that is, the
availability, quality, and cost of publicly sponsored goods and services;
·
outputs or results and stakeholder assessments; and
between stakeholder assessments and reactions and, back to the top of the list,
political preferences and interests [Lynn, Heinrich, Hill & 2000].
Well designed performance
indicators can serve as a catalyst of change in the organisation yet applying
performance measurement systems implies plethora of challenges and problems
concerning conceptual and technical areas. The first group relates to quality
assurance. The trust is relocated from internal control systems of
professionals to data systems. In result quality assurance which is perceived
as informal and unrecorded, may be threatened and new structures may generate
suspicion and fear. The other challenges apply first and foremost to selection
of indicators, validity of data, specificity and sensitivity of indicators.
Technical and conceptual difficulties concerning health care indicators are
often discussed in the literature of health care performance. The question is
how to use indicator data most effectively must be completed with analysis of
barriers that may result from organisational inefficiencies such as resistance
to change or lack of experience [Freeman, 2002].
Conclusions: towards effectiveness of health care
Public
sector organisations differ from their commercial counterparts. First, there is
no profit maximizing focus. Second, they have little potential for income
generation and no bottom line against which performance can ultimately be
measured. Most of the incomes of vast majority public sector organisations are
financed from the state budget and must be able to satisfy different
stakeholders. Public sector management occurs within a complex, dynamic system
involving different independent stakeholders coupled with informational and
resource material flows and behaviour. Thus it is necessary to provide a
framework within issues of performance measurement can be considered [Boland
and Fowler, 2000].
Despite differences in health care systems
among countries, it is possible to point at common performance drivers. The
performance measurement system should be consistent with expectations of
multiple stakeholders. The health care system includes complex net of actors,
activities and processes who have different needs and evaluation criteria.
Hospitals are usually at the centre of the health care delivery system. On the
inputs side there are customers, purchasers, suppliers, internal members and
regulators and other entities [Kanji & Sa, 2003].
Many public
service delivery systems including health care are multidimensional in their
nature. Different constituencies formulate different goals for the program,
that result in differentiated goals for the organisations [Gianakis, 2002].
Perception of effectiveness held by patients, doctors, payers and the
government may differ what implies the need of creating integrated performance
measurement systems that allow to consider multiple stakeholders perspectives [Hassan,
2005].
The main assumption to
our deliberations is a statement that organisations operating in a public
sector and applying performance measurement are more capable of creating higher
values for the society by exploiting political, physical, or institutional
resources then organisations, which do not implement such activities.
The problem of the
performance measurement in the public organisation is emerging at the moment as
one of the most crucial issues in the area of public management. The literature
review unveil a number of symptomatic references investing the matter from
theoretic perspective but there is a serious shortage of elaborations analyzing
the real effect of implementing public management at different levels of public
organisations e.g. states, local communities or specific units. There exist a
need of the application of modern management tools in health care. The purpose
of implementing these changes is improvement of efficiency in the health care
units struggling with performance measurement. Both theoreticians and
practitioners of public management empathize the importance of harmonious
development and maintaining balance between each of perspective, since
equilibrium is the condition sine qua non of reaching stable development of the
organisation. Concepts and methods of management might be used as a tools which
application will considerably improve overall efficiency of health care unit –
and this in turn will lead to improvement of a whole system - because they
provides comprehensive measurement of efficiency, facilitates formulation of
strategy, promote proactive orientation and are favourable to control public expenses.
Literature
[1] Aldona
Frączkiewicz-Wronka, Chief of Public Management Department, The Karol Adamiecki University of
Economics, Katowice, afw@ekonom.ae.katowice.pl
[2]
Agata Austen Ph. D. Department of
Public Management Department, The Karol Adamiecki University of
Economics, Katowice, afw@ekonom.ae.katowice.pl
[3] Research process carried out in research Project Nr. 115 030 32/0884; “Pomiar efektywności organizacji publicznych na przykładzie sektora ochrony zdrowa”