Organizing relations or functions?
- Different Perspectives on the Organization of Swedish
Healthcare
©Ove Jobring, Stig Larsson
October 1994
Abstract - In the Swedish public health care strategic
perspectives and organization is changing due to shortage of
resources, new technology and reevalutations of patients
involvement in the health care process. However, the
reorganizings can be seen as at least two developments. They can
be seen as functional improvements based on a traditional logic.
Alternatively they can be seen as initial steps to introduce new
logics. In the first logic the focus in the change process is on
the improvements in the internal functional efficiency and in the
second on the external relational effectiveness. In this paper
these two points of departure form the basis for discussing
different outcomes of the reorganization process.
REARRANGING THE PAST OR CREATING SOMETHING NEW?
Today, extensive rationalization is taking place within Swedish
healthcare. Attention is being paid to lower costs and increased
efficiency within the traditional logic and established
functions. Thus, healthcare rationalization problems have often
been tackled by squeezing the in-house organization also where
introduction of new organizational arrangements could have had
more effect. However, there is no clear guidance on how
alternative forms, such as loosely coupled networks can be
developed, despite healthcare today, with its many specialties,
being completely different than it was when the current
hierarchical organizational forms came about. The solidly
integrated hierarchical structure has, through increasing
complexity, become difficult to manage and analyze in regard to
effectiveness. This is also why we in this report contrast
traditional functional efficiency improvements with the
introductions of an new relational arrangements logics for the
Swedish health service.
Specialities are becoming more differentiated and new relations
between specialities and between system and patient have to be
developed to make resources effective in use. Despite health care
being largely a heterogeneous activity, it is administrated by
uniform approaches and methods. The hierarchical structure has
been characteristic of public sector activities under the folkhem
concept, a euphemism for Sweden's womb-to-tomb welfare state,
where it was a case of creating equal social security for all.
This clashes with a concept of differentiated or individualized
service. Clegg (1991), meant that we today are experiencing a
trend towards post-modern perspectives where the organization of
activities no longer can be based on only one dominating
principle, being the case in for instance bureaucracies.
Following such lines of thinking the rationalization has to be
accompanied by recognition of heterogenity and contextual natural
relations and value chains. The traditional organizational
approach has its roots in positivism and functionalism while the
challenging approach is more based upon inter-subjectivism and
relationism. From there conceptualizations of health service
values and differentiated system dimensions can be approached in
contrast to seeing an established system as the departure point
for approaching changing expectations.
Day to day to life concerns operating decisions and, quite
naturally, many such decisions are made in the Swedish healthcare
of today. However, also the number of strategic development
decisions taken in healthcare during recent years is impressive.
By strategic development we mean large all-embracing changes
which affect the basic structure of the organizations.
The impressive number of strategic changes is perhaps in itself a
measure of the value of the rejuvenation requirements existing
within Swedish healthcare, just as well as it occurs in other
countries (Forunier 1992, Marszalek-Gaucher 1990, Riddell 1992).
Of cource it can always be discussed what is strategic
developments and how strategy and structure is percieved by
different interest group and actors. In the former stable
environment strategy was linked to long-term planning procedures.
Later on the perception changed towards visions and measures to
achieve stability in a changing world. Today it seems that, due
to unpredictability in the environment, major measures in the
direction of flexible specialization (Piore and Sabel 1984) and
extensive use of external partnerships are coming into focus we
we identify strategic developments.
We have selected the following measures as strategic. This list
is based upon material from county councils, daily newspapers and
publications from the Federation of Swedish County Councils.
County Councils in change 1990, and interviews and discussions
with representatives of healthcare.
1. Performance-related reimbursement to units
Reimbursements are paid for the specified services that
different units produce instead of through fixed allocations.
Tariff setting is done, for instance, through DRG
(Diagnosis-Related Grouping) systems. A system for cost
calculation which allows the cost of a certain healthcare
performance to be related to an average value.
In the Bohus County Council, a computer-based system for the
tariff setting of services, known as Transition, is being
developed.
2. Purchasing-selling systems
An area or a unit is given financial responsibility, and must
also pay the costs of healthcare or services purchased from other
units or areas.
3. Performance units
Certain service units are being converted into performance
units which in some cases also entails the recreation of some
units as companies (such as, for example, real estate companies).
Thus, a balance sheet is created within the performance unit.
Most usually, however, it would seem to be that only one income
statement is produced for the unit's costs and revenues.
Through a DRG system, for instance, a performance unit can be
paid in arrears for its performance.
4. New forms of activity :
Inside contracting
In principle a limited contracting out, but which primarily
means, however, that the trusteeship, eg the hiring of staff,
remains within the county council, but that inside contractors
have in practice an extensive responsibility for the running.
Co-operatives
New forms of organization are being tested, eg in the form of
co-operatives. Staff co-operatives are to be found here, but user
co-operatives are also being developed.
Outside contracting
Units are put out to private outside contractors, eg clinics.
5. Population-based
Distribution of resources
A new way of distributing resources. Allocations are
calculated in accordance with the consumption requirement within
a specified area and not, as previously, in accordance with the
production capacity of the healthcare. The idea has been
expressed as a way of bringing the county councils from planned
economies to market-governed systems.
6. The municipality as a basis for division
In several county councils, new parliamentary organizational
structures are being linked, not in accordance with the
traditional boundaries of the county councils rather in
accordance with municipal boundaries. This will lead to a more
decentralized administration, a coming closer together of the
political leadership and the public responsibility. (The legal
responsibility of the clinical healthcare service to plan
healthcare based upon the needs of the public.)
Clinical healthcare and municipal boundaries are thereby placed
on an equal footing.
7. The Care of the Elderly Reform and the municipalities
The municipalities will be assuming the responsibility for
the running of, among other things, nursing homes, group
dwellings and day centres.
8. Healthcare without borders
Is now being introduced on a wide front. From the Federation
of County Councils, this has been claimed as something to be
pursued.
9. Development from specialized healthcare to joint wards
Examples are general surgical wards which have been developed
into a joint ward where patients with medical, urinological and
general surgical illnesses are treated.
Departments for internal medicine, general surgery, urinology,
orthopedics, gynecology, general medicine and emergencies have
been coordinated into a joint department.
The endeavour is that the patient, as far as possible, will be
treated by different specialists in one and the same unit instead
of being moved around between different specialists and
functions. Improved acquisition of know-how, increased
flexibility and co-planning gains are other aims.
Beds common to the surgical, orthopedic, gynecological and
urinological clinics.
10. The family doctor system
Doctors are attached to a fixed patient group. In principle,
all citizens will meet the same doctor when visiting surgeries
and clinics. This reform is expected to increase the relational
values between patient and doctor.
The strategic changes have entailed increased external
purchasing. We lack, however, a collective assessment of the
rationalization effects of this. In an article concerning the
United Kingdom, it is claimed that, among other things; "The
purchasing of services within the healthcare sector is estimated
to have saved [[sterling]]50m per annum, of which approximately
[[sterling]]30m was achieved by the in-house administration being
forced to be become more efficient as a consequence of
competition." (The Co-operative Institute 1990).
Some of the above mentioned changes have been met by heavy
critisism. Conflicts in change processes can often be traced to
defences in the former system, uncertanties and a general
tendency to use generalized organizational solutions regardless
of differences in nature of problems. As several of the mentioned
changes are just introuced it is impossible at present to
evaluate them. However, they can more or less be allocated to the
relation or function perspectives focused on in this report and
to tendencies to increase or decrease the hierarchical
integration in the Swedish health care system.
In the following we will use the above mentioned measures as a
background for an analyze if the measures can be judged as
rearrangments of the past functional logics or desintegrations
from internal hierarchies toward external contracting in loosely
coupled reelations in networks.
The hitherto solidly integrated and hierarchical form being
worked under today can be contrasted with loosely connected
network forms kept together by different forms of collaboration
construction based upon selective integration. In the
hierarchical structure we see the highly efficient and
independent profession in the center of the work process while we
in the network perspective see contextual clusters of relations.
Networks based on selective integration can be a strategic
perspective for scrutinizing a range of the problems that
healthcare has, eg municipalization of clinical healthcare,
healthcare without borders, etc. In loosely connected
collaboration forms, heterogeneity is recognized as a departure
point for collaboration (Håkansson 1990). Also, network
partnerships are regarded means oriented arenas where sharing of
aspirations, intentions or goals may result in mergers but also
where dynamics are fostered by the partners different objectives.
In the report, we describe an ideal model for networks, related
to a value-added chain, and apply the model to the situation and
growth trend of Swedish healthcare. The empirical background to
this healthcare structure is primarily a study that the authors
recently conducted within the Östergötland County Council
(Jobring /Larsson 1993).
By networks, we mean different contractual forms between
specialized, detached functions with the aim of achieving
rationalization through parallelization and direct connection of
streams instead of in sequential streams. In an hierarchy the
coordination of two or more functions is handled sequentially
through a superior level. In market structures the sequentiallity
is the result of no coordination at all. In the network
coordinations is handled through direrct parallelization of
certain functions in a process. Such collaborations can have a
semi-hierarchical character, ie one of the units participating in
the network dominates the coordination, or can be more mutually
dependent on power balances and the aim of the coordination.
Seen from a certain organization's perspective, networking deals
with mastering external relations and thereby the specialization
of its in-house know-how. The issue has, during recent years,
increased dramatically in interest through the environment having
become increasingly unsettled, complex and unpredictable. At the
same time, greatly improved information technology has enabled
the external organization of networks in cases previously
directed towards intra-organizational governance. Through
network-oriented contractual collaboration, services can be
differentiated and individualized without increasing coordination
costs, since the coordination is selective.
The model we use to describe healthcare networks consists of a
number of related concepts which together create a logic. Our
attempt is however tentative and there is a great need for dialog
with research fellows and actors in the health service in order
to develop things further. One departure point is that in a unit,
the core tasks are focused upon and the supplementary details, in
connections ever looser with the more peripheral, in various
ways, the task becomes, are contracted out. Another departure
point is that a multidimensional view of structure and governance
is necessary, since the coordination deals with different
resource bases, specific connections and non-homogeneous
operations. The focus of the analysis, thus, lies in the
uniqueness that unites these factors into a network arena.
The dialog is central to the development of new know-how. The
idea behind this report is to critically scrutinize where the
organization is going, hopefully elicit reactions and go on. In
order to make the departure point for the dialog concrete, we
have differentiated between a functional perspective and
relational perspective of the ongoing rationalization of Swedish
healthcare. The former represents measures based upon the
established basic values with activities at the centre while the
latter is based upon more post-modernistic values with the
client/patient relation at the centre.
Working with internal hierarchies or disintegrated forms
basically deals with different basic perspectives, which have
above been juxtaposed as rearrangements of the past or creation
of new realtions. We have also refered to eventual general
tendencies from perceptions of values in modernistic versus
post-modernistic rationalities. We make the ideas concrete by
differentiating between organizing relations from the
client/patient into an organization, which we see as embryos to
changed basic logics, and organizing functions from the
existing organization out towards patients and partners, which we
see as a continuation of established logics.
Organizing functions is an expression for an integration
perspective. Control of the efficiency of the production process
is important in this perspective, since it is the splendour of
the product that is to convince the customer of its usefulness.
Uncertainties in the processing chain are reduced in different
ways and thereby the prerequisites for optimizing and
rationalizing activities are created and the customer is induced
to adapt to it.
If there is an organize functions perspective, then the
representatives of the organization regard themselves as experts
and offer services; "we offer them a product". Their
relation with the market and suppliers is an us and them one.
Central concepts for the integrator are ones like crowded sectors
in the processing chain, production bottle-necks, volume,
economies of scale, percentage allowances to cover fixed costs or
performance-related reimbursement and rationalization of the
processing chain through making processes uniform. Variations in
demand, healthcare without borders and patient input are regarded
as interfering with efficiency.
During the 40s, 50s and 60s, it was a case of building up,
through expansion, a healthcare service which would be able to
meet the demands for an equal and quantitatively comprehensive
healthcare service for all. The solution to the problems existing
in society was large scale and centralization. The environment
was relatively stable and, over and above all else, it was
considered predictable. Prognostications and assumptions had a
relatively high reliability. As the environment was characterized
by predictability, stability and growth in a continually
increasing demand, the perspectives became institutionalized
into; "we organize for them".
Today, the allocation of funds to the public sector is falling,
as opposed to previously when it was rising. Growth in the
economy is close to or under zero. The turbulence in society has
increased and the stability, and with it the predictability, has
fallen. We are getting a continuous process in which the players
are seeking various predictable and discernible lines of
development along which they can manage the reality. In the lack
of alternative success models, this will lead to a cheese paring
style of rationalization in a continuous and organizationally
confused process of change.
In pace with technology etc providing more and more
specialization and the striving for differentiated social
intercourse with patients and between institutions, it will be
important to organize relations rather than functions. Organizing
relations, in the Swedish healthcare structure, is equal to
having a disintegration perspective. For those working with the
disintegration perspective, new concepts are prestige words for
the activities: link or bind the supplier to the activity.
Long-term and lasting relations, mutuality and confidence between
the partners as well as flexible and dynamic structures.
In a differentiated and complex development, it becomes more
important to meet service requirements to find and communicate an
effective relation oriented concept than to focus on streamlining
a function. If we have a relation perspective, we start
out from the demands of our environment and work our way in
towards the core and the functions of the organization. If we
have a function perspective, our departure point is the
functions and keeping the core itself in focus in order to
understand the organization and we work our way outwards towards
relations. In principle, in a relation perspective the function
is depending on the relation. In a function perspective it is the
way around. So, in the relation oriented perspective service is a
shared relation and process between two partners such as a
supplier and a customer while from a function oriented
perspective service can be seen as a result of specialization and
profession.
The function-oriented outlook shows itself in, among other
places, how the quality of healthcare is assessed. Quality has
traditionally been defined in input criteria, such as the
approval of pharmaceuticals, the authorization of professional
healthcare categories, etc. The Bohus County Council, however,
has recently tried to establish a more relation-oriented quality
consciousness. A care event has been defined as a patient-related
stream in a treatment situation. Within the care event,
beneficial quality (determinable return from the treatment),
experienced quality (patient preferences) and organizational
quality (the organization's image, etc) have then been defined.
The experiences from the trial, however, showed that it was
difficult to reconcile the staff's understanding of quality
(based upon a function outlook) with the stream-oriented
information (based upon a relation outlook).
The development of new forms of organization in the form of
networks has primarily attracted attention in conjunction with
corporate development in the private business sector. The reason
for this is that factors such as the increased complexity of
service requirements, globalization and turbulence in the
corporate environment are coercing new organizational solutions.
Incongruities between the old organization and the new
environment have arisen as a consequence of the environment's
having changed, thus entailing new and increasingly palpable
provisions. Barreyre (1988) discerns six different imperatives,
as they are known, which put demands on the organizational
development:
1. Accelerating technological change and shorter product
life-spans are increasing the demands on capital and know-how.
2. Discontinuities are accentuating the demand for organizational
flexibility in the short-term and strategic mobility in the
long-term.
3. Difficulties in retaining a satisfactory yield in a world
context characterized by crises.
4. Increasing complexity through a multiplicity of products and
large variations between the processes needed to produce each
separate part.
5. An increasing number of laws, regulations and ordinances which
constitute social limitations for companies in the West.
6. Intensified worldwide competition which is both the cause and
the effect of corporate efforts to obtain increased productivity
through economies of scale.
Company and activity are thus concepts which have recently
undergone change and obtained a new meaning. The local company
has developed symbiotically with worldwide organizations.
Activities can no longer be analyzed in isolation in-house,
instead more often being seen more as a function of a larger
external context. Thus, the old industrial concept is
anachronistic, exclaims Skinner (1978), for two reasons: 1) Its
management concept are outdated, focusing on cost and efficiency
instead of strategy and on making piecemeal changes instead of
changes that span and link the entire system. 2) Its
infrastructure contains such conflict and paradox that the
expectations and desires of its people are too often incongruent
with the imperatives of its technology, the demands of its
markets and strategies of its managers.
Traditional borders are erased and demands are placed on the
rejuvenation of management and organization design where the
coordination capability is an important ingredient. The
capability of organizations to control and govern external
resources thus becomes an increasingly decisive factor for their
expansive ability or potential to react to changes in their
environment.
If the production chain is seen as a manufacturing process, it
will also be developed more and more downstream towards
the customer/client and the market. Customer-oriented companies
are becoming increasingly dependent on external contacts and less
and less on real resources (Larsson 1989). They tend,
consequently, to develop complicated networks in order to bind
their own know-how with regard to customers and customer contacts
to the trailing stages of the manufacturing process (Norén,
1990). As the relation with the client/customer is seen as a
future cramped resource, customer-dependence will thus be the
strategic device around which resources are grouped.
Strategic organizational development can, in principle, take
place in two different ways; through integration, such as
mergers, corporate acquisitions or wholly-owned subsidiaries, or
through disintegration, ie the transition to loose
connections in different forms of network such as joint-ventures,
license agreements, contract forms, franchising, etc. Since
Swedish healthcare is strongly integrated, our main interest is
disintegration in order to enable the differentiation of
relations.
Barreyre (1988) described networks in a business trend he
designated impartition. It was defined thus:
"An entrepreneurial behaviour which consists of casting
other firms (partners) for different parts of its overall system
of activities. A firm imparts when, in order to allocate its own
resources to activities more congruent with its strategic
objectives, it contracts out instead of doing in-house."
Barreyre (1988, p.507)
An organization imparts when it chooses between doing a job
in-house or contracting it out. Impartition also entails a number
of long-term consequences for companies. It affects, for
instance, a company's capital restriction, as the company isn't
itself responsible for the necessary investment, leading to
consequences for the organization's production, organizational
and management structures.
In the strategic instructions for a company, it can thus be
stipulated, for example, "contract out, unless....",
entailing a direction to develop external relations in the
working process as soon as an analysis shows that a relation
investment is a feasible alternative to in-house resource
investment (Larsson 1993).
An organization working with an impartition policy, should
accordingly in our opinion with time develop to an increasingly
open system. The organization should become flexible instead of
rigid. The organizational structure is simplified, to a great
extent, to contract relations. Impartition can be expected to
lead to a more innovative management in relation to the
environment, a better feeling and sensitivity to changes in the
environment since there is more intensive interaction externally.
Impartition increases the ability to differentiate and develop
the organization with an increasingly complex and changeable
environment at hand, since there isn't such large in-house
manoeuvre inertia in resource restrictions.
According to Miles and Snow (1986), many organizations will in
the future be organized in accordance with concepts which can be
referred to vertical disintegration, networks interwoven by
internal and external agents, interactive communication systems
and the market substitute for administrative techniques. The
interplay between companies they designate dynamic networks by
which they mean a network where decisive components can be linked
and changed flexibly with the aim of meeting complex and changing
structures. They regard the most important ingredients in the new
situation as being:
Agents: Business: functions are linked by an agent, ie
someone who takes on a coordinating function. The agent's
significance varies from occasion to occasion.
Market mechanisms: The main functions are held together by
market mechanisms rather than plans and governance devices.
Contracts and payments for results are used in preference to
operational reports.
Developed information systems: Communication takes place
through interactive computer communication, giving simultaneous
and immediate results.
Each part of the network, each function, is required to
contribute with its specific know-how. Miles and Snow claim that
a successful organization's requirements for innovation and
efficiency can be met and organized through different units which
contribute with complementary endeavours. They are based upon
separate strategies with disparate, primary and distinctly
formulated know-how.
Thus, the know-how in the network is supplementary rather than
competitive. This supplementing means that, through the network,
complex situations and rapid changes can be met. The choice of
know-how takes care of itself, there exists an implicit
dependence-relationship between the various functions.
Disintegration as a strategy for change will not, however, be
valid until the disintegrating organization creates the
prerequisites for effectively governing external potentials and
synergies. Disintegration is a development strategy which is
learnt and which should permeate the organization over a long
period of time. This is not a question of short-term cost cutting
campaigns or simplified commissioner-manufacturer models.
Barreyre (1988) shows that impartition is a development strategy
which is closely associated with the organization's know-how, its
experience or, if you like, its life-style. Perhaps the most
important point is that disintegration is a form of conduct, an
attitude towards the manner of organizing the activities.
Specialization always means delimitation vis-a-vis other areas
of specialization or consumption. If the content of a relation
between two partners is unequivocal, as with regard to, for
instance, standardized goods and services, it can be described as
transaction-oriented behaviour. This means that utilities are
exchanged while in less specialized and not as unequivocal
contexts utilities are shared or assistance is rendered. In the
former case, the financial transaction is at the centre while in
the latter, it is the social communion.
A surgery clinic may, for example, act towards its environment
with a transaction-oriented perspective, since it works with well
delimited know-how, technically determinable method and
short-term relation with the client. Within the field of care for
elderly people, a completely different perspective on relations
is of course necessary, since a long-term social communion
between healthcare actors and patient is being striven after. The
entire healthcare organization can be seen as a conceptual
interface between financial, organizational and sociological
theories. In healthcare, the know-how and client relations of
different clinics is an expression of such different
constellations (Lindkvist/Cederholm 1992).
The transaction cost theory for social intercourse between
partners on a market has, for a long time, been a lodestar for
how organizations come about and change (Coase 1937, Williamsson
1975). The focal point of the theory lies in the cost of social
intercourse, but it also has a one dimensional departure point
instead of, in a differentiated market structure, having to have
different explanations of why and how relations are organized
with, among other things, sociological instead of financial
departure points.
In the transaction theory, resources are transaction-specific, eg
in equipment, situation, customer or know-how. In order to be
able to work efficiently, companies adapt, according to that
model, to one another in a processing chain. The
transaction-specificity increases through specialization and a
more continual relation is obtained, which under the stable
conditions prevailing previously, has favoured a hierarchical
order. Highly integrated relations are assumed to entail low
transaction costs as the transaction takes place within one and
the same organization. At the same time, however, administrative
costs and regulations increase in conjunction with the
integration, the forming of standards etc creates rigidity.
What is missing in the transaction cost theory, when a relation
perspective is discussed, is its frontage, ie the value of social
intercourse. In this case, we prefer to talk of interactions
instead of transactions. Here it will not be a question of the
exchanges from various transactions between partners, rather of
the value of the long-term dynamic and socially oriented
intercourse. The focal point will not then lie in each respective
work unit, but on the transformation of value in the relation
between the units of the partnership or what Barreyre (1988)
called impartition processes. It has also become increasingly
popular to define an organization's task as "creating value
for its customers". Companies are being described more and
more as value supply systems (Bengtsson/Skärvad 1993).
Value creation can be seen as an interactive process in a
transformation in a shared process between two or more partners
while in the transaction cost theory, relations are reduced to
transfers and value creation is a function`s internal matter. We
can thus say that, in all organizing over longer periods, there
is a struggle between what it costs to have social intercourse
and what is obtained from it in the long or the short-term, which
in healthcare can't be solved generally, rather only through an
assumption of heterogeneity that each relation is in principle
unique (Håkansson 1990). Thus, values in health care services is
generated both as competences within functions and in relational
developments between functions. Generally speaking, a
transactional approach can be effective when the service product
is well defined and does not require long-term relations while
many health care processes are socially oriented and a relational
approach is more natural as the basis for organizing functions.
When an organization is facing a strategic reorganization
problem, it is forced to make conscious a concept which will be
able to carry the activities further. It also has to be made
concrete in system terms in order that the organization's own
resources can be concentrated on the most important parts and can
collaborate with external resources on supplementary system
components. Further, it must be made clear how different
equipment, services etc will be integrated into the in-house
system. External partners divide networks into various functions
like logistics, production, distribution and purchasing with
varying degrees of mutual adaptation. Each partner invests in the
network with the particular and unique know-how or resource that
the network demands.
When an operation is analyzed in a network dimension, things like
efficiency, quality etc are assessed in different characteristics
throughout the entire processing chain. In the current systems,
representatives for the areas of activity tend to delimit
efficiency assessments solely to the individual healthcare
functions.
In-house endeavours tend, in network organizing, to become an
ever smaller part of the whole. It can be said that work is done
partly in parallel between functions instead of sequentially.
The network consists of, in principle, know-how resources, units
and various forms of link (contracts) between the resources. The
services in the network come from different directions and are
united in a composite healthcare performance. In order to work
with these forms, a public market principle is necessary which
supplements or replaces current cost-based performance-related
reimbursement.
The tentative model that we are outlining for network organizing
thus builds upon, among others, the following basic assumptions:
* Multiplicity of types of activity
* Competition and collaboration on resources and know-how
between organizations
* Flexibility through coordinating specialized partners
* Products are defined as a customer performance instead
of a physical product or service
* Specialization takes place within detached or partly
integrated units
* Leadership and well-developed social interactions will
carry, in the majority of service fields, the activity's specific
nature
* Social intercourse between customers and suppliers will be
characterized by long-term trustful interactions
Some central concepts for describing the quality of service,
based upon a network perspective, are as follows:
Healthcare concept
Different performance criteria expressed in the subjectively
experienced and communicated benefit of the interaction in the
healthcare chain.
Healthcare system
The combination of different services into a functioning
operation.
Clinical healthcare services
Denote components such as doctor input, technical aids, etc. The
performance we are assessing here is the efficiency in the
utilization of the available concrete production components.
The factors of the concept offered as a form of social
intercourse must qualitatively balance with the system quality
offered in the working process. In the daily social intercourse,
it is the carrying out of the concrete services by the healthcare
staff which mirrors all dimensions. On a "service
plattform" several dimensions such as image, service
defslivery system, cultural aspects etc. form a "total
service performance".
With a focal function at the centre, there will be an
increasingly more loosely linked collaboration from the centre to
the periphery, depending on the opportunities for standardized
intercourse. Doing is related to the internal structure, ie a
traditional command structure. Contracting out can be compared to
a federal negotiating system. This builds upon mutuality, with
regard to both values and financial benefit. Purchasing is
referred to competition systems. Here, a service is purchased in
the form of a finished customer concept or physical product.
THE SWEDISH HEALTH SERVICE DEVELOPMENT DIRECTIONS
The concept pair Relation/Function perspectives and Integrated/Network
organized can form the basis for a preliminary analysis of the
strategic development of Swedish healthcare. The concept pair can
be illustrated as follows:
Figure 1: The strategic compass of healthcare?
What we mean by relation and function orientation has been
described above. In an "integrated" structure we see
the hierarchical form as the basis for coordination. In the
"network organized" strfucture we identify more market
oriented and loosely coupled arrangements in a wide scale from
semi-hierarchies to almost open markets. We could also have this
dimension as a scale from centralized to decentralized control.
The various compass points represent four totally different forms
of strategic development. The behaviors in the different
development directions can also be attributed metaphoricly in
order to clearify the way we see them. In their pure forms, they
have the following significance:
Healthcare in the North West - The "clan"
The "clan" is the extrovert organization based on
environmental exchange. The North West healthcare organization is
a characteristically integrated organization. Activities are
governed by plans and budget directives. The basis for the
decisions is a patient-oriented ambition. In various ways, using
different techniques, through systematized experience and
enquiries, the health care requirement of different physical
areas is determined, whereupon decisions are made regarding the
allocation of resources and the operation and development of the
organization.
The North West is, in other words, a very market-sensitive and
alert hierarchical organization. Many have tried to create an
organization like this, but the question is whether it will ever
succeed.
Healthcare in the North East - The "sect"
The "sect" is the introvert organization based on
institutionalized beliefs. Healthcare in the North East is
characterized by an extensively integrated structure whose
healthcare services are offered to the market on the basis of the
resources and know-how existing within the organization and with
political governance. The salient organizational concept within
Swedish healthcare has, for several decades, been this integrated
and uniform organization. The objective has been to achieve
economies of scale through the planned coordination of various
activities. The characteristic feature is a functional division
into departments, clinics and hospitals within the framework of
an administrative superstructure.
In the extreme case, there exists in this model no link between
healthcare requirements and supply. Here we again find classical
problems which have often been attributed to planned economies
with production problems, where production is more likely to be
governed by the flow of materials and access to resources than
the needs of people. Based upon various themes, a debate on
healthcare is under way in which it is asserted that the range of
services in Swedish healthcare is governed by technical
production interests rather than actual needs among the
population. Some years ago, the National Accounting and Audit
Bureau presented a report in which it was asserted that the
investment in specialist care in the county councils is in no way
proportional to the investment in clinical healthcare, from the
point of view of needs (Dagens Nyheter 1991-03-15).
Swedish healthcare organizational compass could generally
speaking at present be pointing somewhere between the North East
and the North West wisth a pressure from both directions to
change course.
Healthcare in the South West- The "friends"
"Friends" come and go. Friendships are enriched by
differencens as well as by similarities. Healthcare in the South
West is, in its extreme form, utterly related to parallelization
of processes and interactional behavior betwen system and
patient. It is characterized by a completely free right of
establishment; anyone at any time can establish healthcare units.
As long as the patients come to the units, revenues are also
generated since this healthcare is financed via private insurance
systems. The US is probably the country whose healthcare system
most resembles that of the South West. However, the misfits in
the US system does not nessessarily mean that we would face the
same problems should this organizational tendency appear i Sweden
as legal systems etc. are quite different.
Healthcare in the South East - The "gang"
The social control in "gangs" is strict and under the
control of the gang leader. Group pressures are heavy. Healthcare
in the South East is characterized by its activities being
conducted by detached units but being governed and controlled by
an organization where someone else, eg central levels, decides
which type of healthcare is to be conducted and in which way it
will take place. In other words, it is not a market-oriented
healthcare service in the sense characterizing healthcare in the
South West - the operator doesn't have the opportunity to
influence the forming or the direction of the healthcare
personally.
Even if we don't exactly have any healthcare, beknown to us, that
is organized in the same way that can occur in the South East,
this is not an uncommon form in business. Different concepts,
such as franchising etc, where the forming of the product, as
well as the way in which it is produced and sold, is carefully
detailed and determined. The independent salesperson of the
product is firmly tied to the concept and cannot make
modifications, with regard to local market conditions,
personally.
With a certain arbitrariness and with a certain propensity for
generalization, the various development measures can be located
in the above compass.
A: Healthcare towards the "gang" structure
The largest portion of strategic organizational changes can, in
our opinion, be attributed to measures that shift healthcare
towards the South East. To this group belong performance-related
reimbursements to units, purchasing-selling systems of different
kinds, the development of performance units and different forms
of new and alternative activities.
In the debate, and in the healthcare organizations' own journals,
measures like these are often put forward as a move closer to the
South West rather than the South East, that the measures are a
way, to a greater degree than previously, of market-orienting
healthcare. A great deal of money was also invested in the field
the development of alternative forms of activity in, eg the
Stockholm and Älvsborg County Councils.
It can however be questioned whether it is a step towards network
orientation or not. Irrespective of whether a clinic is run
privately, co-operatively or internally, the form is no guarantee
that the content will change. If the conditions for governance
are identical, then the healthcare content will probably be
unchanged too. Thus it is not self-evident that a private clinic
will be experienced differently by the patient than a county
council run clinic. In several of the examples of outside
contracting analyzed, the frameworks are so specified and the
conditions so exact that a decentralizing of the activities can
be spoken of, per se, but not really of going towards a
market-oriented organization of activities (Jobring et al 1993).
There exist here, however, differences between different types, a
scale going from the performance unit to the individual
contractor. The scale shows a tendency, an opening towards the
market, when a competition condition is introduced between
different contractors. This can open the way for new forms of
healthcare and the activity thus being formed, to a greater
degree, based upon the needs of the patient than based upon
system requirements.
B: Healthcare towards the "clan" structure
The second development tendency that we are able to discern is
strategic developments, which move the healthcare organization
closer to the North West. To this group belong measures such as
the introduction of a population-based distribution of resources,
developing the municipality as a basis for division of healthcare
activities, The Care of the Elderly Reform and the formation of
umbrella County Council Region Associations.
The changes aim to improve the ability of integrated healthcare
to meet and detect the needs of the customers/patients. The aim
is that the organization will move closer to the people and
strengthen the politicians. That the municipalities are assuming
the operational responsibility, as well as a population-based
distribution of resources, decisions which are strategic, to the
extent that they change the organizational structure, but not
necessarily the content or form of the governance. They do not
however necessarily change the integrated organizational
structure and its management philosophy.
C: Healthcare towards the "friendship" structure
The third and concluding development tendency is measures which
entail that the organization strives from the North East to the
South West, a striving to organize activities together with the
demands of the partner or the patients towards the core activity
in the specific function. To this we with some hesitation may
attach the measures healthcare without borders, development from
specialized healthcare to common healthcare departments and the
family doctor system.
These examples may be a steps towards the loosly coupled systems
we identify as networks as they are not just a change in the
forms of technical administration but real changes based upon the
view that the consumer/patient is central to the organizing of
healthcare.
Much, however, points to the fact that the organizing of
healthcare today is done in a traditional way, which means
forward towards the patient from the system requirements and
instead of, which can sometimes be the impression one gets from
the debate, an integration backwards from the demands of the
patient into the technical systems. It is rather a question of
evolutionary development than radical change.
THE CHANGE PROCESS
After having gone through the organizational changes that
healthcare has undergone during recent years, the lasting
impression is that the majority of these changes are based upon
the traditional working perspective and are more likely to be
based upon internal demands for change than on new and
differentiated patient and collaboration relations. Such
recreating measures have been, for example, contracting
activities out while at the same time the contractor's scope of
action to work in accordance with his/her own prerequisites has
been powerfully restricted and regulated in detail.
Contracting activities out and then governing in the traditional
way, sequentially and cost-oriented, means that contracts become
long-winded and that the rationalization potential which exists
in utilizing the partner's unique capability is not made use of.
It would also seem that considerable observation rights and
specified reporting requirements were demanded from the
manufacturer to the commissioner at the cost of result
evaluation. Coordination takes place, as previously, at central
planning levels regardless of whether the units are operated
under private, municipal or state direction.
The expressed striving for decentralization and multiplicity has,
in practice, been in the opposite relationship with unchanged
forms of management. The measures mentioned earlier are a step in
the direction of a disintegrated form of the healt care
organization, but has been introduced as a homogeneous concept
instead of emphasizing the differences in the healthcare system
and the contract situations. The homogeneous models for
introducing such an organization into municipalities and county
councils thus suffer from the defect that they are homogeneous
and that the rapid coverage of many functions at once is being
striven after. Contract relations are instead built up over long
periods of time and are dynamic. It cannot be expected that a
market of manufacturers will spring up overnight, providing the
commissioner with choice. The demand for efficiency and cost
rationalization is, furthermore, being focused upon individual
units instead of upon natural streams and processes, creating a
retention of the hierarchical principles.
A series of new forms of activity have come about within health
care. Performance units, outside contractors, inside contractors
came about to create competition and multiplicity, commitment and
efficiency. Staff and contractors were approached and offered the
running of the activities. Tenders were solicited from healthcare
units and contracts were developed. All these measures have been
carried out within the framework of centralized resources and
control systems. Thus, the healthcare apparatus is still
basically a professional bureaucracy (Mintzberg 1983). Network
organization is thus being approached backwards, so to speak, by
recreating what exists instead of finding genuinely new outlooks
on governance. The first step was putting rationalization demands
on the units instead of identifying natural and different
streams. In this way, cost cuts are certainly obtained but the
service is hardly better.
Thus, when new organizational structures are introduced, the
natural procedure is, with a rational outlook, to begin with the
strategic exterior of the organization, then methodically tying
up the forms of operation. Within healthcare, much has been done
vice versa. The first step was alternative forms of operation but
without the connections with the strategic requirements for
differentiated service. The lack of a clearly articulated
direction within the organization has thus impeded the
opportunities for implementing the shaping of a new organization.
The very prerequisite and departure point for organizing a
network is primarily having an insight into what the market
demands, doing an analysis of how to concentrate the in-house
activities in order to later seek solutions of how to link up
units and outside contracting to the activities. Clearly, such
questions have seldom or never been asked. Knowledge of how to,
for example, create relations, new concepts and link partners has
not been built up during the development phases and has not been
evaluated in subsequent phases of reorganization attempts.
In processes of change, representatives for, and investments in,
the existing healthcare organizations are thus often obstacles to
rejuvenation. They constitute a defence for know-how and security
in the lasting and familiar system, as opposed to the new and
unfamiliar. Behind every organization, there always exist more or
less conscious outlooks and strategies that are formed in
accordance with the values and social prerequisites of a certain
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