Who is running our hospitals?

Four years ago, John Menadue (former Chair of the NSW Health Council) said ‘no-one runs hospitals’. He argues that evidence in support of his proposition continues to mount with malfunction in many hospitals.

Health ministers across Australia must be among the most frustrated people in the country. They keep pouring money into health to address the ‘hot button’ issues – often run to extract more money – but the crises keep bubbling up week after week.

A major problem we face, which not one health minister has yet acknowledged, is that we can’t have all that we want in health. Until we effectively and fairly manage the demand, no solution is possible. Bandaids keep failing. Resources are limited. We have to ration or determine our priorities otherwise the powerful will continue to skew public resources in their favour, eg more money for waiting lists, while the needy, in areas such as Indigenous and mental health, are relegated to the end of the queue. When some hospitals try to prioritise their workload, their political masters tell them not to, for fear of a front-page story.

Our present allocation of health resources is haphazard, secretive, costly and unjust. The hard issues about priorities are dodged. The hard questions are never really posed, and the health debate continues to be largely a private conversation between the minister, privileged doctors and special interests. The public is excluded.

There is a particular design problem in all our hospitals, although I will focus on acute care in the 750 public hospitals in Australia. My proposition is that no one really runs these hospitals in the sense that we understand how a normal organisation should function.

There is a major disconnect between corporate governance and clinical governance.

Doctors admit, treat and discharge patients. They largely see their roles as professionally autonomous. Their clinical decisions drive both hospital inputs and outputs. Doctors manage the clinical demand and supply the clinical services. Senior executives are ‘responsible’ for staffing and budgets, but don’t make the clinical decisions that affect outcomes and costs. They do not involve themselves, quite properly, in clinical decisions. There are, of course, exceptions to this but they are at the margins and even where they exist in some hospitals, it is usually only in part of the hospital and often reliant on a few champions. The result is often that hospital budgets blow out and senior executives get the blame when clinicians are really making the decisions that determine expenditures and health outcomes. There is administrative confusion. Nurses hold the system together but don’t have authority.

Hospital boards are often political decorations or amalgams of interest groups. Most do not seriously concern themselves with clinical outcomes and particularly with quality and safety. Ministers and CEOs of health departments often compound the governance confusion by trying to micro-manage in response to media pressures. They mainly succeed in confusing their organisations even further, making senior executives gun-shy in making decisions, and frustrating clinicians. The governance confusion is also worsened by the work pressures of unplanned admissions pouring in through emergency departments. (This is caused by a major problem in another part of the ‘system’ – the collapse of general practice at night, weekends, in outer suburban and rural areas.)

Hospitals in Australia have a life of their own with no clear lines of responsibility and accountability. They are large cottage industries.

Only the good sense of people within hospitals prevents even more confusion. Governance is fundamentally flawed by the corporate and clinical divide.

Managers traditionally attempt to control and lead their hospitals (or other organisations) through hierarchical systems. The top level gives the orders and, by and large, the rest of the organisation follows. But this type of command and control, hierarchical system is ill equipped to deal with the key roles of clinicians dealing with very complex cases and employing highly technical skills. Clinicians rely on networks and not hierarchies to do their work.

Every organisation has disconnects. There are time lags up and down the hierarchy; middle managers often build empires and, of course, the problem of disconnect in large organisations is greater because of the distance between the top and the bottom.

But the disconnect in hospitals is much more fundamental, principally because of the professional autonomy and clinical freedom which is highly prized by clinicians. In hospitals, the skill and imagination is at the ‘bottom level’. Yet, while clinicians have very considerable power in clinical matters, they have very little organisational power and are consequently very frustrated. They literally make life and death decisions but often can’t sign a $50 petty cash voucher. Where clinicians have been given some management autonomy and generated efficiency and cost-savings, the savings have often been taken away in the next budgetary round. Clinicians then lose their motivation.

Attempts have been made to get around this disconnect by reinforcing the top/down hierarchical approach.

These attempts to overcome the organisational disconnect through strengthening the top of the organisation have only been partially successful and have often alienated even the best-intentioned clinicians.

Reform also needs to take a bottom-up approach.

Those at the top of the hierarchy need to recognise the barriers to their top/down power. (Instinctively, they probably know it but don’t articulate it.) Clinical communities need to recognise that they must play a much broader role in reforming and modernising hospitals.

Senior managers must recognise they cannot translate policy intentions into changed clinical practices. They must encourage clinicians to take on a much wider agenda including governance and work practices. This enhanced role for clinicians is essential despite the history of antagonism between managers and clinicians and past political opposition by some doctors to public health in any shape or form.

A robust program of hospital avoidance through large-scale building of primary health care clinics for all but the most acute cases would also relieve some of the pressures brought about by the disconnect between corporate and clinical governance in hospitals. A buy-in by clinicians in any health reform is critical, as the Rudd Government will find out. By clinical buy-in I do not mean AMA buy-in.

This disconnects between corporate and clinical governance is not an easy issue to fix. But before we can find a solution, we need first to acknowledge the problem. Money is clearly not solving our health problems. The solution must be in demand management and in design reform. We have outlived the design life of our present health delivery system.

Design reform will be resisted by the powerful vested interests that plague the health system, and the AMA and the private health insurance funds in particular, who want more and more money to fund the status quo. Leadership is necessary to win the public debate for design change.

This is an abridged version of a speech published by the Centre for Policy Development. The full version is available from http://cpd.org.au/sites/cpd/files/JohnMenadueRACMA.pdf