Workplace Reform in the Healthcare Industry

This book is the culmination of the research of a number of Australian scholars in the fields of employment relations, health policy, health sociology, health economics and health services management. In the first instance it arises from the three editors’ doctoral studies, carried out between 1994 and 2004. We began our PhD research at a time when healthcare reform was high on the agenda in Australia; we were concerned with the impact of these reforms on the work of various health professionals and on the quality of care extended to patients. During this period we found ourselves presenting work-in-progress papers at the Association of Industrial Relations Academics of Australia and New Zealand (AIRAANZ) annual conferences and other related conferences. Sometimes the conference organizers would program us in the same session, for example making health a case study in employment relations, at other times we were separated by themes such as human resource management, enterprise bargaining, casualization, labour flexibility or working time. Through this process we discovered other academics with similar interests and it became clear that while there were many similarities in our investigations, there were also differences in our research approach, discipline orientation or theoretical explanations.

This chapter introduces the reader to the Australian health sector under three main headings in order to provide background to subsequent chapters. The first section describes the Australian healthcare sector and outlines key features in relation to finance, organization, employment and control of health professionals. The second section examines the health sector reform process, exploring the main drivers for reform and the policy and management initiatives that were incorporated within a New Public Management approach. The third section outlines the industrial relation reform strategies and their impact on the healthcare sector.

Healthcare reform and industrial change impact directly on the health workforce in a number of ways. The structure of the workforce and the number of people employed can often be the subject of government action and policy change, and industrial issues are quintessentially about payment and employment arrangements for the health workforce. This chapter is a scene-setting chapter for the other chapters of this book, providing information about the size and composition of the health workforce, with particular attention to nursing, medical and allied health personnel, as well as identifying contemporary issues affecting those professions.

This chapter concerns employment relations in the public hospitals of New South Wales, Victoria and South Australia. The main aim of the chapter is to describe and then compare trends in the structure of bargaining in the public hospitals of three Australian states; the ‘structure of bargaining’ being defined as ‘the institutionalized arrangements by which employers and employees determine the terms and conditions of the employment relationship’ (Bray and Waring, 1998). In this context, the focus is mostly on union-management relations and collective bargaining, but at the same time there is a broader subject because these collective forms of regulation in which employees are represented by unions operate alongside individual bargaining, managerial prerogative and state regulation to determine the conditions of employment of public hospital workers.

In Victoria throughout the late 1990s structural change in the public hospital system was immense as hospitals embarked on a range of market-testing and benchmarking exercises accompanied by downsizing and, in some cases, outsourcing. The clinical services which were subjected to these processes included radiology, pharmacy and pathology, and the non-clinical services included car parking, catering and cleaning, engineering and supply. In Victoria with the election of the Liberal-National government in 1992, outsourcing became a key part of the public management program (Stockdale, 1995, p. 29). This occurred alongside considerable decreases in state government funding, the implementation of industrial reform and the aggregation of metropolitan public hospitals into networks. The introduction of the Federal Liberal-National government’s National Competition Policy (NCP) in 1995 with its rationale that private sector pressures and competition would make the public sector more efficient, saw widespread changes to the provision of structure of all public sector services.

The hospital industry in Australia has been subjected to widespread change in the last 20 years. Previous chapters of this book have demonstrated that significant workplace change has taken place in the hospital industry, as evidenced by the introduction of new management practices such as benchmarking and enterprise bargaining. These have been initiated as a response to public sector fiscal austerity and the introduction of private-sector practices under the auspices of New Public Management. There has been an overall increase in per capita health expenditure in Australia in the last 25 years (AIHW, 1998, p. 163). However, it has not kept pace with increased demand for services due to an ageing population. It is here that demand-side pressures have contributed. Evident is an increasing role for the private sector, and a diminishing public sector share of health expenditure. This has been encouraged by a federal government, keen to promote private treatment through tax rebates for private health insurance as a means of reducing public sector waiting lists. One consequence of fiscal austerity has been work intensification, compounded by the ‘caring work ethic’ displayed by health sector professionals.

Over the last two decades, public hospitals in New South Wales have seen huge workplace changes that have been caused by two main imperatives: increasingly neo-liberal solutions to public sector management by governments of both political complexions, which have led to great pressure for increasing efficiency and reductions in costs; and health sector-specific cost increases associated with new medical technologies and procedures. The cumulative effect of these two imperatives has been transmitted through strict limitations on funding and new hospital budgeting regimes that have forced hospital managers to seek new and cheaper ways to deliver patient care (Bray and White, 2002).

The processes used for achieving reform in the public healthcare sector in Australia have taken two directions. The initial strategy employed by governments was to introduce efficiency measures into the sector via policy directives that usually tied funding to productivity. These have been broadly defined elsewhere in this book as the strategies of New Public Management. The introduction of Casemix diagnosis related groups (DRGs) and the incentives built into the various Medicare Agreements are two examples of this approach. This strategy motivated many hospital managers to engage in workplace reform with financial assistance provided by both Labor and Liberal-National Federal Governments through such incentive programs as the National Hospital Demonstration Program. The second strategy has been industrial relations reform aimed at increasing workplace flexibility in order to increase productivity and efficiency gains. Both reform strategies have impacted on the working life of health professionals and occupational groups in the sector.

This chapter considers the risks inherent in managing those performing emotional labour in environments that reflect the philosophies of managed care. Drawing on a South Australian case study in aged care, it illustrates the link between the demands of emotional labour and the contradictions imposed on managers attempting to simultaneously minimize costs while providing quality care and quality work environments. Health and aged care workers experience the weight of emotional labour in both their jobs and in the framework of their organizational settings, often in ways that challenge their health and well-being and that ultimately has an impact on organizational performance. A deeper understanding of the range of factors aggravating the emotional labour content of care work is a salient concern given the need to attract and retain workers to the health and aged care sectors. It alerts us to the broad dimensions of human resource management characteristic of this industry.

There is currently a major shortage of working nurses in Australia. It is expected that this shortage will worsen in the immediate future (AIHW, 2003; Buchanan and Considine, 2002; DEST, 2002). A recent government report indicates a shortfall of 31,000 nurses by 2006 (DEST, 2002). This skilled labour shortage is not confined to Australia and is an international problem (Loquist, 2002). Countries such as the UK and the USA have experienced long-term problems in nursing labour supply and have relied extensively on immigration to supplement local labour shortages (Davis and Nichols, 2002).

The workplace reform that is the subject of this book has been justified on the basis of the need for higher productivity, cost control, modernization and greater accountability of healthcare providers to government, the community and the corporation. Productivity has indeed improved and government has had some impact in addressing costs. Many customs and practices have been modified, and outputs are now more tightly specified by governments for the public sector and by corporate owners in the private sector. However, the pressure on the Australian health system has only strengthened, with workforce shortages, budget deficits in public hospitals, turbulence in the profitability and ownership of private hospitals, and increasing concern about quality and safety in all sectors.

Over the past twenty years there has been an international focus by governments on achieving efficient and effective health services through health sector reform. Yet until recently little attention has been given to people management approaches in healthcare (Saltman, Figueras and Sakellarides, 1998), or the impact of government policies and environmental change on the management of the workforce at the organizational level (Bach, 2003). This lack of focus on people management is surprising considering that the industry is labour intensive, highly educated and accounts for a large proportion of total costs. Instead the health labour force has been seen as a target for cost savings and government policies have often focused on costs and efficiency (Thornley, 1998) rather than innovation and human capability building (Bach, 2000; Stanton, 2002a).

This chapter considers the scope of clinical governance by tracing its origins to the National Health Service in the United Kingdom, and by outlining its heterogeneous impacts on health sector employment relations in Australia. The concept of clinical governance originated in the United Kingdom (UK) in 1997 in The New NHS report, which describes it as an instrument that aims ‘to assure and improve clinical standards at the local level’ (Gray, 2004; UK Department of Health, 1997). Its formal definition is often derived from a later article:

… a framework through which NHS organizations are accountable for continually improving the quality of their services and safeguarding high standards of care by creating an environment in which excellence in clinical care will flourish (Donaldson and Gray, 1998, p. S38)

This chapter outlines findings from interviews conducted between 1999 and 2004 with the chief executive officers (CEOs) and directors of operations of offshore outsourcing organizations supplying health sector related work in Bangalore, India. These case studies consider established instances of relocation of health sector related work from the USA to India and are considered in the context of two associated developments: the shift towards introduction, or increased levels, of outsourcing of health sector service work in the United States of America (USA) and their relocation internationally, in the form of telemediated work.¹ The chapter attempts to identify some of the connections between the trends to commodification and outsourcing and offshoring of health sector services which are becoming increasingly well established in the USA and in doing so raises issues of relevance to similar areas of the health sector workforce in Australia.²

The twelve chapters of this book highlight the massive changes that have occurred in the Australian healthcare sector since the early 1990s and their impact on the employment relationships of healthcare workers. In common with many other countries these changes have had a number of drivers, mostly linked to concerns over rising healthcare costs. Dramatic increases in information and changes in technology have led to increased demand and rising costs of both capital and medical services. At the same time consumers have higher expectations of access to the latest and the best techniques, and the ageing population has exerted pressure on service delivery and raised fears of unsustainable future costs. As Chapter 1 demonstrated, Australian state and federal governments have responded to these developments by placing an increased emphasis on attaining improvements in efficiency, productivity and effectiveness of healthcare delivery. They have done this largely through the introduction of neo-liberal policies with a focus on cost saving and a belief in the benefits of New Public Management. In the healthcare sector at the organizational level, decision making is strongly influenced by government policy. The government not only provides the majority of funding but also determines how it will be spent through its funding policies.