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Public Organization Review

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01.09.2013

Processing Institutional Change in Public Service Provision

The Case of the German Hospital Sector

verfasst von: Ingo Bode

Erschienen in: Public Organization Review | Ausgabe 3/2013

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Abstract

With the proliferation of New Public Management (NPM) worldwide, public service providing agencies are increasingly expected to operate in a business-like manner and exposed to ‘competing institutional logics’. Exploring the German hospital sector, this article shows that this is processed within two areas of collective action simultaneously: at enterprise-level and at the regulatory infrastructure of the organizational field. In both places, ‘institutional work’ takes place, albeit differently. With emerging tensions, trial-and-error strategies (deployed by individual hospitals) and mitigating (regulatory) measures engender a nervous cohabitation of the two logics, endangering potentially the sector’s public mission in the long term.

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In many contemporary health care systems, funding for hospitals is operated through lump sum payments according to a scheme embracing ‘diagnosis related groups’ (DRGs, see below).

‘Accountingization’ is operated via permanent (real-time) budget control or fine-grained performance indicators, with the aim of monitoring numeric outputs against commitments fixed in contracts between providers and purchasers, or in the eyes of individual ‘costumers’ (patients) (Kurunmaki et al. 2003, Jacobs 2005).

Others have referred to this as a ‘social welfare logic’ (Pache and Santos 2010: 11, with these authors exploring work integration enterprises in France, equally exposed to strong public sector norms). Note that, in the past, medical professionalism and those following the rules of welfare bureaucracies, while having never been in total harmony with one another, rarely encountered open, let alone institutionalized, conflicts.

That is, to organizations of a given field becoming ever more similar through the influence of overarching institutional environments (e.g. certain norms of professionalism) (DiMaggio and Powell 1983).

Thus, major organizational structures were seen to be imposed by institutional environments. Importantly, ‘clandestine’ coping can hardly be viewed as collective action geared towards handling institutional change pro-actively. Also, it may not be sustainable because the avoidance of external scrutiny, aimed at disclosing the truth about an undertaking’s actual agency, may generate severe organizational stress or even existential risks in the long term (Pache and Santos 2010).

Such actor-centred neo-institutionalism has also inspired recent research on hospitals, too (see Goodrick and Salancik 1996; Reay and Hinings 2009; Currie et al. 2012).

See DiMaggio and Powell (1983). Allusions to the role of this level are also made the more recent literature, e.g. with respect to ‘struggles between interest groups who promote different organizational forms’ in public sector settings (Greenwood et al. 2008: 10).

Contributions centring on German health care policy analysis exhibit a similar bias (e.g. Döhler and Manow 1997).

But it may factually apply to Anglo-Saxon countries as well (see Birkinshaw et al. 1990 or Rhodes 1997).

See Klenk (2011). From 1990s until 2005, the share of commercial hospitals had markedly gone up and doubled in terms of units (from 14 % to 25 %). They were specializing in mass elective surgery before taking over indebted municipal hospitals, and, in a few cases, university (teaching) hospitals. Private investors that are often not (fully) bound to the traditional collective agreements, have managed to change working conditions rather swiftly, with this leading to a markedly reduced nursing workforce (particularly in sections with low intensive care) and an extraordinarily high patient–doctor ratio (25 % above average).

That is, the workers’ funds, employees’ funds, the company-based funds (see Bode 2010a).

Collective agreements are operated for each sector (non-profit, municipal, private) separately.

The German version of the scheme was originally modelled on the ‘Australian Refined DRG’-approach and then gradually transposed into a more sophisticated instrument.

Note furthermore that different price levels co-exist for one and the same DRG throughout Germany, as for each ‘Land’, a specific factor (Landesbasisfallwert) applies.

As is well-known from the wider literature, NPM endorses various regulatory mechanisms by which market principles are applied to public sector organizations (e.g. through pay-for-performance, competition, or funding schemes based on measurable outputs). Mosebach (2009) provides evidence for NPM having shown a clear impact on German hospitals.

Smaller units and those embedded in the public sector are affected most.

Only some of these studies can be cited throughout (but see Bode 2010b).

This data can also be compiled for measuring the ‘performance’ of a hospital department (medical specialty). The respective results can be discussed at any point of time among Medical Directors and with the administrative overhead.

In the German hospital sector (like elsewhere in the Western world), the number of beds has been constantly reduced sector-wide. Moreover, the general tendency goes toward shorter stays. So in theory, more efforts to fill beds are required. On average, 85 % of all hospitals beds were occupied on average at the beginning of 1990s, as opposed to 75 % in 2005.

By 2010, German hospitals had founded more than 250 of these centres.

In Germany, 10 % of all citizens are fully covered by private insurance; moreover, almost a quarter of the population has contracted a plan complementing the standard provided by public health care insurance. More and more German hospitals also seek to offer wellness services to wealthy citizens, as well as medical treatment to patients from overseas.

In our interview sample, only the trade unionist argued that it had detrimental effects as a matter of principle.

The former regulation worked by setting caps on a hospital’s expenditure calculated on historical records. The industry argues that this has prevented it from taking initiatives towards strategic development.

It seems that the commercial sub-sector managed to convince actors from the meso-level of the organizational field (particularly the sickness funds) of their ability to realize economies of scale via chain-wide procurement policies, technical innovation, new quality monitoring systems, and models of clinical governance based e.g. on e-health projects. With hindsight, however, their ‘business strategy’ was largely geared towards creaming off the most interesting sections of the market.

This institute confers a monetary value to the various pathologies, meant to decrease over time due to assumed technological progress (entailing greater productivity) and economies of scale regarding the number of cases being treated. The respective suggestions results have to become agreed officially by the stakeholders of the Institute.

Due to the German constitution, the ‘Länder’ would have had to agree to this overhaul of the funding scheme in the process of enacting the law.

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Titel: Processing Institutional Change in Public Service Provision
The Case of the German Hospital Sector
verfasst von: Ingo Bode
Publikationsdatum: 01.09.2013
Verlag: Springer US
Erschienen in: Public Organization Review / Ausgabe 3/2013
Print ISSN: 1566-7170
Elektronische ISSN: 1573-7098
DOI: https://doi.org/10.1007/s11115-012-0201-z

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