INTRODUCTION

Health service management is a profession that has changed substantially over past decades. In both the public and private health care sectors changing health care policy, legislation and regulation, industrial relations and reimbursement practices challenge the skills of health service managers. Often considered as ‘behind the scenes’ or ‘hidden’ professionals in the health care industry, the role of health service managers is not well understood, nor even accepted by other health professionals. Health service managers are collectively referred to as health executives, administrators, coordinators or managers and many continue dual functions as both clinicians and managers. Despite this lack of clarity health service managers provide critical functions for the delivery of health care and exert influence over the operations of health service organisations, and ultimately the health care system of which they are part (Palmer & Short 2000).

This chapter begins with a short history of health service management that has led to the current definition of a health service manager and the contexts within which these managers work. Understanding our history gives new insights that help us to build upon the past rather than re-invent it. The next section provides an abridged discussion of some of the management theories and concepts that underpin the practice of health service management. The chapter closes with an exploration of the possible future expectations for health service managers.

WHO IS A HEALTH SERVICE MANAGER?

As outlined in Chapter 1, there are many definitions of management. Many make reference to planning, organising, leading, supervising, controlling, coordinating or evaluating the work of others to achieve defined goals (Fayol 1916, Fulop et al 1992) and the skills required of managers have been described as those associated with planning (defining objectives and strategies), organising (designing job descriptions, rosters etc), leading (motivating people) and controlling (measuring and assessing costs of production, worker productivity and product quality) (Stoner et al 1985). Generally managers are accountable for the work of others and are required to set goals, make decisions, allocate resources and organise people to achieve the goals of the organisation (Follette 1918, Mintzberg et al 2003). Over the years there has been debate as to whether health service management is different; that is, whether the nature of health care requires the managers to possess skills, knowledge or attitudes that are different from managers in other industries. One side of the debate suggests that the management requirements are the same across all industries; they are just applied in a different context. All professionals are notoriously difficult to manage and doctors and nurses are no different than engineers and lawyers (Braithwaite 2004, Degeling 2000). The other side maintains that the nature of health care — with pluralistic management and clinical hierarchies, service complexity that is difficult to measure and providers that can create their own demand for services — requires different skills for health service managers. See what you think as you read this chapter.

In most countries there is no clear pathway to health service management. Professionals with clinical qualifications, such as medicine, nursing and the allied health disciplines, as well as those with formal qualifications in business (such as an MBA), hospital, health (MHA) or public administration (MPA) all work successfully as health service managers. The knowledge, skills and competencies found in these disciplines provide a rich foundation for shared leadership and collaboration. The multiplicity of backgrounds and career paths recognise, if not promote, multiple contributions and perspectives.

Unlike most other professional groups, such as law, accounting, medicine or nursing, there is no registration or licensing requirement for management in general, and health service management in particular. In Australia and New Zealand health service managers derive certification, professional support and continuing education from professional colleges, such as the Australian College of Health Service Executives, the Royal Australian College of Medical Administrators and the New Zealand Institute of Health Management. The tertiary qualifications in health service management required for standing in the colleges are achieved through university member programs of the Society for Health Administration Programs in Education. Unlike managers in other industries whose continuing education and leadership development is frequently funded by their employing organisation, the health sector has for the most part relied upon individuals pursuing their continuing education through professional associations or self-funded postgraduate studies. In health the resources available for professional development are limited and the business concept of ‘identifying a promising young executive and providing him or her with extensive development opportunities [as happens in other industries] is foreign to many healthcare institutions’ (Stefl 2003, p 60).

Health service managers tend to work in hierarchical structures, remnants of the early influence of military organisation. At the top of the management hierarchy the most senior manager, variously referred to as Chief Executive Officer, President, Executive Director or Managing Director, carries responsibility for the coordination of the activities of the organisation as a whole. First or frontline managers work at a team, service, or unit level, supervising day-to-day work flow. In between the senior and frontline managers, middle managers provide a variety of management functions that tend to evolve to best suit the needs of the organisation, such that there is no generally accepted definition of middle management. Recent organisational restructuring in health care has usually involved a flattening of the organisational hierarchy and a downsizing of the workforce, including the elimination of middle-level health service management positions.

The different levels of health service managers are perceived to require different types of knowledge, skills and attitudes. It has been suggested that frontline and/or entry-level positions rely on technical expertise, middle managers require greater skills in human resource management, and the senior-level roles need greater conceptual skills (Robbins et al 2001). Often the senior roles are thought to focus more on managing organisational adaptation and change, while the junior management levels manage the technical operational aspects of the organisation.

Health service managers can also act as coordinators of defined areas, such as quality improvement, casemix or organisational development, while, increasingly, managers are also working at the interface with other organisations (Australian College of Health Service Executives 1994); for example, as managers of complex contractual arrangements and coordinators of service delivery networks (see Chapters 13 and 14). While the functions of the manager vary according to the sphere of operation, the primary objective of health service managers at all levels remains the same — namely to lead their staff to deliver high-quality, cost-effective services that are responsive to community needs (Capp 2001).

Health service managers work in a wide range of organisations. The Australian Institute of Health and Welfare (AIHW) has defined health services as comprising public hospitals, private hospitals, medical and other health professional services, pharmaceutical services, residential aged care, dental services, and community and public health. In addition, health service managers can be found in international organisations, such as the World Health Organization (WHO), national, state and local health departments and authorities and corporate health and health insurance organisations. The organisational factors that most directly influence the role of health service managers are the organisational ownership, the source and type of organisational funding and the size and complexity of the organisation.

The ultimate measure of the effectiveness of a manager is his or her contribution to organisational performance. Health service managers also tend to have another performance expectation related to improving population health status and addressing health priorities that is not often found in management positions in other industries. As aptly described by Greene, ‘A health services administrator has a noble cause as well: service to community purpose and community need’ (Greene 1986, p 588). Improving organisational performance is covered extensively in Chapter 15. The interview in Box 2.1 elaborates the objectives of the health service manager from the perspective of the chief executive officer (CEO) of one of Australia’s largest aged care organisations.

HISTORY OF HEALTH SERVICE MANAGEMENT

Health service management is a relatively new profession; although some contend that management is not a profession at all — ‘management is not a profession and never has been; pretending it is only trivialises its practice’ (Glouberman & Mintzberg 2001b, p 82). The changes in the ‘professional’ associations in the United Kingdom (UK) parallel the development of health service management. The Hospital Officers Club was first established in 1885 to provide social activities for chief administration officers of London hospitals. Reflecting the evolving role of the health service manager this association was subsequently renamed the Hospital Officers Association, the Institute of Hospital Administrators, the Institute of Health Services Management and finally, in 1999, the Institute of Healthcare Management. The 1920s saw the first defined educational programs established for health service managers. A Diploma of Health Administration was launched in London. A degree program in hospital administration was established in the United States in 1927, but was short lived because of a lack of interest. In 1932 the American Committee on the Costs of Medical Care suggested a need for the administration of hospital and medical centres to be developed as a ‘career which will attract high-grade students’ (American College of Health Care Executives, 2005).

Organisation to support health service management began much later in Australia. In the 1930s annual conferences were held for hospital administrators in New South Wales and Victoria (at that time comprising secretaries, administrators and superintendents) and by the end of the decade there were unincorporated associations of hospital secretaries in both Victoria and NSW. In 1940 and 1941 the Victorian Institute of Hospital Managers and Secretaries and the NSW Institute of Hospital Secretaries were incorporated. Both of these organisations had interests in the development of formal education programs for their members.

In 1942 representatives of these two organisations agreed on a basis of examinations, syllabi and curricula for hospital secretaries and recommended the formation of the Australian Institute of Hospital Administrators, which was eventually incorporated in Canberra in 1945 with 25 inaugural members. A diploma course in Hospital Administration was established by the institute in 1947 on a correspondence basis, with 80 students enrolled in the first year. In 1955 this diploma course was transferred to the newly formed School of Hospital Administration at the University of New South Wales, still maintaining a close relationship with the institute. In 1978 the institute became the Australian College of Health Service Administrators and in 1990 the college became the Australian College of Health Service Executives (ACHSE). By 2005, in its sixtieth year, ACHSE had in excess of 3000 members with branches in all Australian states and territories as well as in New Zealand and Hong Kong (Lawrence 2005).

Until the 1970s, it was the role of the hospital administrator to provide administrative support to the hospital trustees, the matron of the hospital and the medical superintendent. The trustees (who often included senior doctors) made key decisions about the hospital facilities and financial matters and broad clinical directions in consultation with the chairman of the visiting medical staff who commonly attended board meetings. The medical superintendent supervised the junior medical staff and provided operational management of clinical services while the matron supervised the nurses and managed the wards (Mitchell 1977, p 31 et seq.). Although different models evolved in each of the states and dependent on the size of the hospital, the primary role of the administrator was to acquire and account for the utilisation of resources by the health professionals. In 1957 the President of the UK Institute of Hospital Administrators said the ‘… qualities of a good administrator are impartiality, good judgment, courage and kindness, coupled preferably with a sense of humour’ (Institute of Healthcare Management 1999). Administrators paid considerable attention to government or corporate policies but not to changes in the social, political and economic environment, and took few initiatives themselves. The respective roles of the clinician and the administrator were clearly defined.

By the late 1970s hospital care in Australia and New Zealand was seen to be expensive; an increasing burden on the public purse with little demonstrated impact on improving population health. It was also increasingly complex with an expanding range of specialties and laboratories. By the mid 1980s there was also growing public concern about quality of care, including the risk of iatrogenesis (illness caused by treatment). By the late 1980s policy makers were giving greater attention to population health strategies and to cost and quality control measures. These changes resulted in expansion of the role of the health service manager and an attempt to be less reactive and more proactive in developing and communicating organisational objectives and managing complex systems. Some saw these changes solely as ‘legitimising the potential for non-clinical managers to impose managerial criteria on medical decisions in lieu of professional criteria’ (Walker & Morgan 1996, p 32).

The 1990s saw a wave of global changes in public sector management which aimed to improve the efficiency and responsiveness of public services (Pollitt 1995). This managerialism or new public administration fostered a paradigm shift from traditional public administration to management, with a focus on efficiency and performance management, as well as facilitating greater public choice and consumer responsiveness. This change in public sector management was echoed in changes in health service management.

Today in both the public and private sectors health service managers have a broad and complex role. This role includes responsibility for economic efficiency, the direction of the organisation and the quantity and quality of the services provided to patients, families and communities. Managers also have responsibility to advise policy makers or corporate boards of the practical implications of the options available to them, and to foster linkages within the organisation and with other providers to improve the care experience for patients and their families. Today’s performance criteria for senior managers are more outcome-oriented, with the emphasis on population health, cost, activity and quality control.

CLINICIAN MANAGERS

In most industries good practitioners are often seen as good material for management. More than ever doctors, nurses and allied health professionals have had an increasing presence in middle management (Harris et al 1998). However, in health care the move from clinician to manager is often not easy. The clinician manager may have divided loyalties, with the potential for conflict of interest. Lawson et al maintained that:

To be effective in the role of health service manager requires a significant cognitive shift for most health professionals from commitment to individual care to a community or population focus. Feelings of isolation, uncertainty and self-doubt about their performance were among the stresses of newly appointed health service managers (Prideaux 1993, Tobin 1993). Some of the difficulties arise because ‘the values, mores and standards of the profession are inculcated into the practitioners and they are seen as owing their allegiance to the cosmopolitan profession rather than to the local organisation’ (Grant 1985, p 96).

New health service managers have described their tasks as ad hoc, ambiguous and fragmented. For the novice, the world of the manager seems chaotic and complex, governed by power struggles and personal loyalties and frequently overly concerned with the protection of hierarchy and the control of resources (Prideaux 1993, Tobin 1993). This reality comes as a shock to many newly appointed managers, but is consistent with the nature of managerial work in general (Mintzberg et al 2003). Clinician managers may have to reconcile the loss of expert power derived through their clinical authority with the need to learn a new political context in managing resources.

Prideaux (1993) also found that exerting authority was particularly challenging for new health service managers. This is illustrated in the following statement:

This is consistent with the argument that ‘… clinical activities cannot be coordinated by managerial interventions’ (Glouberman & Mintzberg 2001b, p 76).

Some new health service managers were not well prepared for their new role, finding the skills required for effective performance to be different from their health professional skills (Prideaux 1993, p 43). Identifying with organisation-wide issues rather than individual patient issues and finding new ways of problem-solving proved challenging. Prideaux also noted that a number of newly appointed health service managers lacked the support they needed from senior management. These new managers were disappointed to find that senior management did not always live up to their expectations with respect to planning, sharing of information and the way things were done; organisational politics were perceived to pervade everything. The essential health service management skills included negotiating, political skills, entrepreneurial skills and skills in managing people (Prideaux 1993).

Table 2.1 summarises the differences observed by Prideaux in the roles of the clinical service provider and the health service manager under six headings: tasks, role, relationships, orientation, decision processes, and skills.

Table 2.1 Differences in the roles of clinical service provider and health service manager

Glouberman and Mintzberg have expanded on the duality of health care and have identified four worlds that relate to health service management: community, control, care and cure. They hypothesise that the various stakeholders to a health care system each belong to a different ‘world’ and the barriers between the worlds are strong. The board or trustees are associated with the community world focused on oversight, the managers in the control world are focused on constraint, the doctors are positioned in the cure world and are focused on intervention and the nurses, allied health professionals and other staff in the care world are focused on integration (Glouberman & Mintzberg 2001a). The issue for health service managers is that each of the four worlds has different characteristics, goals, and even organising principles, and managers need awareness and understanding to be able to forge links across the boundaries. Glouberman and Mintzberg have suggested the need for health service managers to have greater skills in bridging the ‘worlds’, with a craft management style that focuses on convincing rather than controlling, facilitating rather than deciding and linking rather than leading.

Braithwaite (2004) identified that clinician managers had five modes of operating: managing change, decision-making and problem resolution, education and development of self and others, achievement orientation, and structure and hierarchy. Underpinning these modes were four primary pursuits, comprising three types of management (financial, people and organisational/institutional) and customer orientation; and five secondary pursuits of data, quality management, process management, strategy and planning, and external relations. This model recognises the complexity of the clinician manager’s role and suggests the need for clinician managers to develop a broad range of skills encompassing both the modes of operating and the primary and secondary pursuits. As well, systems and procedures identified for easing the transition from clinical service provider to health service manager include: improved mentoring including feedback and support from immediate supervisors and peers; supportive organisational systems (such as a team approach that facilitates integration of the new manager into the organisation); and management courses that facilitate discussion of shared management problems in a safe environment (Prideaux 1993).

ACCOUNTABILITIES OF THE HEALTH SERVICE MANAGER

Being held accountable for the work of other people implies ensuring their compliance with the laws, regulations, policies and procedures that govern and guide the operation of the organisation. However, because these rules and regulations are never able to cover every conceivable situation, the manager’s role extends beyond ensuring compliance with formal rules and regulations to encompass the development of a culture that facilitates judgments consistent with the mission and philosophy of the organisation. In health care, this is particularly important because of the kinds of work and the ways in which that work is most effectively done. In this people-oriented environment, the hands-on service providers (doctors, nurses and allied health professionals) make most of the important decisions in relation to individual patients. The challenge for the health service manager is the development of a culture or ethos that supports good clinical and managerial decision-making and accountability for service excellence. For further information about this important issue see Chapter 3.

The accountability structure is dependent on the ownership of the health care organisation. Five different ownership types have been identified (Deber et al 2004): publicly owned and managed; publicly owned and managerially independent; private not-for-profit, usually religious or other charitable organisations; private for-profit small business and private for-profit investor-owned. In most instances the most senior manager reports directly to a governing body such as a board of directors, board of trustees or board of management that represents the owners, or in the case of publicly owned enterprises, the ‘community’ interest. Policy makers swing between hands-on and arm’s-length relations between health authorities and publicly owned health care organisations. In some Australian states there is a trend to eliminate the governing board of public health care organisations, replaced by direct management oversight by the government department.

Where it exists, the governing body carries responsibility for the overall operations of the organisation and for achieving the performance outcomes appropriate to the type of organisation. In general, governance comprises four important functions:

The way a board moulds the functions to meet the overall objectives is dependent on the type of organisation. For example, private, for-profit, investor-owned health care organisations are concerned with shareholder value and return, while publicly owned and managed organisations may be more focused on improving population health status.

The board appoints a senior manager who is held accountable for the day-to-day operations of the organisation in a manner that is consistent with the directions of the board. It is assumed that the best performing organisations are ones where the board and management understand each other’s roles and work well together to achieve the organisational goals. At its most extreme, an effective board will undertake the management functions of a poorly performing management team. However, an effective board, over time, either mentors the management team to overcome the performance issue(s) or replaces management so that the board can revert from day-to-day management to its designated role in governance and oversight.

The terms and membership for health sector governing bodies are typically outlined in legislation. For example, in Victoria public hospitals are incorporated under the Health Services Act 1988; Community Health Services (CHS) are incorporated under either the Health Services Act 1988 or the Associations Incorporations Act 1981; and private for-profit hospitals are incorporated under the Corporations Act 2001 but are regulated subject to the Health Services Act 1988. According to Australian Standard AS8000-2003 a governing body is responsible for:

ensuring the strategic direction of the entity;

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