The Performance Management Design in Public Hospitals: A Case Study Josef Krupička1 Abstract In response to the growing pressure on public budgets, many countries introduced various...

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The Performance Management Design in Public Hospitals: A Case Study Josef Krupička1 Abstract In response to the growing pressure on public budgets, many countries introduced various private-sector-inspired management practices to improve the performance of publicly funded health systems. Regardless, the non-negligible share of healthcare spending is still considered wasteful, and the search for effi ciency gains in healthcare is still relevant. Th e relevance even increases in the context of events related to the outbreak of the coronavirus disease in 2020, presenting new challenges for performance management in hospitals. Considering the gaps between the environmental settings of various countries, a fi nding of one universal theory of eff ective hospital management is unlikely. Th e contextual examination of hospital management on the national level and knowledge-sharing is then a more suitable approach to aid the practitioners in search of the most appropriate mix of management practices. Th is study employed a mixed methodological approach to examine individual aspects of performance management from the hospital management’s perspective to identify the areas of potential effi ciency gains. Th e core research phase consisted of on-site visits in three public hospitals taking place since September 2019 with the respondents from various management levels and both clinicians and non-clinicians. During an approximately hour-long session the respondents were asked to fi ll out the questionnaire examining the aspects of the performance management system employed in their institution (e.g., the scope of measurement, reliability of data, communication of results, engagement of management) and interviewed to examine the rationale of provided responses. Th e on-site research stage resulted in 87 complete data sets further analyzed using statistical analysis with results interpreted using commentaries and rationales obtained from interviews. 1 Prague University of Economics and Business, Czech Republic. The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License. 10.2478/nispa-2021-0005 Open Access. © 2021 Krupička Josef, published by Sciendo. 108 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 Th e fi ndings were similar among all examined institutions and mostly consistent with similarly natured studies. While the performance measurement appeared to refl ect the clinical performance better than the organizational one, it is also perceived as inadequate to the complexity of service. Th e management seemed to consider performance management for operational purposes rather than being incentive-oriented or exploratory, in line with the perceived lack of connection between the performance measurement and the organizational strategy. Combined with poor communication of performance management principles, this discrepancy appears to contribute to the potential tension between the hospital and clinical management in setting priorities between the economic performance and the quality of care. Overall, these fi ndings should provide insight into aspects infl uencing performance management employed in public hospitals in the Czech Republic and present the evidence for the discussion of potential effi ciency gains in practice. Keywords: Performance management; performance measurement; public hospital; Czech Republic; healthcare management. 1. Introduction Th e latest demographic and economic development in European countries established a trend of increasing healthcare expenditures, adding to the existing pressure on the public budgets of countries where public funds represent the predominant source of healthcare provision coverage. Simultaneously, up to one-fi ft h of health spending might be considered wasteful and related to potentially unnecessary tests, procedural ineffi ciencies, and wasted pharmaceuticals and could be reallocated for better use (OECD / EU 2018). While the frameworks and applied policies of individual national healthcare systems may diff er, according to Joumard et al. (2010), no broad type of system appears to be systematically better in delivering cost-eff ective healthcare. Th us the adoption of best policy practices from similar settings in combination with the most appropriate mix of practices might be the way to increase effi ciency. However, any search for best practice should be preceded by an understanding of the mechanics behind performance management practices and aspects that infl uence these practices on an institutional level. Th e relevance of the search for effi ciency gains in healthcare provisioning became higher regarding the events of 2020 when the hospitals experienced an increased need for capacity management as the infl ow of patients rapidly grew with the outbreak of the coronavirus disease. According to the results of an annual survey inquiring quality of healthcare in the Czech Republic among the hospital directors, over ninety percent of respondents considered the Czech health system to be of good quality (HICR 2020). At the same time, over three-quarters of respondents acknowledged the need for improvement in the effi ciency of man- 109 The Performance Management Design in Public Hospitals: A Case Study agement in their institution (HICR 2020). Within such an environment the topic of healthcare performance management is highly relevant, just as is the identifi cation of possibilities that might yield gains in effi ciency to maintain a good quality of service in the long-term. Although the literature provides useful knowledge regarding the theoretical approach to performance management in general, there are still plenty of opportunities for the research of performance management in the various contextual settings. Th e examination of performance management in the context of public hospitals presents one such research gap, where the common issues related to performance management practice in public institutions combine with the complexity of the healthcare environment. Such an environment is challenging for any research eff ort, which might explain to date scarcity of any related literature, but also present a potential for additional knowledge gains. To fi ll this gap, this paper aims to present the evidence on the current state of performance management practice on an institutional level while discussing the contextual aspects infl uencing the performance management practice to identify the potential effi ciency gains and contribute to the knowledge available to practitioners and policymakers. Following this introductory chapter, Chapter 2 reviews the literature relevant to examining performance management in healthcare to determine the specifi c areas for research focus. Chapter 3 goes through the research design and presents the utilized methodological approach. Data results are presented in Chapter 4 as well as the discussion of fi ndings and implications. Th e fi nal chapter concludes the study results and outlines the main points for the practitioners and further research. 2. Performance measurement and management in public hospitals 2.1 Performance in public hospitals Just as the public institutions diff er from private organizations in complexity and ambiguity of their goals (Hvidman and Andersen 2014; Rainey and Bozeman 2000), the concept of performance in the public hospital goes beyond fi nancial results, stakeholder demands, and market position. Based on expert knowledge from the fi eld, the World Health Organization Regional Offi ce for Europe defi ned hospital performance in six diff erent dimensions for assessing the hospital performance: clinical eff ectiveness, effi ciency, staff orientation, responsive governance, safety, patient-centeredness (Veillard et al. 2005). A diff erent classifi cation of performance dimensions is off ered by Mettler and Rohner (2009), who summarize the potential areas of healthcare performance as healthcare fi nancial strength, healthcare operations, healthcare people development, patient service and satisfaction, and healthcare marketing. Either way, the concept of performance appears to be multidimen- 110 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 sional, dealing not only with aspects of economy and effi ciency but also with the qualitative patient-oriented and procedural aspects of healthcare delivery. Although the performance assessment in healthcare has its own history reaching to the eighteenth century (McIntyre et al. 2001), many authors regard the New Public Management (NPM) as the primary driving force behind the implementation of performance measurement systems (PMS) and private sector techniques to improve the effi ciency of public healthcare (van Elten et al. 2019; Bortolocci Espejo et al. 2017; Schwartz and Deber 2016; Speklé and Verbeeten 2014; Nyland and Pettersen 2004). Although the specifi c form of NPM reforms varied across the countries, the issues accompanying the introduction of PMS in this environment appear to be similarly natured. 2.2 Issues accompanying performance evaluation in healthcare In their study of PMS concepts in the hospital sector in Norway, Nyland and Pettersen (2004) pointed out the crudeness of measurement being the leading cause of the reduced information value of PMS as the measurement insuffi ciently refl ected the complex nature of provided service and thus provided little guidance for the performance management. Other authors also mention the inadequacy of the measurement to the complexity of service (Speklé and Verbeeten 2014; Mannion and Braithwaite 2012). Speklé and Verbeeten (2014) pointed out the narrow focus on accountability and incentive provision of NPM-inspired PMS, which disregards the other possible uses of PMS (e.g. organizational learning, strategic management) for the public sector in general. Both these pitfalls of PMS implementation are in line with the observation of Mannion and Braithwaite (2012), who categorized observed adversities of PMS introduction in English National Health Service (NHS) into four categories: poor measurement, misplaced incentives and sanctions, breach of trust, and the politicization of performance systems. Although these adversities may have arisen for various reasons, PMS use appears to be the common mediator of PMS success (van Elten et al. 2019; Speklé and Verbeeten 2014). Van Elten et al. (2019), in their study of PMS employed in Dutch hospitals, observed and categorized three diff erent uses of PMS with diff erent impacts on hospital output. Regarding the quality of care, the results of this study presented the operational use (e.g. for budget control, process monitoring) being positively related to operational performance and negatively to patient-oriented care and exploratory use (e.g. to learn and improve) having a positive infl uence on work culture and patient-oriented care (van Elten et al. 2019). Further results of this study suggest that incentive-oriented use (e.g. to align employee motivation and institutional goals) has no relevance to hospital outcomes (van Elten et al. 2019). Th e result of this study has been in line with the fi ndings of Speklé and Verbeeten (2014) in the case of exploratory PMS use. However, the case was diff erent for incentive-oriented PMS 111 The Performance Management Design in Public Hospitals: A Case Study use in public institutions, where Speklé and Verbeeten (2014) observed a negative relation to performance stemming from opportunistic behavior. Regarding the operational use, Schwartz and Deber (2016), in their work examining the PMS employed in health systems of various English-speaking countries, pointed out the existing performance measurement-management divide arising from the little use of measurement results for the improvement in performance management and the PMS instead serving as a surveillance tool providing information for the public. Similar results were observed by Zidarov et al. (2016), who closely examined the process of PMS implementation in the Canadian rehabilitation hospital and identifi ed the factors infl uencing this state. As they conclude, insuffi cient planning about the potential use of PMS and lack of senior management engagement, combined with insuffi cient resources dedicated to the PMS implementation process, resulted in the creation of sub-optimal PMS incompatible with the information needs of hospital management (Zidarov et al. 2016). Th is resulted in degradation of intended use of the PMS from a decision-making supporting tool to a tool serving for monitoring and accountability purposes (Zidarov et al. 2016). Similarly, Mettler and Rohner (2009), in their exploratory survey of performance management applied in Swiss hospitals, raise the question about the quality of examined performance management practices, as the core processes of PMS design (e.g. data collection and evaluation) were not adequately solved, and the linkage between performance management on the operational level and the strategic level was not established. Th ey also highlighted the infl uence of the healthcare regulatory framework and market dynamics on the adoption of performance management (Mettler and Rohner 2009), as these factors may aff ect quality, safety, and effi ciency via management changes (McConnell et al. 2014). According to further studies (Bardhan and Th ouin 2013; Angst et al. 2011), the sound informational infrastructure and its adequate support by information technologies (IT) also present enabling factors of eff ective performance management. Another important factor supporting the successful adoption of policies affecting performance appears to be the professional background of the management involved in performance management implementation (Naranjo-Gil 2016) or, more specifi cally, its clinical professional background (de Harlez and Malagueño 2016; Zidarov et al. 2016; Fiondella et al. 2016; Lehtonen 2007). In their examination of Spanish public hospitals, Naranjo-Gil (2016) identifi ed the broad design of management control systems and the diversity of the top management team as being factors facilitating the adoption of sustainable policies achieving both short-term and long-term performance. Th e involvement of clinicians in performance management facilitates the alignment between the use of PMS and strategic priorities, which in turn aff ects hospital performance (de Harlez and Malagueño 2016), as the cost-consciousness increases among the clinical managers (Lehtonen 2007). 112 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 Regarding the regional settings of the Czech Republic, the pace of public administration reforms appears to be slow with the only recent introduction of performance management elements in public administration (Špaček 2018). While the results of this performance-related eff ort still appear to be inconclusive, as suggest the conclusions of Plaček et al. (2020) in their study examining the impact of the implementation of performance management tools into Czech public institutions, the use of advanced management practices could be observed even in hospital management (Krupička 2020). For example, Popesko et al. (2015) illustrate the application of Activity-Based Costing in the Czech regional hospital and the benefi cial eff ect of this practice on the decision-making activity of hospital management. Regardless, the studies comparing the effi ciency of public and private hospitals in the Czech Republic provide contradictory results (Mastromarco et al. 2019; Łyszczarz 2016; Papadaki and Staňková 2016) and thus the defi nitive example of practices leading to an effi cient hospital is yet to be identifi ed. Lastly, the EU requirements for the allocation of funds appear to be an important driver of the introduction of healthcare reforms leading to the introduction of elements of performance management (Dubas-Jakóbczyk et al. 2020; Špaček 2018); nonetheless, this process is accompanied by challenges (e.g. political instability, uncertainty about reform eff ects) which are common among the countries in Central and Eastern Europe (Dubas-Jakóbczyk et al. 2020). 2.3 Identifi ed aspects of performance management Th e identifi ed issues accompanying the introduction of PMS and the factors infl uencing performance management are thematically similar for public hospitals regardless of the diff erent healthcare settings and the variety of countries in the mentioned studies. Th e themes of alignment of PMS users’ needs and PMS design with its intended use, of proper understanding of the activity-output transformation mechanism, of close cooperation with clinicians in the adoption of performance management practices, or of the ability to decompose organizational strategy on the operational level, provide hints aiding to steer the direction of performance management in public hospitals step by step towards the hypothetical best practice. Understanding these areas appears to be the enabling factor of organizational learning in performance management, which could lead to improved performance, and thus these aspects (Table 1) are a subject of analysis in this case study. 3. Methodology and research design Following the established practice in survey research design (Van der Stede et al. 2005; Kelley 2003), this part focuses on the defi nition of the research question, explanation of the research method, design of the employed research tool, sample selection, description of methods used for data collection and data analysis. 113 The Performance Management Design in Public Hospitals: A Case Study Table 1 Examined aspects of performance management ID Individual aspects of performance management Related sources A Scope of measurement and its ability to refl ect clinical and hospital performance Speklé and Verbeeten 2014; Mannion and Braithwaite 2012; Nyland and Pettersen 2004 B Reliability of performance information and its value for decision-making Nyland and Pettersen 2004 C Relation of performance measures to operational performance and strategy Mettler and Rohner 2009 D Quality of data collection and evaluation process McConnell et al. 2014; Mettler and Rohner 2009 E Support of PMS processes by IT Bardhan and Thouin 2013; Angst et al. 2011; Mettler and Rohner 2009 F Use of performance information and orientation of PMS (operational, exploratory, incentive-oriented) van Elten et al. 2019; Schwartz and Deber 2016; Speklé and Verbeeten 2014 G Communication of performance information to the personnel Jääskeläinen and Roitto 2015; Wettstein and Kueng 2002 H Infl uence of regulatory framework and market dynamics on performance management McConnell et al. 2014; Mettler and Rohner 2009 I Engagement of clinical managers in performance management de Harlez and Malagueño 2016; Zidarov et al. 2016 Source: Authorial compilation. 3.1 Defi nitions and research question Since the research objective of this study is to examine the aspects of performance management in Czech public hospitals, it is necessary to fi rst clarify the scope of understanding the performance and the performance management, given the possible ambiguity in the understanding of these concepts. In line with its multidimensional nature (Mettler and Rohner 2009; Veillard et al. 2005), performance is understood as how the organizational activity aff ects the hospital output measured by fi nancial and non-fi nancial indicators. Th erefore, an improvement in these measures (e.g. fi nancial position, case-mix output, patient feedback) would represent an improvement in performance. Th e performance measurement system represents the activity of measurement and evaluation that results in the comprehensible presentation of performance information. Th e performance management in this context includes the management of performance on both operational and strategic levels, leading towards the fulfi llment of organizational strategy regarding the hospital output and the supporting aspects of these activities (e.g. information technologies supporting PMS). However, as this topic is rather vast, the specifi c focus of this paper lies with 114 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 the identifi cation of areas of potential effi ciency gains in hospital performance management by examining individual aspects of performance management from the perspective of public hospital management. 3.2 Research method and the choice of research tools Th is study uses a combined methodological approach as it aims not only to provide measurable evidence to answer the defi ned research question but also to enhance its informational value by obtaining the contextual rationale behind the answers. Th e complexity of the examined relationship induces the application of qualitative methods besides quantitative ones to adequately address this multi-faceted problem in the healthcare environment (Doyle et al. 2009; Johnstone 2004). Although this approach might have some limitations (Bryman 2007; Morgan 2007), a suffi ciently elaborated research design should aid in their mitigation. Th e research itself thus consisted of the preparatory stage, the on-site research stage, and the post-data collection analytical stage. Th e preparatory stage dealt with the methodological design of employed research tools, the literature review mapping the fi ndings and design of similar studies, and the preliminary testing of selected research tools with potential respondents. Th e on-site research stage concluded the face-to-face interview for each respondent with data collected using the pre-interview questionnaire and post-questionnaire interview notes. Th e post-data collection analytical stage concluded the statistical analysis of survey results and their interpretation to solve the defi ned research task of capturing the relationship between the performance management aspects and hospital performance management. 3.3 Survey design and examined variables Since the purpose of the survey was rather descriptive, as it focused on capturing the current state and thus providing the basis for further learning, the cross-sectional design was adopted in a rather conventional way for the research in management accounting (Van der Stede et al. 2005). Th e written questionnaire had a structured design containing the examined variables, their written description, and the 7-point Likert-type scale with the respondents supposed to indicate to what extent they agree with the presented statements. Although the use of written assessment criteria has been considered an alternative as it would fi nd its justifi cation in the research practice dealing with the assessment of performance management (Jääskeläinen and Roitto 2015), the choice for the use of the Likert scale was motivated by three aspects. Th e subjective nature of the examined phenomena in the questionnaire, the use of a post-questionnaire interview mitigating the limitations of the use of the Likert scale (Jääskeläinen and Roitto 2015), and the common research practice for the examined environment (e.g. van Elten et al. 2019; Bortolocci Espejo et al. 2017; de Harlez and Malagueño 2016; Naranjo-Gil 2016; McConnell et al. 2014; Speklé and Verbeeten 2014). Th e response categories are listed as strongly agree (=7), agree 115 The Performance Management Design in Public Hospitals: A Case Study (=6), rather agree (=5), ambivalent (=4), rather disagree (=3), disagree (=2), and strongly disagree (=1). Th e questionnaire consisted of two parts. Th e introductory part presented the defi nitions of the performance, the performance measurement system, and the performance management, similar to those presented above. Th e examples of fi nancial and non-fi nancial measures followed, with the choice of the presented measures affected by the public ownership and non-profi t orientation of the examined subjects. Th erefore the fi nancial indicators stood for fi nancial stability and economic soundness, while the non-fi nancial indicators illustrated other dimensions of hospital performance, such as patient satisfaction, quality of care, employee satisfaction, or organizational ability to learn. Th e second part of the questionnaire consisted of individual statements presented in Table 2 and the use of the Likert scale. Th e questionnaire presented the individual statements in a numbered list from 1 to 25, with the fi rst letter of the assigned ID representing each statement’s relation to examined aspects of performance management from Table 1. Th e development of exact phrasing took place during the preliminary research stage, with their discussion on the academic level and their testing with the focus group of potential respondents. Th e post-questionnaire interview was selected for its suitability to examine the respondent’s point of view and ability to gain an adequate understanding of the subject (Kallio et al. 2016). Th e structure of the interview corresponded with the structure of the questionnaire as it primarily comprised review and discussion of provided responses. While the main aim of this review was to obtain a justifi cation for presented responses, it was optional to the extent of allowing respondents to skip the justifi cation of responses for any statement or to provide broader accompanying commentary instead. Provided commentary for each reviewed response was recorded and confi rmed with the interviewed respondent to mitigate the potential wording bias. 116 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 Table 2 Individual statements used in the questionnaire ID Statement A1 The fi nancial performance measures refl ect hospital performance. A2 The non-fi nancial performance measures refl ect hospital performance. A3 The fi nancial performance measures refl ect clinical performance. A4 The non-fi nancial performance measures refl ect clinical performance. B1 The performance measurement system provides reliable information about performance. B2 The scope of the performance measurement system supports decision-making. C1 The relation of fi nancial performance measures to operational performance is comprehensibly defi ned. C2 The relation of non-fi nancial performance measures to operational performance is comprehensibly defi ned. C3 The relation of fi nancial performance measures to organizational strategy is comprehensibly defi ned. C4 The relation of non-fi nancial performance measures to organizational strategy is comprehensibly defi ned. D1 The performance data collection process is automated (no manual data collection is required). D2 The performance data evaluation process is automated (e.g. automated standardized reports, on-demand visualization). E1 The performance measurement system is adequately supported by information technologies in the data collection process. E2 The performance measurement system is adequately supported by information technologies in the data evaluation process. F1 The performance information is used for budget control and operational planning (operational use). F2 The performance information is used for the performance assessment of employees. F3 The performance information is used for the performance assessment of managers. F4 The performance information is used for rewarding employees (incentive-oriented use). F5 The performance information is used for rewarding managers (incentive-oriented use). F6 The performance information is discussed with organizational members to identify their cause (exploratory use). G1 The performance information is communicated to the personnel. H1 The performance management is infl uenced by the regulatory framework (e.g. Reimbursement Decree). H2 The performance management is infl uenced by market dynamics (e.g. competition). I1 The clinical managers are involved in performance management. I2 The non-clinical managers are involved in performance management. Source: Authorial compilation 117 The Performance Management Design in Public Hospitals: A Case Study Table 3 Characteristics of examined institutions (2018) ID No of departments Total assets (bn, CZK) Total expenses (bn, CZK) No of employees No of beds Founding body No of respondents X 26 2.4 4.4 2508 1113 Teaching hospital 32 Y 28 4.6 9.0 4811 1537 Teaching hospital 28 Z 30 2.4 3.0 2254 1063 City hospital 27 Source: Authorial compilation, fi nancial statements of examined institutions, personal inquiry. 118 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 3.4 Sample selection and data collection approach Sample selection followed the logic set by previous research focusing on the population of public hospitals in the Czech Republic as a whole (Krupička 2020). Since this group of healthcare providers accounts for nearly half of national healthcare expenditures, public hospitals essentially determine the health system’s performance. Th e selection of examined institutions from this group was based on accessibility and willingness to participate in the research. While the fi rst criterion’s selection was arbitrary, its choice aimed to ensure the most time-effi cient data collection process during the on-site research stage. Institutions were contacted one aft er the other, with eleven entities addressed before successfully establishing the cooperation with three subjects. Th e following table presents the main descriptive characteristics of these institutions, with all of them founded by the Ministry of Health of the Czech Republic. All three subjects were quite similar in range and organization of provided service, with operational capacity (personnel, number of beds) causing the differences between the examined institutions. Furthermore, subject Y recently went through signifi cant investments in tangible assets resulting in its asset value being signifi cantly above the asset value of subjects X or Z, mainly due to the use of historical cost as a measurement basis in recognition of assets. Th e personal on-site visit was selected as the approach for data collection since it allows achieving a higher response rate, albeit at the cost of time (Kelley 2003) and enables the use of post-questionnaire interview, which allows approaching the potentially sensitive issue carefully (Kallio et al. 2016). Before the on-site visits, the researcher contacted the hospital administration and discussed the research intention to obtain the management’s support for the realization of the survey. Th e selection of the respondent mix followed these initial discussions with the respondents chosen to represent a cross-sectional mix from both the top and middle lines of management and both the clinical (e.g. nurse managers) and non-clinical (e.g. economic director) professional backgrounds. Th e individual on-site visits followed, consisting of approximately hour-long sessions with both the questionnaire and the interview. Th e questionnaire was presented to the individual respondent in paper form, but the responses were noted down to MS Excel on the researcher’s laptop. During the whole time the respondent was assisted by the researcher for clarifi cation of any statement if necessary. Th e questionnaire was presented in Czech, and the follow-up interview was also conducted in Czech to ensure the respondent’s full understanding. Th e original research timeline assumed the on-site research stage to take place from September 2019 to May 2020 and the completion of 40 sessions per examined institution. However, the on-site research stage had to be terminated early in March 2020 due to the closure of healthcare institutions to the public, except for patients and staff , caused by the coronavirus outbreak. Since the closure lasted for a signifi cant period, the on-site research stage consolidated existing results without 119 The Performance Management Design in Public Hospitals: A Case Study resuming the on-site research stage. Th e consolidation of results led to approximately thirty completed interview sessions per examined institution, with the share of respondents with a clinical professional background ranging from 64 % to 70 % between the subjects. 3.5 Data analysis Data from the questionnaire were analyzed using tools of descriptive statistics and correlation analysis. For each of the statements the mean and standard deviation was calculated to determine the respondents’ sentiment regarding individual statements’ content. Each mean value was tested for signifi cance using a two-tailed t-test to test the signifi cance of results against the base hypothesis of respondents being ambivalent (mean = 4) on a confi dence level of 99 %. Descriptive statistics were also estimated and tested separately for each of the examined institutions to examine the similarity of results between the diff erent institutions. A correlation analysis was performed to examine the possibility of a signifi cant connection between the assessments of individual statements. Correlation coeffi cients above 0.5 and below –0.5 were further analyzed, assuming their correlation not being random. Each of the coeffi cients was also tested for signifi cance using a two-tailed t-test performed against the base hypothesis of no signifi cant correlation between the responses for the examined pair of statements on the confi dence level of 99 %. Following the quantitative analysis, the individual results were analyzed in a prism of responses obtained during the post-questionnaire interview. Th e nature of individual commentaries ranged from brief feedbacks to provided responses (e.g. “I agree with the statement”) to broad expressions of sentiment towards the area of inquiry. Despite their diversity, the provided commentaries captured the general sentiment regarding the individual aspects of performance management and thus aided with the interpretation of quantitative results. Th erefore, the results are presented in the following text in the form of tables summarizing the key quantitative results for each statement, followed by the discussion of fi ndings separately for each of the examined aspects with a comprehensible overview of key fi ndings presented at the end. An asterisk was used in the following tables to mark the means and correlations reaching statistical signifi cance at the examined level of alpha. 4. Data results and fi ndings 4.1 Analysis of results Any kind of performance-related decision-making activity requires relevant information provided by a suffi ciently robust measurement system. Th e capability of the measurement system to refl ect the actual performance thus might be considered an enabling factor for eff ective performance management. Regarding this area, similar tendencies were observed across all subjects, with respondents being rather inclined 120 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 Table 4 Results: A – Scope of measurement and its ability to refl ect clinical and hospital performance Statement ID N Mean St. Dev p-value Signi fi cantly correlating variables (r) Subjects All All X Y Z All All All A1 87 4.483* 4.719* 4.214 4.481 1.119 0.0001 B2 (0.51*), C3 (0.51*) A2 87 4.874* 5.219* 4.464 4.889* 1.087 0.0000 none A3 87 4.805* 4.844* 4.964* 4.593* 1.044 0.0000 none A4 87 5.241* 5.313* 5.000* 5.407* 0.862 0.0000 none Source: Research results. Table 5 Results: B – Reliability of performance information and its value for decision-making Statement ID N Mean St. Dev p-value Signi fi cantly correlating variables (r) Subjects All All X Y Z All All All B1 87 5.195* 5.313* 4.964* 5.296* 0.950 0.0000 B2 (0.59*), E2 (0.54*) B2 87 4.529* 4.750* 4.464 4.333 1.218 0.0001 A1 (0.51*), B1 (0.59*) Source: Research results. 121 The Performance Management Design in Public Hospitals: A Case Study towards the measurement providing relevant data about performance. Financial indicators were considered slightly less capable of refl ecting the performance than non-fi nancial indicators, with both types providing more relevant information on departmental rather than organizational performance. Th e measurement was oft en regarded by the respondents as too “synthetic” or “crude” to refl ect the complexity of overlapping activities, which was similar to the results of Nyland and Pettersen (2004) regarding the crudeness of measurement as disruptive for the implementation of eff ective performance management in healthcare institutions. Th e reserved attitude towards the performance measurement system was shared across the individual interviews, with comments suggesting the lower quality of measurement being context-driven. Similar results were discussed by Mannion and Braithwaite (2012) in the case of NHS, where the poor measurement considered was an adverse consequence of performance evaluation itself. In addition to the relevance, the reliability of performance information provided by the measurement system is another determining factor in its usefulness for decision-making activity. According to the results, the respondents of all examined subjects found the measurement system providing rather reliable performance information. On the other hand, the respondents perceived the performance information as slightly above neutral in its usefulness to support decision-making. Th e respondents mentioned causes such as the narrow scope of measurement, aggregated measures, or insuffi cient details, suggesting an issue of poor measurement as was discussed in the previous section. Whereas the performance measurement system fulfi lls its role by providing reliable and relevant performance information for performance management, the required content of performance information diff ers in the case of operational and strategic management, which also applies to the scope and focus of performance measurement. Regarding the operational performance, the respondents perceived the connection of measurement to the performance to be relatively comprehensible as they understood the measures in the context of cost management or productivity. However, the situation was diff erent for the connection between the measurements and the organizational strategy. While the results were inconclusive regarding the fi nancial measures, the respondents perceived the connection of non-fi nancial measures to the strategy as less tangible. Th e commentaries pointed out the departmental contribution to the fulfi llment of organizational strategy being unclear and the connection between the organizational activities and the strategy being generally diffi cult to grasp. Th ese fi ndings are not that remote from those made by Mettler and Rohner (2009) in their analysis of Swiss hospitals, where the performance management appeared rather operationally oriented with a somewhat weak link to strategy. Th e gathering of data and their evaluation represent two processes of the performance measurement system whose quality has an impact on the reliability and 122 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 Table 6 Results: C – Relation of performance measures to operational performance and strategy Statement ID N Mean St. Dev p-value Signi fi cantly correlating variables (r) Subjects All All X Y Z All All All C1 87 5.034* 4.844* 5.071* 5.222* 0.958 0.0000 None C2 87 4.655* 4.938* 4.393 4.593* 1.044 0.0000 None C3 87 3.977 4.438 3.893 3.519 1.257 0.8650 A1 (0.51*) C4 87 3.425* 3.469 2.893* 3.926 1.369 0.0002 None Source: Research results. Table 7 Results: D – Quality of data collection and evaluation process Statement ID N Mean St. Dev p-value Signi fi cantly correlating variables (r) Subjects All All X Y Z All All All D1 87 4.126 3.906 4.107 4.407 1.098 0.2856 E1 (0.67*), E2 (0.54*) D2 87 4.644* 5.094* 4.321 4.444 0.927 0.0000 None Source: Research results. 123 The Performance Management Design in Public Hospitals: A Case Study relevance of performance information. Th e automatization was selected as a proxy for the qualitative aspect of both processes assuming less room for human error in automated processes. Together with the provided commentary, the near ambivalence of results for data gathering processes suggests the data being gathered at least partially manually. Diff erent results for individual hospitals in the data evaluation processes suggest various approaches between the examined hospitals. While some commentary mentioned the automated evaluation supported by business intelligence, other respondents commented on the analytical eff ort on the economic department. Overall, these fi ndings suggest the space for further improvement in data handling and thus in the quality of performance measurement system, as was the case in other studies (Mettler and Rohner 2009; Nyland and Pettersen 2004). Th e quality of measurement is also aff ected by the magnitude of IT support as IT facilitates both data collection and evaluation processes. Similar to the results for the quality of processes, the results for the level of IT support suggest variability between the institutions. While the respondents were generally inclined to rather agree with the adequate support of PMS by IT, only a few respondents mentioned any specifi c tool, such as management information systems (MIS) or business intelligence (BI). Th ese results might suggest either the limited use of these tools or the limited understanding of their nature. Nonetheless, the results of correlation analysis suggest that IT support of PMS is one of the key determinants of PMS quality, which is in line with fi ndings in studies made by Bardhan and Th ouin (2013) and Angst et al. (2011) analyzing the impact of IT on performance management in U.S. hospitals. Following the classifi cation of performance information use developed by Speklé and Verbeeten (2014), this area of inquiry examined the use of performance information in subsequent performance management as it determines its purpose. In all three examined subjects, the respondents agreed with the PMS being used for operational purposes, which is consistent with the previous study’s result (Krupička 2020), identifying budgeting as the most frequently used management practice in public hospitals in the Czech Republic. Regarding the use of performance information for the assessment of personnel performance, the respondents inclined towards a slight disagreement with incentive-oriented use on the employee level, which the respondents justifi ed by citing insuffi cient details in the provided information and the existence of fi xed time-based remuneration. A possible explanation for the lower importance of performance in the personnel assessment might lie with the general shortage of medical personnel perceived by the Czech hospital directors (HICR 2020). Further results for the use of performance information in the assessment of managers or exploratory use of performance information were inconclusive, with the respondents pointing out the function of PMS being rather informational and the diffi culties in identifi cation of responsibility for performance results. Th e fi ndings of the general use of PMS for operational purposes are aligned with the results from Dutch hospitals (van Elten et al. 2019) and suggest a similar state to that in 124 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 Table 8 Results: E – Support of performance measurement system processes by IT Statement ID N Mean St. Dev p-value Signi fi cantly correlating variables (r) Subjects All All X Y Z All All All E1 87 4.747* 4.281 4.821* 5.222* 1.070 0.0000 D1 (0.67*), E2 (0.61*) E2 87 4.920* 4.781* 4.786* 5.222* 0.918 0.0000 B1 (0.54*), D1 (0.54*), E1 (0.61*), F6 (0.70*), I2 (0.55*) Source: Research results. Table 9 Results: F – Use of performance information and orientation of PMS (operational, exploratory, incentiveoriented) Statement ID N Mean St. Dev p-value Signi fi cantly correlating variables (r) Subjects All All X Y Z All All All F1 87 5.931* 6.094* 5.786* 5.889* 0.728 0.0000 None F2 87 3.310* 3.875 2.964* 3.000* 1.288 0.0000 F3 (0.60*), F4 (0.67*) F3 87 4.184 4.563 4.143 3.778 1.167 0.1451 F2 (0.60*), F5 (0.54*) F4 87 3.586* 4.063 3.071* 3.556 1.196 0.0018 F2 (0.67*), F5 (0.70*) F5 87 3.874 4.063 3.679 3.852 1.043 0.2615 F3 (0.54*), F4 (0.70*) F6 87 3.931 3.969 3.679 4.148 1.265 0.6124 E2 (0.70*), I2 (0.54*) Source: Research results. 125 The Performance Management Design in Public Hospitals: A Case Study English speaking countries, where the performance indicators were predominantly used for informational purposes (Schwartz and Deber 2016). Th e extent of communication of performance information provides information on the involvement of personnel in performance management. In all three hospitals, the fi ndings support the established communication of performance information to the management, with commentary mentioning the standardized reports and the management meetings discussing organizational results. However, the respondents also acknowledged the communication of performance information only at the top and middle levels of management, with general personnel rarely being informed. Th is fi nding might partially explain the existence of adverse consequences of poor measurement since the communication of performance information is one of the key factors facilitating the performance measurement implementation, as was pointed out by Jääskeläinen and Roitto (2015). Changing regulation and increased market dynamics are oft en considered key drivers for the adoption of modern performance management practices (McConnell et al. 2014; Mettler and Rohner 2009). Th e ambivalence of respondents regarding these factors may suggest the neutral infl uence of these factors on performance management or potentially the lack of external stimulus caused by the absence of competition and the low frequency of related regulatory changes. Th e rigidity of regulation might be caused by a lack of political consensus, which also obstructs the realization of required fi nancial reform, as was suggested by Alexa et al. (2015) in their analysis of the Czech health system. In addition to these results, the respondents commented on performance being aff ected by quality standards and input prices of material. Th e continuous engagement of managers in performance management facilitates the eff ective use of performance information to achieve management goals. Th e respondents rather agreed with the engagement of both clinical and administrative managers in performance management. Th e results also suggested that while both clinical and non-clinical managers regard themselves as being involved in performance management, each group focuses on diff erent aspects, thus balancing priorities between economic performance and quality of care. Th is state could be considered positive in line with the suggestions of de Harlez and Malagueño (2016) that the participation of both groups of managers in performance management should facilitate the fulfi llment of various goals. As Zidarov et al. (2016) suggest, the involvement of managers facilitates the implementation of PMS, while the lack of planning and the sub-optimal quality of PMS dampens its use. Th erefore in line with this suggestion and the context of previous fi ndings, while the managers are generally involved in performance management, the lower quality of measurement and lack of connection to strategy appears to lower performance management effectiveness. 126 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 Table 10 Results: G – Communication of performance information to the personnel Statement ID N Mean St. Dev p-value Signi fi cantly correlating variables (r) Subjects All All X Y Z All All All G1 87 5.253* 5.375* 5.179* 5.185* 0.766 0.0000 None Source: Research results. Table 11 Results: H – Infl uence of regulatory framework and market dynamics on performance management Statement ID N Mean St. Dev p-value Signi fi cantly correlating variables (r) Subjects All All X Y Z All All All H1 87 4.023 4.125 4.179 3.741 1.201 0.8587 None H2 87 3.690 3.531 3.786 3.778 1.350 0.0348 None Source: Research results. Table 12 Results: I – Engagement of clinical managers in performance management Statement ID N Mean St. Dev p-value Signi fi cantly correlating variables (r) Subjects All All X Y Z All All All I1 87 5.080* 5.344* 4.929* 4.926* 0.892 0.0000 None I2 87 5.046* 5.125* 4.643 5.370* 0.975 0.0000 E2 (0.55*), F6 (0.54*) Source: Research results. 127 The Performance Management Design in Public Hospitals: A Case Study 4.2 Overall fi ndings, their discussion, and implications Given the similarity of responses across the examined subjects, the results lead to the following fi ndings and implications. While the performance measurement appears to provide relevant data and to refl ect the clinical performance better than the organizational performance, the inadequacy of measurement to the complexity of service limits the informational value of performance information for the management. Th e issue of measurement crudeness is not uncommon in healthcare (Speklé and Verbeeten 2014; Mannion and Braithwaite 2012; Nyland and Pettersen 2004) and thus presents an opportunity for organizational learning, as the improvement of measurement would provide the management with enhanced performance information. Th e potential cause of poor measurement might lie with the insuffi cient communication of performance management principles to the general personnel. Th is cause, combined with the unclear nature of the relationship between the organizational strategy and performance management, contributes to the potential tensions between the hospital and clinical management in setting priorities regarding the economic performance and the quality of care. As a result, the PMS appears to be used rather operationally and not to its full potential, as was the case in performance measurement systems examined by Schwartz and Deber (2016) and Zidarov et al. (2016). Th e improvement in the communication of performance management principles thus presents another challenge for hospital management that might yield gains in management eff ectiveness, to the solution of which the exploratory use of PMS might contribute, as the literature suggests (van Elten et al. 2019; Speklé and Verbeeten 2014). Th e performance information does not appear to play a signifi cant role in the context of employee assessment due to the currently perceived shortage of medical personnel (HICR 2020), but any similar conclusions should consider that improvement in performance information could potentially lead to the optimization of hospital activities, which in turn may relieve the pressure on existing medical personnel. Th e current state of support of PMS by informational technology presents another opportunity for improvement. As the informational technology essentially enables eff ective performance management (Bardhan and Th ouin 2013; Angst et al. 2011), the application of more sophisticated technological tools followed by proper education in their use should improve the information value obtained from the PMS. While the factors of market dynamics and the healthcare regulatory framework may aff ect the adoption of performance management (Mettler and Rohner 2009), the results provide little evidence of any infl uence on the current state of performance management. Th is fi nding might suggest a lack of an external stimulus for further development of performance management practice, with the cause of this possibly being the rigidity of the legislative process, as was the case in other countries (Dubas-Jakóbczyk et al. 2020). 128 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 Th e respondents generally acknowledged the need for improvement in performance management, but it also seemed that there was a general sentiment of pessimism regarding any potential change towards improvement. Further discussions with the respondents suggested the cause being the introduction of many half-measures in the past, which might have responded to the requirement of management at the time but were not part of any comprehensive concept of performance management. Th is sentiment, and a rather voluntary basis of any performance management practice in turn, potentially creates an environment discouraging from the introduction of any complex concept encompassing all areas of performance management, which could off er the solution to the issue of management eff ectiveness. Given the current state of market dynamics, incorporating the performance management principles into the regulatory framework might be one solution to spark off the required advancement in performance management practice in public hospitals in the Czech Republic. 5. Conclusions Although Czech healthcare is considered to be of good quality, the events of 2020 have pointed out the need for management to be able to fl exibly respond to the dynamics of the health situation in the population. In this context, the effi ciency of public hospital management is more relevant than ever, with eff ective performance management playing a crucial part in management’s eff ort to achieve effi ciency. Nevertheless, eff ective performance management requires reliable and precise performance information relevant to the decision-making activity of management. Th is study used a mixed methodological approach to examine various aspects of performance management in three public hospitals to provide evidence on the current state of performance management practice on an institutional level and to identify specifi c areas of potential effi ciency gains. Th e results suggest that the performance measurement systems employed in the examined subjects refl ect the clinical performance better than the organizational performance, while also being too synthetic in their measurement and rather not adequate to the complexity of service. Th e performance information obtained from these systems is used for operational management rather than to improve the understanding of the measured processes or for the evaluation of employee performance. Th e limited use of performance information combined with insuffi cient communication of performance management principles makes the understanding of performance management goals and their relation to organizational strategy for the general personnel diffi cult. While these adverse consequences contribute to the potential tensions between the hospital and clinical management in setting priorities between the economic performance and the quality of care, they are also not uncommon for the examined environment, according to similar studies. Th e commonness of identifi ed adversities presents an opportunity for organizational learn- 129 The Performance Management Design in Public Hospitals: A Case Study ing and improvements in current performance management practice if adequately addressed by managers. Th ese adversities also present an opportunity for further research. It could examine the eff ectiveness of various management responses to this issue in diff erent institutions and enrich the available knowledge base. Th e key fi ndings regarding the performance management practice were similar across the examined institutions and generally in line with the fi ndings of other studies examining the individual issues in health systems of diff erent countries, despite the limitations of this study. Although the limitations of the survey approach were potentially mitigated by methodological triangulation and detailed documentation of methodology, the limitations given by the sample selection approach must be considered when drawing any conclusions. Th erefore the results of the survey should be carefully considered to be evidence on the current state of key areas of performance management in public hospitals in the Czech Republic and serve as a basis for the discussion of areas of potential effi ciency gains in the examined healthcare system. On the other hand, a detailed description of the used methodology allows the relatively simple replication of this study in the future, thus creating a basis for further cross-sectional comparative studies or monitoring of the development of applied performance practice in time. Findings are appliable mainly by practitioners in performance management in public hospitals as they point out the crucial aspects of system design, enhancing the institutional capabilities to infl uence the actual performance. Core aspects lie with establishing clear and comprehensive strategic goals able to be decomposed to specifi c operational objectives and the design of a measurement system capable of refl ecting the accomplishment of these targets on all levels of management. Furthermore, the implementation of the measurement system should be the result of cooperation between the clinical management and hospital administration to cover the economic and medical complexity of healthcare service adequately. Insuffi ciently addressing these aspects might result in the crude design of the measurement system failing to refl ect the essential aspects of performance, thus not serving its purpose and creating space for potential tensions between the various levels of management. Th is state creates an organizational environment potentially obstructing the use of more sophisticated performance management practices and the management tending to adhere to the basic practice of budget control. In conclusion, the actual situation in healthcare increased the need for improvement in the management of hospital capacities as well as the demand for quality performance information, which potentially represents a much needed stimulus for further development of performance management practice in public hospitals. Whereas the performance management might have been considered adequate in the past, it provides suboptimal performance information in the current period characterized by volatility in the health situation in the population and by longterm economic pressure. 130 The NISPAcee Journal of Public Administration and Policy, Vol. XIV, No. 1, Summer 2021 Th e acknowledgment of the need for improvement in the effi ciency of management by hospital directors also points to the existing demand for further development of currently employed performance management practice. Th e proper understanding of the connection between the design of performance management, decision-making activity, and hospital performance is essential for any such development. Nevertheless, the knowledge base regarding performance management is broad, and the hospital managers should hopefully be able to fi nd inspiration to remedy the shortcomings of performance management identifi ed in this study. 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Answer To: The Performance Management Design in Public Hospitals: A Case Study Josef Krupička1 Abstract In...

Shubham answered on May 17 2022
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THE PERFORMANCE MANAGEMENT DESIGN IN PUBLIC HOSPITALS
THE PERFORMANCE MANAGEMENT DESIGN IN PUBLIC H
OSPITALS
Introduction
Spending in healthcare is not fruitful
Unnecessary tests, inefficient treatments and procedure and wasted resources on pharmaceuticals
Need for capacity management, improved efficiencies
Enhanced performance management can be a solution
Assessment Of Performance Management In Public Hospitals
As per WHO six factors for assess
Clinical Effectiveness
Efficiency
Staff Orientation
Responsive Governance
Safety,
Patient-Centeredness
Issues in Performance Management
The user needs and design of performance management is not supportive to each other
The employees do not cooperate with the performance management system
The...
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