Governed or self-governed? The challenge of coordination in European public hospital systems

Abstract

This thesis asks whether the increased autonomy and decentralization associated with the New Public Management (NPM) have impacted on the coordination of organizations within the public sector. Ideas and practices once typical of the private sector have become increasingly common in public sectors around the world. Often times they have been promoted under the umbrella of fashionable terms such as rdquo;, “modernization” or New Public Management (NPM). Although not entirely new, these ideas gained momentum, starting in the early 1980s, in some Western democracies and then increasingly became promoted as a solution – and sometimes the solution nbsp;to public administration problems across the world. Great variation exists, however, in their spread and implementation across countries and sectors. Two of these proposals for change are the disaggregation of bureaucratic forms of organization and decentralization. The expectation has been that these reforms would improve operational flexibility, responsiveness to the needs of service users and ultimately quality and performance. Following these reform proposals, administrators are supposed to make use of greater discretion in the application of managerial principles and techniques. Managers and the entities they lead are expected to exercise initiative, to be proactive, and to act rather than just to react to imperatives from politicians, as it was traditionally common in public administration. A second major reform that has been widely experimented with in the public sector is decentralization. Decisions, it is argued, ought to be made as close to the citizen as possible. In this way it is assumed that information and understanding of local needs improve, which can further translate into better decision making. There is also an ambition to reduce the overload and delay associated with highly centralized decisions. However, the trend towards decentralization is neither new nor uniform across public sectors. Some governments have taken steps to recentralize certain functions after earlier efforts to decentralize while others have been initially reluctant to decentralize, but recently have taken more confident steps in this direction. The specific setting of this doctoral dissertation comprises public hospital systems in selected European countries: 1)nbsp; a Nordic country – Norway 2)nbsp; nbsp;Baltic, EU member state since 2003, formerly part of the Soviet Union – Estonia 3) a nation in Central and Eastern Europe (CEE), a former communist state and an EU member state since 2007 – Romania. The thesis comprises eight chapters. Chapter 1 introduces the subject matter and motivates its academic and social relevance. Chapter 2 reviews the literature and shows how the subject matter of the thesis is embedded in the broad academic discourse. This consists of the public administration and management literature – particularly New Public Management, governance and coordination – on the one hand, and healthcare and hospital management and governance, on the other hand. It provides a theoretical review of the concept of coordination, and shows how different theories have dealt with coordination in a public sector context. The chapter also reviews existing analytical and empirical approaches to coordination. In chapter 3 we propose an analytical framework geared to the central coordination of publicly-owned hospitals. The framework builds on two theories – principal-agent theory and sociological institutionalism – and seeks to explain why coordination problems occur across the three cases. Chapter 4 includes the research design: the case selection and methods. The thesis uses an explanatory comparative case study approach to understand how reform affects coordination in hospital systems in the three country cases: Estonia, Norway and Romania. We use congruence analysis as a specific type of case study research. Congruence analysis connects empirical observations to expectations derived from theory. The main source of empirical material comprises of a program of semi-structured interviews conducted in all three countries with various stakeholders – both in central institutions and public hospitals. This evidence is supplemented with relevant documentary data and statistical information. Chapters 5 through 7 constitute the core of the thesis and they describe, evaluate and explain the relationship between organizational reform in public hospitals and coordination problems. Each of these three country chapters ends by discussing the compatibility between empirical findings and the theoretical propositions derived from the two theories. In each country chapter we seek to explain the relationship between organizational reform in public hospitals and central coordination by means of the theoretical framework introduced in Chapter 3. Chapter 8 concludes by comparing the empirical and theoretical findings across the three cases and discusses the implications of the results for theory and practice. The research has reached the following conclusions: nbsp; Organizational reform in public hospitals has constituted an important component of healthcare policy in all three countries in the past 10 to 15 years. All three countries have experimented with structural reform (including decentralization or centralization) and have grappled with granting management autonomy to public hospitals while seeking to solidify policy-making and coordination capacity at the center of government nbsp; This administrative change across the three hospital systems has not been marginal only – it has involved major resources and has received considerable attention from different stakeholders •nbsp; Although hospital decentralization and autonomy reform constitute on-going processes that may constantly undergo some degree of change, we have observed that in two of our three cases, Estonia and Norway, the reform model proposed more than 10 years ago has essentially endured to the present. While ideas for change to the model have been put forward, in Norway for example, it is unlikely that this change would radically reshape the type of reform model adopted years ago. Romania, while clearly experimenting with the same types of international ideas, has thus far only implemented decentralization. Granting greater autonomy to hospital management is still an idea that is being considered by central policy makers in Romania, but it is uncertain if, when and how it will be implemented nbsp; In the face of organizational reform the state capacity to coordinate the decentralized and autonomous hospitals has been put to the test nbsp; We have observed a reconsideration of the role of central institutions, most notably the ministries of health, but also health insurance funds in social insurance systems or other central bodies in tax-based systems nbsp; Hospital autonomy has overall posed serious challenges to the central coordination of autonomous hospitals in Estonia, much more so than in the case of Norway and Romania nbsp; However, the autonomy of hospitals is not the only factor that affects the effectiveness of coordination. Hospitals that enjoy a lower degree of autonomy, as in Romania for example, are not necessarily more effectively coordinated than hospitals that enjoy a high degree of decision-making discretion nbsp; nbsp;Norway, a high-trust society that is compliant with government regulation, coordination problems exist in more specific areas of ICT and in the case of elite medical specialties in the Oslo University Hospital. Overall, coordination in Norway has significantly improved following the 2002 hospital reform, but this does not necessarily mean that coordination in the public hospital sector is problem-free nbsp; Hospital system culture and principal-agent theory offer complementary insights into the dynamics of public hospital coordination. Conflicting interests and goals and cultural factors are particularly relevant in understanding the effectiveness of central coordination of public hospitals nbsp; There is more evidence for some propositions of principal-agent theory than for othersnbsp;more evidence was found in favour of conflicting interests and goals than in the case of imperfect information. Positive and negative incentives are situated in the middle with more evidence in some cases than in others. The thesis contributes to the existing literature in the following ways: nbsp; Directly compares two eastern and one western European system and shows that such comparison, although it does not follow a most similar research design, is both feasible and productive. This research finds that problems of coordination can occur in different systems and therefore to study public sector coordination comparatively one can choose to select cases that display differences between them and look for factors that can explain a similar outcome nbsp; Covers one country where only very limited research on hospital reforms has previously been published (Romania) •nbsp; Sets out new primary evidence in the form of original interviews and documentary evidence which has not previously been cited in academic research nbsp; Employs two theoretical approaches in a comparative and complementary way, and argues that conflicting interests and goals and hospital system culture help explain coordination in European public hospital systems nbsp; Proposes an analytical framework for analyzing coordination in public hospital systems and finds the framework to be useful in that it encourages researchers and practitioners to think specifically about the implications of coordination; that is, the problems and effects of coordination problems.