Professional Documents
Culture Documents
The Myths
of Health Care
Towards New Models of Leadership and
Management in the Healthcare Sector
Foreword by Henry Mintzberg
The Myths of Health Care
Paola Adinolfi Elio Borgonovi
•
Editors
123
Editors
Paola Adinolfi Elio Borgonovi
CIRPA (Interdepartmental Centre for Public Administration and Health Institute
Research in Economics, Law and “Carlo Masini”
Management of Public Administrations) University “Luigi Bocconi” of Milan
University of Salerno Milan
Fisciano Italy
Italy
vii
Preface
It can be considered widely held that health care models are significantly condi-
tioned by sets of beliefs which are in turn parts of broader philosophical ideas
rooted in the culture of the time. Such beliefs may be more or less true, nevertheless
they are vitally important in shaping health care models. Henry Mintzberg identified
some false sets of beliefs—he calls “health myths”—which in his view are at the
basis of the mess we currently face in health care.
It is indeed difficult for any one individual to see the fallacy of such myths,
because they are below the surface. Furthermore, because of their invisibility, they
are rarely challenged: debate on health care management is mainly focused on
managerial-organizational models, as well as on specific techniques and tools, while
discussion on ideas is surprisingly poor. We wanted to fill this gap: without
informing Mintzberg, we asked a number of academic and practitioners, equally
distributed between supporters and critics, to reflect on the “health myths”. We
aimed at bringing Mintzberg’s myths to light, being open to any possible outcome:
either overcoming them or discovering their “Holy Grail”.
Among the academics, we invited senior and junior scholars from the field of
management, accounting and organization studies, enrolled in CERGAS (the
Research Centre for Health and Social Services) at Bocconi University of Milan
(Patrizio Armeni, Oriana Ciani, Francesca Lecci, Federico Lega, Marco Morelli,
Anna Prenestini, Rosanna Tarricone and Alexandra Torbica) and in CIRPA
(Interdepartmental Centre for Research in Economics, Management and Law of
Public Administrations) at the University of Salerno, a leading university in the
South of Italy for research and action-research on public sector management and
health care (Carmela Annarumma, Antonio Botti, Giuseppe Festa, Giuseppe
Iuliano, Gaetano Matonti, Rocco Palumbo, Gabriella Piscopo, Paolo Tartaglia
Polcini, Alessandra Storlazzi, Aurelio Tommasetti, Massimiliano Vesci). We also
engaged academics from the University of Chieti-Pescara (Massimo Sargiacomo),
the University of Florence (Mario Del Vecchio), the University of Lazio and
Cassino (Lorenzo Mercurio), the Polytechnic University of Marche (Luca Del
Bene), the Polytechnic University of Milan (Emanuele Lettieri), the University of
Naples “Federico II” (Mariavittoria Cicellin, Gianluigi Mangia, Stefano Consiglio),
ix
x Preface
We also invited a general, member of the Italian Airforce (Lt. Gen. Fernando
Giancotti), currently Commander of the Air Education and Training Command,
who published essays and textbooks on the US Air Force Leadership and a book in
Italy widely used for education on leadership and change management.
Finally, we decided to invite key actors in the Italian health care arena, who are
in a position to look at the broader system: Francesco Bevere, after having per-
formed as a senior manager in different health care organizations operating both in
the North and the South of Italy, and as head of the Health Planning Directorate
of the Italian Ministry of Health, is currently the Director in chief of the National
Health Agency (the consulting body for the Health Ministry); Renato Botti, after
long experience as a senior manager of both for-profit and not-for-profit organi-
zations, is now the chair of the Directorate of Health Planning of the Ministry of
Health; Silvio Garattini is one of the most prestigious researchers in the field of
pharmacology: in 1963 he founded the Mario Negri Institute, a not-for-profit
research institute that is well known in the international scientific community; he
was principal investigator of hundreds of studies in this field and was member of
several national, European and international committees and regulatory agencies;
Walter Ricciardi, Professor of Public Health, is member of the External Advisory
Board to the WHO European Regional Director for the development of the
European Health Policy, member of the National Committee for the evaluation
of the Italian National Health Service, President of the Italian Higher Institute of
Health; Maria Grazia Sampietro has long managerial experience in health and social
services and is currently the Director in Chief of the Welfare Directorate of INPS
(the Italian National Institute for Social Security); Umberto Veronesi is an out-
standing oncologist surgeon who developed in late 1970 an innovative and less
aggressive approach to breast cancer. He has also top management experience as
director of the Italian Cancer Institute based in Milan: in 1982 he founded in Milan
the private European Institute for Oncology (IEO). Last but not least, Umberto
Veronesi was the Ministry of Health of the Italian Government from April 2000 to
June 2001.
We selected the contributors in order to maximize the diversity of perspectives:
different cultural backgrounds; different geographical areas; both academic and
practitioners (sometimes the two cooperating in the same contribution); senior and
junior positions.
A common element to all contributors is having encountered, at a certain point
of their professional path, Mintzberg’s provocations: some of them participated as
discussants to the conferences organized in 2007 and 2010 at the University of
Salerno. Others have been mentioning Mintzberg on other occasions, assuming
different positions: from those who have been struck on the road to Damascus and
fell in love with Mintzberg’s theses, to those who were severely critical.
The outcome of this joint effort is presented in the second section of the volume,
after an introductory section which includes an outline of health myths, as originally
xii Preface
illustrate with disarming simplicity his view on managing health care, highlighting
the unescapable conundrums of management and crumbling the intellectual
framework of health care management orthodoxy. To us, Henry Mintzberg
appeared himself as a conundrum: a complex and provokingly simple scientist, a
humble and refined speaker, an irreverent and respectful scholar, a generous teacher
and an eager learner.
xv
xvi Contents
xvii
xviii Contributors
xxiii
xxiv About the Editors
Henry Mintzberg
Myths abound in management, for example that senior managers sit on “top” (of
what?), that leaders are more important than managers (try leading without
managing), and that people are human resources (I am a human being). Myths
abound in what is called the system of health care too, not least that it is a system,
and is about the care of health (mostly it is a collection of treatments for disease).
Combine these two sets of myths, as is increasingly common these days, and you
end up with the mess we now face in the world of health care.
Let us begin with the myths of managing now prevalent in health care and then
turn to some reframing that may help to escape this mess.
Myth #1: The health care system is failing. Speak to people almost anywhere in
the world and they will tell you how their system of health care is failing. The truth
is quite the opposite: In most places in the developed world, health care is suc-
ceeding—expensively. In other words, success is the problem, not failure. Consult
almost any statistic. We are living longer, losing fewer infants, and so on, in large
part because of advances in treatments. The trouble is that many of these are
expensive, and we do not want to pay for them—certainly not as healthy people
through our insurance premiums or taxes. So health care services get squeezed, and
it looks like the system is failing. In fact, as we shall discuss below, the problems
are not in the health care services themselves so much as in the consequences of our
Source: Mintzberg H. Managing the Myths of Health Care. World Hospitals and Health
Services: The Official Journal of the International Hospital Federation 2012; 48(3):4–7.
Copyright © 2012 IHF. Reprinted with permission
H. Mintzberg (&)
Desautels Faculty of Management, McGill University, 100l Sherbrooke West, Montreal H3A
lG5, Canada
e-mail: hm@mcgill.ca; henry.mintzberg@mcgill.ca
business; as such, it needs greater cooperation, not competition, among its many
players and institutions. Physicians may be well paid, but these are smart people
capable of earning large incomes elsewhere. What keeps many, if not most, of them
in health care is the sense of service. This applies equally, if not more so, to the
nurses, who do not earn that kind of money, and many of the managers too. What
happens to health care as a calling when it is seen as “one-stop shopping,” hospitals
as “focused factories,” patients as “customers” and “consumers,” and physicians as
“industry players” (as described by Herzlinger 2006)?
Myth #5 and 6: Health care is rightly left to the private sector, for the sake of
efficiency. Health care is rightly controlled by the public sector, for the sake of
equality. Take your choice, according to the country in which you live. In fact, if
you live where the services are largely public, you hear a great deal about the
private sector (as in Canada now). And if you live where they are largely private,
then you hear a great deal about the public sector (as in the recent debates in the
United States Congress). That is because, nowhere in the world today can the field
of health care function without serious involvement of both government controls
and market forces. Many Americans, and not only on talk radio shows, are sharply
critical of the role of the state in health care. In two influential publications, Porter
and Teisberg were highly dismissive of the state as a player in this field. Their book
Reforming Health Care (2006) referred to government-controlled regulations as
“never a real solution” (although it certainly is in most developed countries).
Concerning the unsatisfactory performance of American health care over many
years, they claimed in their related Harvard Business Review article (2004) that
“while this may be expected in a state-controlled sector, it is nearly unimaginable in
a competitive market.” (Again, the facts suggest exactly the opposite.) Of particular
importance is that many of the most important services in health care come from
neither the public nor the private sector. Canada and the United States sit near the
two extremes on this issue, yet the vast majority of hospitals in both countries are in
the plural sector, namely in the form of organizations that are owned by no-one
(so-called “voluntary” in the United States), and that includes the most prestigious.
Efficiency and equality certainly matter in health care, but hardly more so than
quality, which often seems to be delivered best by organizations that are autono-
mous—controlled neither by the state nor owned by private shareholders.
Presumably this helps to reinforce the engagement of their professionals with regard
to their sense of calling. Of course, all the sectors have a role to play in health care:
the public sector, largely to maintain a certain level of equality (as in the new
American legislation) as well as in regulation; the private sector, significantly to
provide supplies and equipment as well as some of the more routine services; and
the plural sector, for the delivery of many of the key professional services,
including research. (And the latter might well include pharmaceuticals. In the
twentieth century, arguably the three most significant pharmaceutical developments
—penicillin, insulin, and Salk vaccine—all came out of not-for-profit laboratories.)
The Myths of Measurement and of Scale Measurement is a fine idea, as long as it
does not mesmerize the user. Unfortunately, it so often does: both managers who
rely on it for control and physicians who believe that being “evidence-based”
6 1 Managing the Myths of Health Care
As noted at the outset, management on “top” is a myth. Aside from that ubiquitous
chart, and those famous bonuses, what is management on top of exactly? Indeed, in
hospitals, “top” managers often sit on the ground floor (perhaps to be able to make a
quick getaway). Seeing yourself on top of an organization all too often means not
being on top of what is going on in that organization. Should these top managers
have the power to make decisions about the purchase of expensive equipment,
independent of the physicians who use them? That hardly makes more sense than
leaving those decisions to the physicians themselves. These are not financial
decisions or technical decisions but hospital decisions, and so require collaboration
on the part of managers and physicians. And, make no mistake about it, involve-
ment in such decision-making places the physicians squarely in the realm of
management—as soon as we get past the notion that management is something
practiced only by people called managers. Many health care organizations require
“distributed management,” which means that managerial activities be performed by
whoever has the necessary skills, knowledge, and perspective to carry them out
most effectively—and that often means collaboratively.
With management as distributed and the strategy process as venturing, the nature of
most health care organizations can be better understood. The prevailing model in
business is what can be called the “machine organization”: top-down, hierarchically
focused, control-oriented, numbers-driven, and outputs-standardized. Managers
rule. But a very different model, that can be called the “professional organization,”
is more common in health care: expert-driven, skills-oriented, and highly oriented
to pigeonholing, which means getting the client into the right box (mania, hernia,
etc.) so that the most appropriate intervention can be applied. Such pigeonholing
describes the great strength of the professional organization as well as its debili-
tating weakness. The professionals get used to operating in their own pigeonholes,
as free as possible of the influence of their own colleagues, let alone the controls of
the managers. Unfortunately, as human patients we are sometimes square pegs
forced into these round holes. Some of us have this habit of getting illnesses that cut
across the disease categories, or worse still, that do not fit them well (as in
auto-immune diseases). Then we require interventions that cut across the pigeon-
holes, which are often resisted by medical specialists used to operating within them.
In other words, we need collaboration from people who are mostly inclined to avoid
it. How to organize around this problem? The inclination has been to use solutions
designed for the machine organization—centrally imposed control systems, per-
formance measures, financial incentives and the like, or else expecting managers up
the hierarchy to force the professionals to collaborate. But these hardly work well
with independent professionals. Resistance to collaboration in the professional
organization will more likely be overcome by drawing on the professionals’ sense
of calling, and enhancing their organization as a community of service. Put dif-
ferently, when people are committed to their organization, and not just to their own
profession, they are more likely to collaborate effectively. A good sense of this can
be had from some comments made by Atul Gawande in one of his New Yorker
articles on health care: The Mayo Clinic is among the highest quality, lowest cost
healthcare systems in the country. A couple of years ago, I spent several days there
as a visiting surgeon. Among the things that stand out from that visit was how much
time the doctors spent with patients. There was no churn—no shuttling patients in
and out of rooms while the doctor bounces from one to the other. The core tenant of
the Mayo Clinic is “The need of the patient first”—not the convenience of the
doctors, not their revenues. The doctors and nurses, and even the janitors, sat in
meetings almost weekly, working on ideas to make the service and the care better,
not to get more money out of patients decades ago Mayo recognized that the first
thing it needed to do was eliminate the financial barriers. It pooled all the money the
doctors and the hospital system received and began paying everyone a salary, so
that the doctors’ goal in patient care could not be increasing their income almost by
happenstance, the result has been lower costs (Gawande 2009, pp. 14–15).
1.5 Reframing Scale: As Human Beyond Economic 9
None of the guidelines suggested above are helped by large scale—not community,
not engagement, not collaboration, not closing the gap between administration and
operations. Nor does large scale help to humanize the practice of medicine. There
can, of course, be technical reasons to favor large scale, for example, in order to
purchase necessary expensive equipment. This suggests that we should no more
reject large scale than embrace it. But the unfortunate fact is that, because of our
mesmerization with measurement, far too often we embrace large scale, conve-
niently forgetting the human factors. Imagine if we made small scale the default
position, so to speak—in other words put the onus on the proponents of large scale,
in health care institutions as well as in health authorities, to make their case for scale
on social grounds, judgmentally as well as numerically, beyond the technical and
economic grounds.
Nursing, focused on care, may be a more appropriate model for managing than
medicine, focused on cure. Our health care institutions, in other words, require care
more than cure: the engagement of their managers to help them function more
smoothly, rather than having the power of heroic leaders to run around fixing
things. There was a cartoon once that showed a group of surgeons around a patient
on an operation table, with the line “Who opens?” In medicine, we know who
opens; in management often we do not—not even if someone should open. That is
why management has to be a fundamentally cooperative practice, of a style far from
heroic leadership. Managing in health care should be about devoted, continuous,
holistic and pre-emptive care more than interventionist, episodic, narrow, and
radical cures.
I opened this article with the claim that we do not have a system of health care so
much as a collection of disease treatments. Even my own examples have come
largely from the latter. (Hospitals, it should be remembered, account for only about
30 percent of health care expenditures.) Especially the promotion of health, but also
the prevention of disease, are muscled aside by our focus on the treatment of
disease, even though investment in the former can be far more cost-effective. An ad
appeared some years ago for SAP Canada, headed “This is not a cow.” It showed a
10 1 Managing the Myths of Health Care
picture of a cow, with lines drawn where it would be quartered, with the text: “This
is an organizational chart that shows the different parts of a cow.” In a real cow the
parts are not aware that they are parts. They do not have trouble sharing infor-
mation. They smoothly and naturally work together, as one unit. As a cow. And you
have only one question to answer. “Do you want your organization to work like a
chart? Or a cow?” Why can’t health care work like a cow: why can it not be a true
system of cooperation and collaboration? Note that the parts of a cow are not
“seamless.” They are distinct, necessarily so. But in a healthy cow, they work
together harmoniously. Can this happen in health care? I believe so, and have been
working with colleagues for some years to that end. Our management and medical
schools at McGill University have teamed up to create a master program for health
leadership that seeks to encourage all of these guidelines (www.mcgill.ca/imhl). It
brings practicing managers from all over the world in all aspects of health care—
hospitals, community care, public health, government ministries, etc., most of them
with clinical backgrounds—together in an ongoing forum that meets periodically
over a year and a half to address the major issues of health care. These include
• The Gap Issue: How to bring the administration of health care closer to the
operations, connecting it for support beyond control?
• The Collaboration Issue: How to get the different parts of health care working in
greater cooperative harmony?
• The Engagement Issue: How to enhance engagement through the promotion of
human scale beyond economic scale?
• The Sector Issue: What are the appropriate roles of the three sectors, especially
the plural sector that sits between the now dominant public and private sectors?
• The Performance Issue: How to balance the intrinsic needs for efficiency,
equality, and quality in health care?
We have been especially struck by the natural propensity of managers in such a
program to work together on such issues, reaching out beyond their own personal
needs and those of their institutions, into their local communities and out to the
needs of health care in general. On a number of occasions, groups in the class have
brought into our forum key issues of concern in their communities, to enable the
class to address them in a process we call “friendly consulting.” A group of
managers from Quebec, for example, invited the three commissioners of a major
government health care commission into the class for a workshop on some of these
issues. And two physician managers from Uganda brought our classroom to a
conference they organized in Kampala for 60 health care managers from seven
African countries, on the subject of how to scale up their management infrastruc-
tures. What this has made clear is that an immense amount of energy and goodwill
exists in the field of health care, to work collaboratively to render it more effective,
on both the local and the global levels. We just need to get past the myths.
References 11
References
Bernasek A (2007) U.S. health care debate burdened by ideology: suspicion stalls single payer
insurance. International Herald Tribune, p 11
Clifford A (2000) Tyrannosaurus Rx. Fortune 142(10):84–91
Gawande A (2009) The cost conundrum: what a Texas town can teach us about health care. The
New Yorker. Retrieved 22 Feb 2010 from http://www.newyorker.com/reporting/2009/06/01/
090601fa_fact_gawande
Herzlinger RE (2006) Why Innovation in health care is so hard. Harv Bus Rev 84(5):58–66
Mintzberg H (1994) The rise and fall of strategic planning. The Free Press, New York
Mintzberg H (2007) Tracking strategies…toward a general theory. Oxford University Press,
Oxford
Porter ME, Teisberg EO (2004) Redefining competition in health care. Harv Bus Rev 82(6):65–76
Porter ME, Teisberg EO (2006) Redefining health care: creating value-based competition on
results. Harvard Business Press, Watertown
Chapter 2
The Historical Evolution of Health
Concepts and Approaches: The Challenge
of Complexity
2.1 Introduction
An adage says that “myth is more potent than history” (Fulghum 1988, p. vii).
Indeed, the myths of health care identified by Henry Mintzberg (2012) have proven
to be stronger than both history and reality. They have played, and still play, a
significant role in affecting health policies and practices, influencing the shapes of
health care systems. The belief that the health care system is failing, the assumption
that it could be fixed by detached social engineering and heroic leadership, the idea
that public health care guarantees equality, while private health care ensures effi-
ciency, the blind trust in the healing role of management models drawn on the
for-profit sector, the emphasis on scale and measurement: all these are common
prescriptions to cure the illness of current health care systems.
It is interesting to reconstruct, through an analysis of secondary sources, the
period and the context in which these ideas emerged, and how they have affected
This chapter is a re-elaborated and enriched version of two articles previously published in
Health care Analysis. In particular, this chapter is drawn on: Adinolfi, P. (2014). Barriers to
Reforming Health care: The Italian Case. Health care Analysis, 22(1), 36-58 and Adinolfi,
P. (2014). Philosophy, Medicine and Health care: Insights from the Italian Experience, Health
care Analysis, 22(3), 223–244.
P. Adinolfi (&)
CIRPA (Interdepartmental Centre for Research in Economics, Law and Management of
Public Administrations), University of Salerno, Fisciano, SA, Italy
e-mail: padinolfi@unisa.it
E. Borgonovi
Public Administration and Health Institute “Carlo Masini”, University “Luigi Bocconi” of
Milan, Milan, Italy
e-mail: elio.borgonovi@unibocconi.it
medical and health care models over the course of time, thus leading to the con-
solidation of what Henry Mintzberg calls “myths.”
In this chapter, medical and health care models are diachronically examined to
evaluate their relationship to the sets of beliefs identified as myths. This is an
innovative perspective, considering that historical analyses of medicine and health
care are typically intra-disciplinary and do not touch upon any underpinning foun-
dations. The analytical narrative focuses on the unfolding over the centuries of the
various myths. In the limited space available, only a synthetic outline can be pre-
sented, with the unavoidable consequence of oversimplifying complex phenomena;
such an account is indeed sufficient to show that the sets of beliefs identified by
Henry Mintzberg have significantly affected the functioning of health care systems in
developed countries. These myths, being strongly conceived on a subconscious level,
have had insidious effects on the broad concepts of “medicine” and “management.”
In particular, we can say, although bearing in mind the limits involved in the
simplification and modelling of complex ideas into schemes, that the myth of heroic
leader and the myth of measurement, which emerged in remote historical epochs,
have consolidated over the centuries and blended with the other myths, reinforcing
one another until assuming the current configuration of coherent frameworks that
can be subsumed under the models of “biomedicine” and “scientific management.”
The belief that “not only health but the overall system can be fixed by bringing in the
heroic leader” (discussed in Chap. 6) can be traced back to archaic societies, where the
healers had the attributes of heroic leaders in the sense intended by Henry Mintzberg.
A common element of all the archaic healing cultures—Mesopotamic (3000 a.c.–2000
a.c.), Assyro-Babylonian (1792 a.c.–323 a.c.), Egyptian (3000 a.c.–2000 a.c.), Hebrew
(1200 a.c.–550 a.c.)—was the recourse to the heroic figure of healers, who could solve
health problems (and also more general problems) with their miraculous virtues and
absolute wisdom deriving from their relationship with the supernatural.
Illness was seen as overwhelming and linked to the action of supernatural
entities. According to this “theurgical model,” divinities, offended by human
behavior, allowed malevolent entities to take control of an individual’s body or hint
it with an object (a caterpillar, a stone, a sting). As a result, healers had to try to
calm down the fury of the gods, acting as intercessors by means of superstitious
practices, exorcisms, and mass offerings.
Related to the “theurgical” model, was the “magic” model of medicine. Magic
was Man’s attempt to control, through irrational practices, the shadowy forces
around him. Not rejecting the transcendent, the “magic” model acknowledged the
validity of experiential remedies (amulets, individual or group rituals, gestures,
herbal blends and potions) and conferred ever greater honours to healers.
In this framework, medical care could not be considered from a commercial
perspective: healers acted not on the basis of scientific knowledge, but by virtue of a
2.2 Healers as Heroic Leaders in Archaic Societies 15
supernaturally endowed gift; therefore they were not trained in the art of medicine,
but rather were consecrated by ancestral faith healers, by virtue of a miraculous
event linked to their birth or by what was considered a divine calling.
These “heroic leaders” considered Man in his wholeness and showed moral
virtues consonant with their relationship with the transcendent. The extraordinary
moral standing of healers was not significantly affected by the progressive aban-
doning of supernatural explanations in favour of a gradual repositioning within the
domain of natural causes. Healers were increasingly substituted by schooled pro-
fessionals who had the same heroic connotation and moral standing apart from the
relationship with the transcendent: it is significant that in Babylonian times the
Scribes abandoned the incurables while the healers treated them until their death.
In ancient times, the figure of the healer, who acted by virtue of his relationship
with the transcendent, was progressively substituted by that of the private doctor,
who acted on the basis of the scientific knowledge, assimilated through a
long-lasting training. This evolution coincided with the development of a medical
tekne, namely a body of theoretical and empirical knowledge managed by profes-
sionals, which can be put in relation to a ground-breaking cultural change: the
occurrence of a deep fracture between Man and Nature: Man discovered himself to
be an external actor able to control, by means of rational thought, the rest of Nature.
Hippocrates was the forerunner of this new approach, which rejected the
supernatural and introduced clinical medicine, based on the observation, elaboration
and reproduction of natural phenomena. He advocated a rational approach as
opposed to the theurgic-magic conception of medicine: any possibility for divinities
to provoke illness was refuted, as well as any validity for therapeutic activity aimed
at awakening the pity of the divinities, while attention was paid to discovering the
natural causes of illnesses. Doctors, endowed with specific intellectual and technical
competences, had to address the condition of the patient in each specific situation,
from a holistic perspective. The holistic approach typical of theurgic and magic
medical models consolidated and led to the concept of complexity, according to
which each organism is an open network of relationships and, therefore, a rich
variety of elements—diet, psychology, social relations, experiences, hygiene,
dreams, etc.—are to be considered when investigating the causes of illness.
Unlike the archaic age, an antagonistic attitude towards illnesses emerged, as
proved by the frequent use of metaphors of war related to medicine. This was
reflected in the doctor–patient relationship, as summed up in the Hippocratic Oath
(the first deontological code of conduct, sworn by doctors and other health care
practitioners professing to practice medicine ethically): it reveals how doctors
exercised absolute power, making decisions for their patients, not informing them,
not considering their preferences, not looking for consensus, not accounting to them
(or to anybody) for diagnostic and therapeutic decisions.
16 2 The Historical Evolution of Health Concepts and Approaches …
Another pioneering figure was Galen, who added to the empirical observation
the experimental method, thus further enriching the complex medical model. He
suggested the existence of a strict link between physiology, personality and the
external environment: for example, he asserted that bodily humours had not simply
a biological fluid function, but also depended on the character as well as on the
physical and sociopolitical environment.
Summing up, in ancient times there was the consolidation of the complex
holistic conception of Man and the emergence of the idea (discussed in Chap. 8) of
health care as a private service provided by ad hoc trained professionals. The
fruitful merger of the scientific vocation of the Greeks with the efficient organi-
zation of the Romans led to the development of clinical medicine and to the
construction of the first operating theatres and hospitals—the so-called valetudi-
naria—as structures of assistance created (prevalently in frontier areas) to treat and
heal wounded legionnaires. These were mainly used by rich people to cure their
relatives and slaves in a private, commercial framework.
The Middle Ages witnessed exploratory trends that went beyond the familiar to
enter the sphere of the transcendent. In the Christian conception of the period, the
main emphasis was no longer on a mysterious, unpredictable world, nor a knowable
and controllable world, but an incommensurably distant God. All this had a marked
impact both on medical theory and practice. From a religious perspective, only
God, as Creator, could have a full comprehension of the universe, and significant
aspects of the world (including illnesses) would forever remain mysterious and
uncontrollable by Man.
Illness was seen as a natural occurrence related to the frailty of Man, represented
by Adam’s original sin and the fall from Eden. The biblical idea of disease was
reinstated (substituting the notion of fault with that of sinful behavior). Pain was
welcome as a way to amend sins. The new meaning that suffering acquired within
the theological perspective stimulated attitudes of resignation and prayer rather than
efforts towards treatment: healing was regarded as a function of God’s grace.
Along with the rise of this new approach, the health care based on the valetu-
dinaria model was challenged: the first hospitals in the fifteenth century were aimed
at providing shelter for sick people who could not privately be assisted, because
poor. These hospitals, deficient in terms of structural and hygienic conditions, as
well as in terms of quality of care, were richly endowed with sculptures, paintings
and works of art. The latter most probably had a therapeutic value: the biographical
documents of the epoch show how, in order to lessen suffering, wide recourse was
made to paintings of the Crucifixion, while during surgical operations—performed
under extremely painful conditions—extracts from the Bible and from the lives of
martyrs were read aloud.
2.4 Divine Engineering in the Middle Ages 17
Under the control of the Church, a new body of medical knowledge developed,
which was detached from the reality of patient and founded on a top-down, uni-
directional relationship between patients and doctors. The Church established what
could be good or bad for the body and soul, thus expropriating doctors from the
faculty of deciding what could be considered useful for healing the sick. Doctors
were obliged to remain celibate (until 1452) and to ask for the permission of a priest
to be allowed to cure patients (only after verifying that patients had previously
confessed their sins, and by adhering to the detached model of health care).
Detachment as regards bodily functions derived from the idea that the body was not
only the fruit of divine creation but also an obstacle on the path towards God, in
conflict with the soul, therefore there was a limit to hygienic procedures which were
linked with bodily contact.
This detached model of health care questioned the so-called “popular medicine,” a
range of consolidated holistic medical and nursing practices focused on a visceral
knowledge of body/soul, provided by popular healers such as the barbitonsor, ceru-
sicus, cataract couchers, lithotomists, phlebothomists, herniotomists, booth-surgeons.
Holistic healing practices were also carried out by the so-called vetulae (in Latin “old
women”)—who possessed “first hand” knowledge of the body, due to their experience
of childbirth and motherhood and to their daily “routines” for “survival.” The
knowledge possessed by these vetulae was strongly refused by the Church, which
declared that any woman daring to dispense medical care without prior medical
education was a “witch” and, consequently, to be condemned to death.
This is the cultural basis of what Henry Mintzberg (2012) calls “the myth of
clever social engineering” (see Chap. 5): “the health system can be fixed by experts,
not people on the ground, who understand the problems viscerally, but specialists in
the air, such as economists, system analysts and consultants.” The Medieval doctors
can be considered the first “specialists in the air”: specialists of sanitas corporis and
salus animae, who dispensed a detached, top-down care in conformity with the
reigning perspective of the Church—the only faster mother that Science could find
(Fielding 1913, p. 112). Later this detached, top-down conception will be consol-
idated in the development of modern medicine and will pass from medicine to
health care, leading to a centralist approach to the administration of care, both at a
macro- and a micro-level.
The modern age was the epoch of secularization: the starting point was not any
more God, but Man, with his autonomy and possibility of exercising full control
over natural phenomena. In the late sixteenth century, Bacon theorized that, through
a “new” science, a powerful understanding of an essentially ordered physical world
could be gained. This view was reinforced in the Newtonian mechanistic view of
the world and continued to develop in the physical sciences throughout the eigh-
teenth and nineteenth centuries, combined with a triumphal vision of unlimited
18 2 The Historical Evolution of Health Concepts and Approaches …
scientific progress. On the other hand, the medieval dualistic conception of body
and soul consolidated during the Renaissance and reached its peak in the eighteenth
century with the Cartesian idea of Man as a soul separated from the body and
isolated from the external environment. The concept was then widely assumed and
explored by many philosophers, from Locke to modern existentialists. Separations
and dichotomies became fundamental pillars of modernity.
These ideas had a profound impact on the conception of medicine and of
health/illness, stimulating the belief in the possibility of exercising full control over
illnesses, with its potential for creating a new order of knowledge that relied on the
possibility of measurement.
The ideal of objectivity gradually began to gain ground within medical disci-
plines, involving a scientific approach to the human body and, at the same time, its
separation from subjective factors. While in the Middle Ages the dichotomy
body/soul had been resolved by emphasizing the spiritual elements, in modern
times there was an increasing focus on the organic components of pathologies. The
human body was considered a machine, and health linked to its smooth functioning.
A biomechanical approach, based on the application of the laws of physics,
mechanics and chemistry to organic processes, took hold within medicine and
established the research agenda for three centuries. It led to huge progresses in
therapies, but also to an increasingly reductionist concept of medicine and an
impoverished notion of the doctor–patient relationship.
In this context, hospitals were the fulcrum of the health care system, designed to
pursue research and clinical aims, rather than charity and humanitarianism. They
were consequently designed according to the rules of hygiene and hospital engi-
neering, structured in relation to the scientific disciplines and organized in com-
pliance with the bureaucratic hierarchical model. The latter was functional to
specialization and research objectives, and favoured the development of clinical
knowledge, but produced a focus on diseases rather than on patients, perfectly in
line with the scientific conception of medicine and health/illness that had gradually
been consolidating.
Hospitals were considered not only a treatment center, but also laboratories for
the study of diseases to develop new knowledge and competencies, and, therefore,
were completely separated from the daily lives of patients, clearly distinguishing
the scientific knowledge (deriving from the academic disciplines) from the
“non-scientific” knowledge (deriving from socio-cultural and environmental ele-
ments). A series of new techniques were introduced, such as the analytical obser-
vation of patients, the recording of a thorough description of their case histories and
symptoms, the comparative study of clinical symptoms and anatomical lesions, the
statistical recording of syndromes and the measurement of pathological phenomena
by means of metric criteria. All these techniques were founded on the myth of
measurement (discussed in Chap. 10) which consecrated hospitals as sanctuaries of
objectivity and experimental knowledge.
The above trend accelerated during the nineteenth century, encouraged as it was
by pharmacological and technological developments. On the one hand, progress in
bacteriology strengthened the dualistic notion of illness as a conflict between two
2.5 Mechanism and Measurement in the Modern Age 19
The twentieth century can be considered the century of a new complexity, which
has had a profound impact on medical and health care models.
The paradigm of modern science and, in particular, the triumphal vision of
progress started to be questioned, as awareness of vulnerability and risks increased,
favouring the progressive affirmation of a more complex and moderate relationship
between Man and Nature, not in terms of control, but rather of harmony and
interdependence. At the same time, the modern conception of Man based on the
dichotomy body/soul was being discussed critically, and a more holistic vision of
Man as the product of multiple linked factors emerged. Consequently, a new
holistic conception of health, in line with the new conception of Man and his
relationship with Nature, started to take shape in most Western societies.
This cultural revolution evolved jointly with other developments in the epi-
demiological field. While acute infectious illnesses declined, new pathologies
emerged, generated by complex and combined causes, partly unknown and char-
acterized by no clear pharmaceutical remedy. In addition, the abuse of antibiotics
provoked the chronicization of pathogenic processes, and the transformation of the
fight against bacteria from a patchy battle to a prolonged war, with neither winners
nor losers. The epidemiological transformation promoted the epistemological
change of medicine from a criterion of strong causality, typical of infectious dis-
eases, to that of weak causality, typical of chronic degenerative pathologies.
The discovery of X-Rays at the end of the nineteenth century, the technological
improvement of diagnostic tests, new and more effective drugs, advanced imaging
equipment, the use of sophisticated devices and medical technology for treatment
and rehabilitation, on the one hand, helped doctors to be more effective in early
diagnosis and treatments, while, on the other hand, generated the risk of anonymous
doctor–patient relationships. An increasing number of doctors started to rely more
and more on test results, normality range for glycaemia, cholesterol, blood cells
composition, blood pressure and others, rather than on their own capacity to con-
sider the patient as a whole. The advancement of technologies pushed towards an
extreme specialization, which could be managed in more and more complex
delivery organizations, such as the ambulatory with many specialists, the hospital
with dozen of specialized units, hundreds of beds for inpatient units and for out-
patient treatment, thousands of doctors, nurses, professionals and administrative
staff. Doctors, nurses, other professionals, patients and their relatives had to comply
to the formal rules of the organization and, because of that, personal relationships
20 2 The Historical Evolution of Health Concepts and Approaches …
became weaker. Continuity of care was not guaranteed and only under certain
conditions patients could ask to be treated by one specific doctor.
The twentieth century is also characterized, at least in Europe and Western
developed countries, by the development of sickness funds, social insurance funds
(voluntary or compulsory), private insurance integrated with national health sys-
tems (based on the principles of universal coverage, equity, solidarity), private
insurance integrated by public financed programs for poor, elderly and disable
people (US). For this reason hospitals and other delivery organizations, public or
private, are conditioned by whole-system rules, such as structural and functional
requirements, manpower standards in relation to beds, parameters related to funding
or reimbursement systems (DRG’s, length of stay, typology of treatment/surgical
procedure, others).
In this increasingly complex environment, health care is affected by a large
number of factors, such as
• Sociopolitical environment, in particular health care models (universal coverage,
sickness funds, private insurance, public–private funding and delivery) and
health policy (role of prevention, acute care, outpatient treatment, chronic dis-
ease, continuity of care, home care);
• Political-institutional processes, in particular priority-setting among different
health conditions and the relation between different levels of the institutional
system (State, Region, local health organization, hospital, etc.);
• Administrative models, in particular for public authorities, regulators, policy
makers;
• Organizational models, in particular the functioning rules of hospitals and other
delivery organizations;
• Technology, in particular drugs, equipment for laboratory tests and imaging
devices and other medical technologies;
• Professional approaches, in particular new solutions to the specialization–inte-
gration challenge, due to the evolution from cure (for acute patients) to conti-
nuity of care (for chronic health conditions), from a focus on diseases to a focus
on health.
developed in the period between the two world wars and consolidated after the
second world war with the Beveridge reform in the UK and similar reforms in other
countries during the 1950s–1970s of the last century. At the core there were a series
of demands made by the “Movements for Health,” inspired by new ideas emerging
in many industrialized countries: the concept of universalism, settled in the throes
of the “liberation from need” principles sustained by the Atlantic Charter (1941); of
“welfare from the cradle to the grave,” as recommended by the Beveridge Plan; and
of health considered as “a state of total well-being—physical/psychological/social
—and not merely absence of illness,” as recognized in the 1948 World Health
Organization (WHO) constitution. The peak of the international cultural evolution
on health matters was represented by the Alma Ata conference of 1978, which
sealed a unifying vision of care for both the physical and psychic health of
individuals.
After the 1973 oil crisis, all Western developed countries experimented a double
trend: increasing public expenditure (in some of them, increasing public debt) and
the awareness of the public bodies’ inefficiency. The dimension and the causes of
the public sector inefficiency were analyzed both from the theoretical point of view
and by empirical research.
From the theoretical point of view, the negative trade-off between the objective
of getting short-term political consensus and that of pursuing efficiency and eco-
nomic sustainability in the long run was underlined. So, public ownership and
political power to appoint public and, in particular, health care managers, was
considered as the main weakness: low efficiency prevented equity or caused high
expenditure and increasing public debt. This theoretical approach was supported by
an increasing volume of empirical research which compared the efficiency of public
and private hospitals or other delivery organizations. The validity of this compar-
ison is widely commented in this book (Chaps. 8 and 9). The consequences were
the spreading of a managerial approach (so-called New Public Management) in the
public sector and a new wave of privatizations.
At the beginning of the 1980s, the time seemed ripe for the introduction of
“business” in the health care sector, in relation to a series of concomitant factors:
the hegemony of Reaganian/Thatcherian-inspired policy; the reformist trend inau-
gurated by the United Kingdom linked to the diffusion of the New Public
Management; the loss of legitimacy on the part of national and local governments
following cronyism and the politically influenced degeneration of Health
Authorities and organizations; the significant raising of citizens’ expectations
combined with little trust in public institutions.
During the 1980s and the 1990s of the last century, many European countries
approved reforms inspired by the myth of business (see Chap. 7), that pushed
towards the introduction in public hospitals and other delivery organizations of
business-like methodology and techniques such as planning, programming, bud-
geting systems, managerial and cost accounting, performance management, orga-
nizational restructuring, human resources management, rewarding systems.
Sometimes economic and financial performance indicators were dominant, some-
times they were better balanced with health performance indicators, but anyway the
22 2 The Historical Evolution of Health Concepts and Approaches …
All the myths that have characterized the history of health care systems must be
considered in the perspective of a new trend of complexity, that is already here and
that will characterize ever more the immediate future.
On the one hand, we are witnessing increasing scientific progress, which can be
intended as the ability to solve problems in order to create, challenge and try to deal
with new complexity. Health care systems, in the last quarter of century, have been
affected by three main phenomena, which allow delivery of increasingly expensive
and successful health treatments (as proved by the improvement of the statistics of
life expectancy or infant mortality rates):
2.8 The Complexity Trajectory and the Myth of Health Systems’ Failure 23
The increasing pressures generated by the above-mentioned trends give the idea
that health care systems are failing, since they are raising the costs of care and, at
the same time, they are profoundly changing the relationship between patients and
doctors (as well as other health professionals, such as biologists, bio-engineers,
nurses), so that the former are not available to pay for the advanced and more
expensive care. This dynamics are at the basis of the myth of health care failure.
References
Fielding HG (1913) An introduction to the history of medicine, IV edn. W.B. Saunders Company,
Philadelphia, p 112
Fulghum R (1988) It was on fire when I lay down on it. Ivy Books, New York
Mintzberg H (2012) Managing the myths of health care. World Hosp Health Serv 48(3):4–7
Chapter 3
A Plural Analysis of Health Myths:
Overview of the Volume
All the contributors who comment on Myth #1, i.e. The Health Care System Is
Failing, agree that the real issue is not failure, but pressures on the health care
system. Because of scientific and technological progress, an increasing quantity of
health needs can be successfully met and this trend will be even faster and relevant
in the future. In addition, social and political factors influence health expenditure,
which has shown a rapid increase since the 2007–08 crisis. Moreover, the health
systems have been affected by radical changes from acute care to chronic care,
mainly because of an ageing population. So, the paradigm to be adopted is not the
level of expenditure as a share of GDP, but the relationships between quantity and
P. Adinolfi (&)
CIRPA (Interdepartmental Centre for Research in Economics,
Law and Management of Public Administrations), University of Salerno,
Fisciano, SA, Italy
e-mail: padinolfi@unisa.it
E. Borgonovi
Public Administration and Health Institute “Carlo Masini”,
University “Luigi Bocconi” of Milan, Milan, Italy
e-mail: elio.borgonovi@unibocconi.it7
The second myth assumes that the health care system can be fixed by
outside-the-box social engineering through large-scale, top-down, externally driven,
out-side-informed approaches. Emanuele Lettieri and Cristina Masella assert that
3.2 Myth #2: The Health Care System Can Be Fixed by Clever Social Engineering 27
Henry Mintzberg, on the one hand, confutes the myth of clever social engineering,
but, on the other, creates another myth, that health care will be fixed by health care
professionals themselves through small-scale, inside-informed, professionally dri-
ven, evolutionary approaches, continuously amended in the light of experience. The
two authors firmly reject this new myth and propose an alternative integrative
approach, drawing on their research at the “Politecnico di Milano” regarding the
adoption of Electronic Medical Records and of Integrated Care Pathways: their
findings show that relevant and long-lasting changes are likely to occur when
outside-healthcare experts and context-wise professionals collaborate in the inno-
vation process, sharing and mediating their visions, core values and positive
energies.
Corrado Cuccurullo echoes these arguments, arguing that managing change in
health care organizations is not a problem of clever social engineering, but rather a
problem of including different internal and external cultures in the change process.
So, the over-emphasis on the individuals at the top should be replaced by a broader
vision, which values the important roles of middle managers and of outsiders, such
as external consultants, patients, suppliers and government. Managers indeed per-
form as internal catalysers of innovation and their style for driving change is
crucial. According to context, different managerial styles could be more or less
appropriate to foster innovative change in the health care arena: direction, inter-
vention, education, participation. These styles are not mutually exclusive: they can
be combined and recombined over time, and the managers with the greatest ability
in managing change are those who have the ability to adopt different styles, or
combinations of styles, in different circumstances.
Fernando Giancotti adopts the framework of “the new science of chaos and
complexity” to interpret the functioning of health care organizations, thus allowing
for a reconciliation of the positions of Lettieri-Masella and Cuccurullo with Henry
Mintzberg’s demythologizing exercise. The complexity framework does not pro-
vide support either to an approach that advocates the supremacy of clever social
engineering, or to another one that advocates the supremacy of incremental,
small-scale, professionally driven change. Whereas conventional reductionist sci-
entific thinking assumes that we shall resolve all the unresolved issues, complexity
theory is comfortable with—and even values—inherent tensions between opposite
approaches, that are to be reconciled (and not resolved). Henry Mintzberg himself
considers that the complexity and richness of reality does not tolerate unique,
extreme solutions, and in the specific case he does not deny the importance of
clever social engineering, but rather its mythologization.
In this perspective, Lettieri and Masella’s idea that change could be realized by
combining the top-down with the bottom-up approach, by relying on sound and
dynamic partnerships between outside-healthcare social engineers and context-wise
health care professionals, is appropriate to the complexity framework and is also
closer to Henry Mintzberg’s view than the two authors themselves admit (for the
sake of argument, they declare their firm disagreement with Henry Mintzberg’s
opinion). Also, Cuccurullo is in line with Henry Mintzberg, when he recommends
blending and forging over time different and sometimes opposing leadership styles.
28 3 A Plural Analysis of Health Myths: Overview of the Volume
Relying on the complexity framework, Giancotti firmly denies that clever social
engineering is the panacea to the problems of the health care systems, and proposes
developing polycentric structures of high-performance modules well connected
with the mainstream of organizational knowledge flowing top-down, bottom-up and
throughout. He establishes a bridge to Myth 3, highlighting the overlapping
between the two myths, as Myth 2 implies the assignment of big challenges to
heroic leaders. One could imagine that a military view of leadership and change
management is established on the command and control paradigm, instead the
Airforce General strongly criticizes the Myth of the Heroic Leader, whom he
colourfully defines as “hopeless bottleneck,” contending that health care organi-
zations need an agile and diffuse leadership, able to “trigger the motivational
hyper-cycles and a related networking of hearts and minds thus multiplying and
boosting the overall capability of the organization.” This view of change and
leadership is also corroborated by an interesting anthropological consideration.
Compared to command and control leadership, diffuse and empowering leadership
is more capable of satisfying our ancestral needs and is in far better accord with
human nature, which has been shaped during the millennia in between our chim-
panzee past and our civilized present. Rather than in contemporary complex soci-
eties, we have been ecologically adapted to life in gathering-hunting societies,
which lasted an incomparably long period (before different forms of social orga-
nization emerged) and therefore constituted the environment where any natural
dispositions that we possess even today have evolved: despotic leadership and
top-down change was made unsustainable by the material conditions of such
societies (such as small groups with little division of labour, cheap exit-options for
dissatisfied people, the possibility of building coalitions to put down would-be
dominators, little property and difficulty in stockpiling durable resources and
exploiting skills for political advantage).
As regards the myth of the Heroic Leader, Colao and Riccio assume a collectivist
perspective and frame health leadership as a group matter, rather than an individ-
ualist concern. They appear in line with Henry Mintzberg when recognizing the
need to break away from past associations with what leaders are and how their
medical training places limitations on their ability to properly function in a health
care organization that is patient-centered with team-based delivery of care.
Situational awareness, proactivity, openness, knowledge sharing, followers
empowerment and engagement are considered to be the main ingredients of the
recipe for effective leadership in health care.
3.3 Myth #3: Health Care Institutions as Well as the Overall System … 29
All contributors commenting on Myth #4, which states that the health care system
can be fixed by treating it more as a business, have two common starting points: the
recognition that economic sustainability is a critical issue, and that cooperation is a
peculiarity of health care services. There is no need to clarify the first issue, because
financial constraints affect not only public finance, but also household purchasing
power for health care services both out of pocket and subscription of private
insurance. Something more can be said with regard to the second issue, because the
contributors argue that market competition cannot guarantee cost containment,
appropriateness, effectiveness and quality of care. Moreover, competition can
destroy physicians, nurses and other health professionals’ motivation and prevent a
holistic approach to patients. Rather than an economic or a business-like approach,
what is needed is a humanistic one. Nevertheless, it is necessary to introduce and
strengthen managerial culture, principles, criteria, techniques and instruments.
30 3 A Plural Analysis of Health Myths: Overview of the Volume
Federico Lega, after stating that there is no evidence that the business-like
approach produces benefits, underlines that “business-driven health systems cost
more and have greater problems in equity in access to health care delivery, variation
in outcomes, adverse selection and opportunistic behaviors.” If managing the health
care system as a business is not the right thing to do, managerial knowledge and
consolidated tools can help to do things in the right way. Then he focuses on
strategic management, performance management, quality systems, lean techniques,
operations management, business planning, human resources management that can
be helpful in dealing with a complex and turbulent environment.
Emanuele Vendramini’s views are summarized in three words: ambidexterity,
professionalism and accountability. Ambidexterity has a twofold interpretation.
Firstly, to guarantee good care at present and, in the future, being innovative in terms
of technology and clinical pathways. Secondly, to guarantee health care and, at the
same time, financial sustainability, a challenge that in the past was much easier than
currently. Vendramini relates professionalism to the intrinsic motivation of physicians
(and nurses) to treat patients and not to pursue the highest possible remuneration, as
happens in market-driven activities. Of course, not all physicians have this motivation
but, in general, “for a physician it is important to have the right number of cases (and
case mix) to be able to tackle all the different situations and be able to offer a state of
the art service.” Accountability in health care systems requires clinical involvement
and a very sophisticated performance measurement system.
Giuseppe Festa and Enrico Coscioni’s main points can be summarized as fol-
lows. There is no doubt that economic issues are becoming more and more relevant
also in national health systems, in which service costs are covered entirely or mostly
by taxation. Nevertheless, economic logic and principles must and should remain
ancillary to health issues and to human relationships between health care profes-
sionals and their patients. Economic criteria should never become a priority because
this will produce what the authors define as defensive economy, that means
undertreatment to cope with financial constraints. Defensive economy is the con-
trary of defensive medicine, that increases cost because of overtreatment. The
authors conclude that, while standardization can be a useful tool for better orga-
nizing health care structures and systems, personalization remains the pillar of
health care services.
The comments on Myth #5, which states that health care is rightly left to the private
sector for sake of efficiency, are divided in two parts: one related to delivery of
health services and the other related to financing. With regard to the first part of the
problem, the first three contributions state that there is no clear evidence that proves
that private delivery organizations are more efficient. When they are, private
3.5 Myth #5: Health Care Is Rightly Left to the Private Sector, for the Sake of Efficiency 31
organizations generally pursue higher efficiency without considering the final effect
on appropriateness and quality of service for patients. Management models and
tools are not restricted to private organizations, but can and must be applied in all
complex organizations, both public and private. With regard to the second part of
the issue, the suggested mainstream solution is a mix of public and private funding.
This solution is not a choice, but, in some way, seems to be inevitable, because of
the structural increase of expenditure and the difficulties of public finance in all
countries. To overcome this myth a win-win approach for public and private
organizations should be adopted.
Aleksandra Torbica and Oriana Ciani’s contribution make a comparison between
public and private delivery organizations based on three main theories:
agency/property rights theory, public choice and organization theories. According
to the first, it is likely that private ownership achieves lower costs in service
provision compared with their government counterpart. Public choice’s central
argument is that often politicians pursue their own aims rather than the public
interest. Organizational theories focus on the differences of structure between pri-
vate hospitals and state-owned provider organizations. These three theories are used
to discuss the three dimensions of efficiency used in empirical studies: technical,
productive (cost) and profit. The authors conclude that the existing empirical evi-
dence does not always support the positive effects of privatization on efficiency
predicted by the different theories. Public–private distinction is only one part of a
broader and more complex link.
Francesca Lecci and Marco Morelli are very clear and concise in saying that
efficiency is not a peculiarity of the private or public sector. It may be that the
efficiency issue was raised in the past for private business companies that operate in
a competitive market environment, but they analyze many reasons why efficiency is
also necessary for public delivery organizations. At present, the cost-management
approach is much more related to the availability of information rather than to the
nature of organizations (public or private). To support their argument, they mention
the cost accounting system introduced in a public-local health organization and in a
private hospital (IEO—European Institute of Oncology). Then they move towards
the argument that it is important to be clear that what should be measured is not
only efficiency and costs but the value for patients, which is the aim of the public
system rather than that of private providers. They accept the principle according to
which only what is measureable and measured can be improved, but what is really
important is the outcome-input ratio (effectiveness) and not the output–input ratio
(efficiency). While the latter drives private providers, the first pushes public orga-
nizations when social and political pressures are strong.
Michael Drummond and Rosanna Tarricone start distinguishing two components
of privatization that are the financing of the system and the provision of services.
Drawing on the agency theory, they argue that, because patients do not know the
value of services, it may be easier under public financing to prevent escalating costs
rather than with private financing. Of course there are many tools to control the
increase of costs in the private system, but the profitability objective can push up
the prices of services and it may still be more difficult to control the growth of
32 3 A Plural Analysis of Health Myths: Overview of the Volume
expenditure. Then, the authors turn to HTA as a methodology that can be better
applied in National Health Services. Private providers generally use high technology
as a proxy for higher quality and higher prices, while national systems are much more
interested in evaluating the actual benefit-cost ratio. So, they conclude that the private
providers’ objective is higher profitability that can be obtained through higher prices
rather than higher efficiency or that profitability can be obtained through higher
efficiency/productivity without considering appropriateness.
Maurizio De Cicco, Salvatore Russo and Luca Del Bene’s contributions debate the
other side of the public-private issue. In particular, Maurizio De Cicco, after a very
short description of the evolution of the Italian NHS, analyses the role of comple-
mentary health care (private social security funds agreed between companies, unions
and private insurance). He is convinced that, in Italy and in the European welfare
model, public financing is still the keystone for generalized health care. Private
financing can be only an additional contribution to support the evolution of health
needs. He quotes the situation of innovative drugs that can be easily introduced into
the market if some private insurance of social security funds accept to pay for them.
His conclusion is that the actual problem is not more efficiency in provision, but a
mixed system of financing and provision aimed at promoting innovation.
Salvatore Russo e and Luca Del Bene are interested in financing investment in
health care system rather than in financing current expenditure. Starting from the
evidence that public health care systems are under financial pressure, they see in the
public–private partnership (PPP) one of the possible solutions. This approach was
developed under the New Public Management (NPM) practice, that characterized
the 1980s and 1990s of the last century. The most common public–private part-
nerships deal with the building and management of hospitals. Its main benefit is to
attract private investment based on the win-win principle. Public delivery organi-
zations can renew hospital technologies they could not otherwise afford and private
investors can pursue their profit objective. So, the former can guarantee higher
quality of services for patients and the latter can pursue profitability, because they
can manage some core and non-core activities, such as facility management for
buildings and supporting systems, the thermic heating system, refrigerator system,
air conditioning, electrical equipment and plumbing, medical gas supply systems,
catering for in-patients and staff, cleaning, disposal of waste material, reception,
reservation center, parking and others. Without solving the problem of more effi-
ciency for private institutions, authors recommend PPPs as an institutional formula
where equal roles and tasks still meet the value for money.
Myth #6, which states that health care is rightly controlled by the public sector, for
the sake of equality, is analyzed from different perspectives: the concept of equity,
the comparison between public and private provision, the competition and
3.6 Myth #6: Health Care Is Rightly Controlled … 33
collaboration challenge, the inadequate policy making and control for drugs and
medical device innovation, the role of private not-for-profit organizations and
low-cost providers. A common framework is that there are very different levels of
analysis: the general principle of Universal Health Coverage that can be guaranteed
only by clear public regulation, at least in European countries; the health care policy
setting that is increasingly more inadequate, because private interests condition
public authorities; the health care delivery process that must be based on collabo-
ration rather than competition and on an integrated approach to patients; last but not
least, the rising of a new business model that is private not-for-profit organization,
which can guarantee low cost, high quality and customized services.
Andrea Silenzi, Alessio Santoro and Walter Ricciardi’s main concern is health
system complexity, because it affects the political, social and financial context
where it operates. The declaration of the World Health Organization, according to
which everyone should have access to quality health services everywhere without
financial hardship, is an abstract principle, but must be concretely applied. The
financial constraint is a real issue, as the demographic trends show that, by 2050,
the 37% of the European population is expected to be over the age of 60, and
similar trends towards an ageing population characterize the US and China.
Therefore it is crucial to clarify the difference between equity and equality. Their
reasoning is that equality means the same services for all, while equity is related to
the concept of social justice: people should get the health services they need and
fund the health system according to their ability to pay. However, here is the
problem for countries that adopted the Universal Health Coverage model, because
public authorities have difficulties in setting priorities aimed at guaranteeing equity.
To overcome this criticism, the authors’ suggestions are to redefine the governance
system, in order to involve as many actors as possible, to strengthen the social and
political leadership that is a requirement for changing in the management process,
to diffuse a greater sense of responsibility for both patients and delivery organi-
zations, to invest in education for health care professionals, to design appropriate
policies, to introduce formal systems for monitoring and evaluating the impact of
policies.
Anna Prenestini and Stefano Calciolari shortly describe the evolution of public
intervention in the 60–70 years. After World War II, many countries converged to
establish a relevant role of the public subject in several sectors, included health care.
Since 1980, the prescription of fixing major problems by treating such sectors in a
more business-like manner became quite popular. This evolution is due to social
pressures and financial constraints and is based on the overrating of the positive
effect of competition. Then they introduced the debate between competition and
collaboration, saying that, for a large part of health care services, the latter is much
more beneficial than competition. The cooperation between health care profes-
sionals takes different paths: multidisciplinary teamwork, collaboration between
specialists of the same disciplines and/or different professions (e.g., between doc-
tors and nurses). The conclusion is that public control is not only a problem of
equity but the best way to foster multidisciplinary, multi-professional cooperation
and integrated service delivery.
34 3 A Plural Analysis of Health Myths: Overview of the Volume
Silvio Garattini and Vittorio Bertelè underline that the health care sector is
unique because quality is by far more relevant than other goods or services, so the
quality–price ratio cannot be left only to the strategic choice of private providers,
which select the most profitable pathologies and interventions. Even if public
policies should take care of everybody and, in particular, of rare diseases, often
public health authorities do not promote innovation. The authors examine what
happens in the pharmaceutical industry, stating that companies try to sell everything
they produce. They are not interested in the actual advancement of innovative
drugs, as in the last decade only a little more than 1% of over one thousand
authorized medicines have offered a real advantage for patients. They support this
statement with many examples, drawn from studies carried out in the Mario Negri
Pharmacology Institute. In conclusion, for the authors the crucial point is not the
alternative between public and private but, is to strengthen scientific knowledge
about what is useful for patients and what is not. Equality in health is a mirage that
is hard to achieve. Public institutions are the only ones that can aim at this while
private institutions have to put other goals first.
Riccardo Mercurio, Stefano Consiglio e Mariavittoria Cicellin introduce a quite
different perspective. The real problem is not the trade-off between equality (or
equity) of the public sector and efficiency of the private one. A third party, social
enterprises, can be the right solution. These private not-for-profit organizations are
more flexible than public authorities and less oriented towards profit maximization.
The authors’ framework is the welfare state reform, which characterized many
European countries and is supported by the European Social Innovation Initiative.
In recent years, in Italy there has been a flourishing of social innovation in the
health care system that provides low-cost services without reducing the quality of
care. They analyze six cases that started a project to develop medical group prac-
tices involving public and private partners. This is a new business model that helps
many people no longer able to afford health care services not guaranteed by NHS.
In conclusion, the transformation of patients into customers/consumers, as well as
the nature of not for profit that characterizes the low-cost services projects could
weaken the role of the state as guarantor of collective public health, transforming
health care in a market not distorted by the profit maximization logic.
Matteo Mario Pietro Motterlini and Carlo Canepa observe that the myth of mea-
surement carries the “rational agent” assumption, and therefore sacrifies, in the
name of exact measurement, some reality aspects in terms of their richness, con-
crete decisional contexts and decision makers’ cognitive faculties. The way in
which choice options are structured shouldn’t modify a rational agent’s preferences,
but in practice this is not true: small, low-cost, well-devised architectural elements
can guide towards virtuous decisions. Therefore, the rhetorical question is: if we
accept that what can’t be measured can’t be managed, what do we really want to
3.7 Myth #7: Myth of Measurement 35
measure and manage? The decisions of omniscient and hyper-rational agents, which
operate in abstract economic models, or the decisions of human beings made of
flesh and bones, with their cognitive boundaries and emotive conditioning, which
work in specific “choice environments”?
The Authors propose merging economics with cognitive psychology so that the
systematic nature of human irrationality can be taken into account, and policy
makers can overtake traditional models that interpret social science in quantitative
and abstract terms, and use tools based on evidence. These tools can be elaborated
according to evaluative experimental methods, like randomized controlled trials.
Giuseppe Iuliano, Gaetano Matonti, Paolo Tartaglia Polcini and Ettore Cinque,
taking into account the criticism of Henry Mintzberg about measurement in health
care, examine the accounting literature on the topic, focusing on the academic
debate concerning the relevance and usefulness of measurement systems in health
care organizations. Once acknowledged the unescapable need for a measurement
system in health care, the authors discuss what should be measured and what should
not in order to overcome the critic raised by Henry Mintzberg. In their view, the
focus should be on the measurement of quality and outcome, and, from this point of
view, promising developments may come from Activity Based Costing methods.
These methods, which have been experimented at Harvard University, widen the
observation of the whole health care processes and more specifically identify their
related costs, to be compared with related benefits. The patient care cycle starts
from the first pre-operation appointment and ends one year after the day of treat-
ment (Kaplan and Porter 2011). Extending the analysis to one year from the
treatment allows for measuring all aspects, even the social outcome and patient
experience measures.
Sabina Nuti expands the literary review on the criticalities of performance
measurements, examining some negative consequences of performance data use:
tunnel vision, sub-optimization, myopia, measure fixation, misrepresentation,
misinterpretation. These dysfunctional effects are all result of some violations of the
“synecdoche principle,” which assumes that the measure is able to satisfy both the
conditions of representativeness and accuracy, by precisely representing the whole
object. The inability of the indicators to portray the complexity of the evaluated
object is at the basis of their bureaucratic use, and, for this reason, Sabina Nuti
believes that the risk that administrators and clinicians are obsessed by measure-
ment appears to be still very weak. In her view, the keystone of improvement
process in the health care system is physicians’ engagement. Professionals and
managers “should share a joint accountability for both the outcome and the costs of
the care path in which they are involved and not just for the patients they care for or
the phases which they are in charge of.”
The theoretical framework outlined by the previous authors is complemented by
the empirical analysis carried out by Marina Davoli, Chiara Marinacci and Renato
Botti, who investigate the challenges of measurement and performance manage-
ment in practice, by examining the experience of the Italian National Health
Service. By illustrating the various government initiatives, such as the monitoring
of Essential Levels of Care (LEA), the National Outcome Programme, the
36 3 A Plural Analysis of Health Myths: Overview of the Volume
Regulation on Hospital Standards, the authors show how the Italian NHS is currently
evolving towards giving greater importance to measurement systems, both process and
result oriented, in order to identify areas of inefficiency, inappropriateness and inef-
fectiveness of services and facilities, while monitoring equity in access and promoting
continuous improvement of health care organizations. The authors also identify, in line
with Henry Mintzberg, some criticalities related to an automatic and exaggerated use of
measurement without judgment. For a better balance between measurement and
judgement, they suggest some procedural recommendations, such as: establishing a
systematic process of data quality control and a systematic update of measures used,
involving different stakeholders, and ensuring transparency of methods and operational
definitions, making it possible for all the assessed administrations and/or providers to
replicate measures. They also recommend adapting measurement for the different
purposes (budgeting, performance management, provider payment mechanism, clinical
audit, provider accreditation etc…), thus avoiding automatic applications, and selecting
measures taking into account the cost of data collection and reporting, as compared to
the measure’s impact on quality and outcomes. They add an important dimension to be
considered in selecting quality standard measures: the safety of the process of care
delivery, based on critical evidence-based practices strongly related to health outcomes.
Francesco Bevere and Paola Adinolfi observe that, despite the growing sensi-
tivity on the issue of expenditure control and health risks, solutions addressing the
problem in an integrated manner are yet to be found. The available supply is mainly
advisory and is confined to: staff training on costs, risk and quality issues; financial
analysis aimed at a better recognition of the benefits produced by the
Diagnostic-related-groups; process certifications based on IT modelling; document
management procedures aimed at better legal protection.
When going beyond mere document management procedures, inspired by a
defensive administrative approach—which adds to the defensive medicine—the
typical approach is aimed at identifying the “best practice” for specific processes, or
related to specific risk management aspects. In most cases, there is acceptable
compliance with one or more “best practice” models, but also a dramatic drop in
reliability and consistency when evaluating the process as a whole. Even when
managing to achieve full application of the entire treatment process developed in
the literature with the input of the relevant national and international scientific
associations, there is hardly a context-specific scope of application, involving
ICT-based tools, able to create the necessary interconnections across the various
clinical and health information systems involved, and promote the analysis of
critical areas and possible innovative connections that include all the assets and the
subjects involved in the value chain. Moreover, there are no cases of an integrated
evaluation of costs, risks and outcomes. The authors add further evidence of the
dysfunctional consequences of a piecemeal, simplistic and obsessive approach to
measurement, highlighting its negative effects on the spending review carried out in
the last few years in many countries.
They recommend developing innovative tools for the analysis and formal
modelling of social-healthcare processes, in order to produce integrated (and even
inter-organizational) paths featuring an experimental approach capable of
3.7 Myth #7: Myth of Measurement 37
accommodating, on the one hand, the established scientific references and, on the
other, the local and structural variables related to individual patients, in a complex
perspective in which all the relevant dimensions (costs, risks, outcomes) are mea-
sured and all actors (including the patient and his/her family, as well as suppliers)
are part of a process of creation of health as a value.
The reconceptualization of measurement systems paves the way for overcoming the
myth of scale. Scale has been considered a recipe for success over the last 70 years:
managers and entrepreneurs realized that “the bigger their estates, the easier it was
to gain and sustain a competitive advantage, typically in the form of lower unit
production costs, higher overall productivity and access to large R&D budgets”
(Calvo and Scaramuccia).
The relevance of the myth of scale in the health care sector is evident for the
merging wave occurred over the last decade: as observed by Cuccurullo, in Italy the
number of public health care organizations was reduced by 23%, with an accel-
eration in the last five years, particularly in regions under cutbacks plans. The
increase in size is driven by the pursuit of technical optimality, inspired by the myth
of scale. As Davoli, Marinacci and Botti observe, the association between volume
of activity and outcomes, documented in several systematic reviews, should be
combined with a more complex analysis of the specific context, considering the
relationship between treatment effectiveness and costs or the geographical distri-
bution and accessibility of health services. The lack of such a contextual analysis
can produce acritical and simplistic decisions, as clearly highlighted by Henry
Mintzberg (2009, p. 165) “To manage nursing in a hospital seems natural enough.
But what about managing nursing in two hospitals, a few miles apart, that have
been magically merged on a sheet of paper?.” Cuccurullo points out that to date
large size has shown more negative effects on patients than positive ones. In the
face of abstract benefits, there are, in fact, some hidden costs, related to the increase
in the number and diversity of the stakeholders, the increase in the cognitive
complexity managers has to cope with, the difficulty for managers in nourishing the
motivation of their followers.
Emphasizing the consideration of motivational aspects, Giancotti observes that
the small size allows for the fulfilment of human deep, ancestral needs, which have
origins in our remote past (dating back to the Palaeolithic), and that the big orga-
nization could recover a more human dimension by organizing itself as a network of
teams at all levels.
Rocco Palumbo, Gabriella Piscopo and Maria Grazia Sampietro contribute to
shedding light on this argument, by examining, from a Complex Adaptive System
perspective, the Mayo Clinic case mentioned by Henry Mintzberg as an example of
how big health care organizations are able to benefit from the advantages of small
dimensions. The authors also contextualize their reasoning on the Italian NHS,
38 3 A Plural Analysis of Health Myths: Overview of the Volume
Evert Gummesson proposes innovative insights into the future shapes of the health
care system which are in line with Henry Mintzberg’s theses but add the new
developments in service theory, particularly the Service-Dominant Logic (SDL).
Discussing the need for a transition from “cure” to “care,” he explores the impli-
cations of “service theory” on the effort to reframe the health care arena. Even
though social engineering is needed to boost structural change of health care
3.9 Health Myths and Service-Dominant Logic 39
References
Kaplan RS, Porter ME (2011) The big idea: how to solve the cost crisis in health care. Harvard Bus
Rev 1271(9):48–64
Langton CG (1989) Artificial life. In: Proceedings of the Santa Fe Institute. Studies in the Sciences
of Complexity, vol 6. Addison-Wesley, Redwood City
Mintzberg H (2009) Managing. Berrett Koehler, Oakland
Part II
Going Through Health Myths
Chapter 4
Myth #1: The Healthcare System Is Failing
Many people say that Healthcare Systems are not financially sustainable and so they
are all ultimately doomed.
U. Veronesi
European Institute of Oncology, Milan, Italy
e-mail: umberto.veronesi@ieo.it
M. Mauri (&)
Direttore Generale, Fondazione CERBA (Centro Europeo Ricerca Biomedica Avanzata),
Piazza Velasca, 5, 20122 Milan, Italy
e-mail: maurizio.mauri@cerba.it
M. Del Vecchio (&)
University Bocconi of Milan, Milan, Italy
e-mail: mario.delvecchio@unifi.it; mario.delvecchio@unibocconi.it
P. Armeni (&)
Cergas, Università Bocconi, Via Sarfatti, 25, 20142 Milan, Italy
e-mail: patrizio.armeni@unibocconi.it
V. Esposito (&) M.P. Iacono L. Mercurio J. Polimeni
Department of Law, Economics, Management and Quantitative Methods, University of
Sannio, Via delle Puglie, 82, 82100 Benevento, Italy
e-mail: vincespo@unisannio.it
The reason for the increase in spending is largely due to modern advances in
medicine and technology: innovation has opened up new possibilities in health care
but has also increased costs to the point that the system is at risk of collapse.
We do not share this pessimistic view, because we think it is important to take
the benefits of the enormous progress made in health care into consideration and not
just the dynamics of its cost.
Over the last 30 years, we have witnessed some major changes in diseases
afflicting human health, including the eradication of smallpox, the sharp decline in
polio and tuberculosis, the drastic reduction in HIV death rates, and the continuing
increase in the number of patients winning their battle against cancer.
Generally speaking, there has been a remarkable increase in life expectancy
thanks to improvements in economic and social conditions, as well as advances
made in health care. These changes were made possible by the revolution in the
equipment used for diagnosis and therapy and the restructuring of research and
healthcare facilities.
There is no question that the latest therapies that are available for treating cancer,
hepatitis, retinopathies and many other conditions, are very expensive but they have
also given rise to some extraordinary improvements in human health, such as:
• vaccinations, enabling us to wipe out smallpox and polio and resulting in cures
for many patients;
• proton pump inhibitors, used to cure ulcers and gastric conditions, avoiding the
need for surgery, once commonplace, and resulting in fewer cases of stomach
cancer;
• surgical radiology, such as hemodynamic therapy, frequently used instead of
heart surgery to correct heart conditions with small stents;
• antiviral drugs, enabling us to control AIDS and avoiding the need for extremely
expensive hospital admissions;
• psychiatric drugs that have made it possible to close mental asylums;
• new imaging techniques (CT, MR, PET, ECO, etc.) that have made the human
body transparent and have eliminated the need for the formerly common
practice of “exploratory laparotomy”.
These innovations have all led to today’s upward trend in spending, but they
have also given us huge improvements in terms of the costs/benefits (in terms of
health) equation.
What’s more, if we expand our outlook to the future, there can be no discussion
as to the extraordinary innovations we are witnessing today at all levels: scientific,
technological, financial, demographic, epidemiological, institutional, cultural, social
and political. Just consider four revolutions, which we can recap as: new findings in
the post-genomics era, biomedical technology, information technology (ICT), and
the patient centrality ethic.
As far as the first revolution is concerned, it is worth pointing out the scientific
discoveries brought to us by genome research, such as transgenic plants, modified
animals, cloning, etc. In medicine, the deciphering of the human genome, whose
4.1 Healthcare Systems: Utopia? 45
decision-making processes affecting his own health and the health of the commu-
nity at large. Greater public awareness, changes in regulations and modes of
practice (such as privacy standards or the new code of ethics of physicians), have
contributed to a Copernican revolution impacting on the fundamental rights of a
person/patient that we can sum up as follows: scientifically valid treatment, prompt
treatment, second opinion, privacy, knowing the truth about a disease, being
informed about therapies, refusing treatment, stating consensus in advance, not
suffering, respect, dignity.
Summing up, these revolutions will lead to the emergence of a new paradigm
marked by the shift away from the concept of advanced disease to that of “pre-
ventive health”. A paradigm of a new medical approach with the following
characteristics:
• proactive or taking the initiative, anticipating Healthcare needs in order to
provide a more timely and effective response;
• predictive, estimating the probability of developing certain diseases;
• preventive, avoiding an illness or treating it as soon as it first appears for best
results, also in terms of quality of life;
• customised, where therapy is “tailor made” to take a person’s physical and
psychological situation into consideration;
• participatory, involving and empowering patients in the care processes affecting
his health;
• specific, considering the individual variability in a person’s genes, environment
and lifestyle.
These trends will shift the focus of attention away from people who are ill to
people who are in good health.
The current patient-care model will change and become a model that puts more
emphasis on all of the stages prior to the onset of a disease and on new methods and
techniques of treatment should a disease be contracted, bringing superior results in
terms of effectiveness, efficiency, real and perceived quality and safety. Since these
trends are structural, we should ask ourselves whether it is possible to have
Healthcare Systems that are effective, fair, efficient, up to date with modern med-
icine and sustainable in terms of their cost. This is only realistically achievable if we
successfully eliminate the main dysfunctions that exist today: questionable political
choices, managers without sufficient knowledge or skills to handle the complexity
of the system, physicians and other healthcare personnel who often pay scant
attention to the actual needs of patients or to ensuring they are treated in an
appropriate manner, the uncontrolled increase in the expectations of the general—
and not always well-informed—public, endemic corruption in sectors generating
4.1 Healthcare Systems: Utopia? 47
Innovation of models of organisation that, for a complex system such health care,
must pursue excellence in management and achieve the correct use of limited
resources compared to the structural expansion of needs and demand. The organ-
isation’s strategies and policies, decision-making and executive processes and its
administrative procedures, have to be rebuilt starting from the holistic observation
of the patient, achieving an interdisciplinary and interprofessional approach, and
abandoning traditional methods revolving around the division and specialisation of
duties and roles. In this context, innovation should impact both on the organisation
within the facility (such as a hospital or local health care authority) and throughout
the health care delivery network as a whole, which should distinguish between its
role as a provider of services on the one hand and its roles related to funding,
programming and the procurement of goods and services (centralised, wherever
possible, to achieve economies of scale and specialisation) and control on the other.
The delivery network must be based on the integration of public and private
facilities, patient care at acute hospitals, local facilities and health care delivered at
home, sharing and safeguarding access to information in order to guarantee the best
response is offered to meet the patient’s needs. It should also include rationalisation,
closing or converting small hospitals, whose level of activity is not able to guar-
antee patient safety, into local (or neighbourhood) hospitals, and the concentration
of funding required for the latest technological equipment at hospitals that are able
to achieve economies of size, scale, purpose and specialisation.
These models of organisation must include governance structures that allow for
the professional autonomy of physicians (and other non-medical professions),
responsible for delivering the proper care, and striking a correct balance with their
managerial responsibilities, and the correct use and organisation of resources at the
different levels in the organisation (central, local health care authorities, hospitals,
welfare and health care centres, departments, wards, etc.).
Finally, organisational models should allow for the integration of staff occupied
in research, training and patient care, in order to promote the rapid passage from the
development of knowledge to the improvement of the quality of life.
Ethically speaking, we may agree with the concept that you can not put a price
on the value of life, but in tangible terms health care always comes with a price tag.
4.1 Healthcare Systems: Utopia? 49
Starting from the consideration that the first resources available are those that are
not wasted, we should underline that increasing the level of spending for prevention
helps to reduce the higher future cost of diagnosis, treatment and rehabilitation.
This link can be proven by applying methods of discounted cash flow or net present
value. What’s more, safeguarding the principles of universal coverage and equity of
care that are the foundations of the National Health Service does not automatically
imply that the only funding available is through taxes levied by the State. Funding
can be raised via regional or local taxes, or through forms of cost-sharing, such as
prescription charges, subscribing to private solidarity funds or private insurance
coverage, provided the quality of services is high. The public may be willing to bear
such charges if they perceive they will be receiving something with a high value.
If we set aside the ideology that was behind the setting up of National Health
Services last century, we can state that a National Health Service that guarantees
universal coverage may well be founded on a combination of public and private
funding, and public and private care providers who have equal dignity, equal duties
and equal rights (when providing similar services to the public), assessed for the
appropriateness, efficacy and efficiency of their delivery of care.
To conclude, we could claim it is not true that Health Care Systems are too
expensive, but it may also be that too much attention has been focused on the
increase in spending in recent years, without considering the even faster increase in
the quantity and quality of care and, above all, without really tapping into the
potential for retrieving resources by combating corruption, inefficiency and waste.
4.2.1 Introduction
Almost everywhere in the world, citizens and patients receive health care services
through complex systems in which public intervention (regulation, financing and
provision) plays a substantial role. From this point of view, health care systems and
their results are more the consequence of an intentional design than the outcome of
an “invisible hand” sustaining and regulating atomistic market mechanisms. If
provision and allocation of services of such an importance for people’s life depend
on collective decisions achieved through explicit (democratic) procedures, not
surprisingly health care systems are subjected to close scrutiny by public opinion.
At the same time and very often, health care is one of the most popular topics in the
public debate as well as one of the hottest issues in the political arena. However, as
Henry Mintzberg suggests, debates and decisions hardly reflect the “actual reality”
of health care systems, emphasising their problems and underestimating the
50 Myth #1: The Healthcare System Is Failing
contribution they give to our better and longer lives. The result is a pressure towards
a change that, even when needed, cannot well distinguish what functions, and must
be preserved in the process of change, from what actually fails and needs to be
fixed.
Why do societies tend to not recognise the real value of their health care systems
and what can be done in order to have debates and decisions based more on facts
and evidence? These questions are really difficult to be answered. The aim of this
contribution is, having in mind the Italian experience, just to offer some consid-
erations on the topic without any ambition to develop a comprehensive analysis.
The dramatic expansion of health care domain and its potentialities is one of the
possible reasons behind a growing dissatisfaction with health care and the demands
for change to the systems. This expansion occurs, and can be interpreted, along
different dimensions.
The most important component is the amount of new procedures and treatments
that scientific and technological progress make available for improving and
restoring health. Opportunities (and costs) for health systems can come from many
different kinds of innovation. In oncology, new expensive drugs are transforming
what in many cases used to be a lethal disease in a chronic condition. Advances in
nutraceuticals raise new hopes for the prevention of age related pathologies like the
Alzheimer’s disease. As the area of what can be useful for human health constantly
enlarges, budget constraints tend to impose tighter criteria to payers, public and
private as well. The result is a widening gap between traditional expectations to
receive everything that can add something to health (every effective treatment) and
what can actually be delivered by health care systems (treatments effective enough
to be considered as reasonably cost-effective).
Moreover, such an expansion is also in part a cause, and in part an effect, of a
blurring distinction between health care and well-being domains that is led not only
by new discoveries and by medical progresses. A shift from acute to chronic
diseases (the new global pandemic), changes in individuals’ behaviours and atti-
tudes (from patient to consumer), changes in health care industry (e.g. diffusion of
low cost–high quality providers) are just some of the factors transforming the nature
of the patients’ interaction with their health care systems. For most people contacts
with health care services are no longer related to catastrophic events, but they have
become part of everyday’s life, so their interaction with health systems is changing
from merely being episodic to a more continuous relationship, if not dependency.
According to an extensive survey on health status and health services con-
sumption of the Italian population, regularly conducted every five years by the
Italian National Institute of Statistics (ISTAT 2014), during the previous year: 72%
of the population bought at least one pharmaceutical product, 51% had seen a
4.2 Health Systems: Too Important to Fail 51
specialist, 49% had a blood test, 36% had an imaging test, 9% experienced a
hospital admission and 7% experienced a surgical procedure. Moreover, most
popular and less expensive services show a significant portion of private financing
(mostly of it on an out-of-pocket basis). Thus, even if the Italian National Health
System (INHS) in principle provides universal coverage for all health care needs,
about 30% of pharmaceutical expenses have been borne by households; 40% of
visits was entirely paid by patient and an another 22% was partially paid
(co-payment). Analogous figures for lab tests are 13% (entirely paid) and 33%
(partially paid); while for imaging they are, respectively, 23 and 32%. For rarer and
more expensive events, such as admissions, private contribution is negligible (less
than 1%).
Italian data tell us to what extent certain areas of health care have become object
of ordinary consumption processes and experiences. At the same time they show
how hard it can be for a public system to cope with a growing and enlarging
demand. The debate around the role of voluntary health insurance in universalistic
systems testifies that problems are not limited to specific countries (Thomson et al.
2015). In this perspective, dissatisfaction with the system—expressing either as
voice (people complaining for waiting times in the public sector) or exit (private
consumption of services already included in the “public basket”)—may be the
result of a fundamental difficulty that a society has in making explicit choices about
what can and should actually be provided under collective responsibility. In fact,
the more the consumption of health care becomes similar to that of any other good
or service, the more the difficulties grow for societies to draw clear-cut and agreed
upon lines separating collective from individuals’ responsibilities. Therefore,
individuals may feel they have the right to receive all services, provided they
pertain to the health domain, while public systems cannot cover the new, larger,
health universe to the same extent as they did in the past. As long as the inevitable
rationing of the more popular, and sometimes less effective, services is more the
result of implicit mechanisms (waiting lists) than of explicit (political) decisions, it
is almost fatal that the public opinion tends to look at the missing part, overlooking
how significant is the part of health needs that health systems are still able to cover.
Public attitudes towards health care systems are the result of different mechanisms
and subjected to many influences. Analysing the paradoxical coexistence among
Canadians of a strong support of their health care model, on the one hand, with a
growing dissatisfaction with health care policy and a demand for radical changes,
on the other, Soroka et al. (2013) propose to look at the issue considering two
different dimensions. The first one is the source of the attitudes towards a health
care system that can be either a direct personal experience or something like a
“collective experience”, that is the perceptions that individuals have of the beliefs or
experiences of others. Both sources influence attitudes, but their relative importance
52 Myth #1: The Healthcare System Is Failing
depends on the specific question asked to individuals. From this point of view, a
judgement about the quality of interactions with doctors is likely to be influenced
by different and more personal sources than a judgement about the quality of the
system in general. A second dimension distinguishes between retrospective and
prospective attitudes. People have attitudes about the past and the future, and they
may differ, as well as they may exert an influence one on the other. Thus, if the past
is the natural basis for any future attitude, expectations about the future may, in
turn, have an autonomous influence on the attitudes about the past.
Building with the two dimensions a two-by-two matrix results in a four-fold
distinction of attitudes on health care: personal retrospective, personal prospective,
collective retrospective and collective prospective. Only personal retrospective
attitudes are likely to be predominantly driven by personal experience, while the
others incorporate different, but significant, shares of perceptions provided by
“external sources.” Among such external sources, media content as well as mes-
sages prevalent in the political arena play an important role in educating citizens
and shaping public opinion. Political messages are conveyed and interpreted by
media, and, in turn, how media frame health care-related issues influence the
political agenda. Therefore, what is usually referred to as public opinion attitudes
about health care (in Henry Mintzberg words: people telling us that their health care
system is failing) is the result of complex interactions among individuals’ personal
experiences, analyses and messages circulating in the political environment, media
representation and interpretation of a given health care system.
Usually, opinions based on personal experiences with health care services are
more positive than those based on external sources. A recent extensive survey about
EU public perceptions of the quality of health care (European Union 2014), shows
that the older the respondents, the more likely they are to say the quality of health
care in their country is good, and the same is true of respondents with higher
education levels. It is well known that, for different reasons, both categories have
higher than average utilisation rates of health care services. Unfortunately, five
years of economic crisis and increasing pressures on public budget may have
worsened individuals’ personal experiences in many countries. In Italy, since the
beginning of economic crisis, public health care expenditures have been stabilised
after two decades of uninterrupted and substantial growth. This has implied, in
certain regions in particular, the implementation in the public sector of severe
cost-cutting policies accompanied by a lengthening of waiting times for visits and
diagnostic procedures. According to Censis (2014) 53.4% of respondents are pre-
pared to wait longer before receiving ambulatory services and 48.1% during the
previous year had decided to opt for private services, because of the waiting times.
The same research shows that negative attitudes on the quality of their regional
health system are growing: only 5.5% of citizens think that it has increased (11% in
2011), 38.5% think that it has decreased (29% in 2011) and 56% think that it has
remained the same (60% in 2011). The main reasons behind negative judgements
are waiting lists and waiting times for ambulatory services, that is, reasons probably
more linked than others to personal experiences.
4.2 Health Systems: Too Important to Fail 53
The undoubtable achievements of health care systems are not so easily recognised
by public opinions in modern societies, while public debates and the dynamics of
consensus tend to ignore facts and evidence, at least in the short term. Traditional
approaches to the welfare state need to be changed, and not only for economic
reasons, but public support for structural changes is weak, and the economic crises
makes resistance to change stronger.
Capabilities to change in any society depend on many factors. The possibility for
the same societies to recognise the real value of their health care system too
depends on many factors. Henry Mintzberg suggests that an indispensable and
preliminary element in order to preserve such important systems is a sensible
diagnosis and tells us that wrong diagnoses, as well as wrong therapies (myths), are
54 Myth #1: The Healthcare System Is Failing
Patrizio Armeni
4.3.1 Introduction
Health has impressively improved over the last century. OECD health statistics
(2015) show that since 1970 there has been a generalised, although not homoge-
neous, improvement in health conditions (e.g. cancer rate survival, vaccination
rates, quality of in-patient care) in the OECD Countries. However, most health care
systems are nowadays facing a variety of challenges.
The most economically advanced countries are capitalising the positive impact
of health technologies and organisational innovations introduced in the last century
with a substantial increase in life expectancy. In 2015, people live on average
5.2 years longer (OECD 2016) than they did in 1990 in the Big-5 European
countries and +4.3 years in the U.S. At the same time, due to a low birth rate,
population in these countries is ageing. The proportion of people aged 65 or more is
19.9% in the EU Big-5 and 14.8% in the U.S., showing a dramatic increase
compared to 1990 (+5.3 points and +2.3 points, respectively, OECD 2016).
Consequently, we are experiencing a higher incidence of chronic-degenerative
diseases, with intensified health and social care needs, requiring a parallel increase
of health-related resources. Moreover, scientific progress and technological inno-
vation are generating opportunities which translated in higher perceived needs,
putting additional pressure on costs. In developed countries, longer life expectancy
and ageing (which is also affecting pension funding) coupled with technological
innovation are often considered to be the drivers of unsustainability of health care
systems.
A similar conclusion, but drawn from different arguments, is often proposed for
developing countries. There, the fast growing number of inhabitants, associated
4.3 Are Healthcare Systems Failing? 55
The literature has extensively analysed the relationship between life expectancy,
ageing and health expenditure. To date, no ultimate evidence is available on this
topic. According to the setting and the methodology used in the various studies that
have tried to shed more light on this relationship, results vary considerably, ranging
from the evidence of a positive relationship (longer life and ageing lead to increased
expenditure) to neutral or even negative ones (e.g. Chernichovsky and Markowitz
2001). This lack of consensus is due, mainly, to (i) the uncertain causal direction;
(ii) the presence of many possible mediators and/or moderators and (iii) the
influence of end-of-life costs. We will present some examples. With respect to the
causality issue, Meerdin et al. (1998) report a positive correlation between
health-related disabilities and health care resource utilisation. Lichtenberg (2004),
instead, finds an opposite direction of causality between public health expenditures
and longevity. Zweifel et al. (2005) support the hypothesis of a two-way direction
of causality between ageing and health expenditure. As for the end-of-life treatment
costs, they have been recognised as a crucial influencing factor (Lubitz and Riley
1993; Garber et al. 1998; Hogan et al. 2001). In fact, after assessing the costs
incurred during the last year of life, the relationship between longevity and health
care expenditure can turn non-significant (O’Neill et al. 2000). In this light, life
expectancy and ageing both tend to shift costs over time rather than to increase
them. Other studies have found non-significant or mixed evidence (Getzen 1992;
O’Connell 1996; Barros 1998). This is a signal that the relationship, if one exists, is
affected by many possible confounding factors (not necessarily exogenous). We
tested a longitudinal mediation model using WHO historical data to assess the
relationship between life expectancy in t, health expenditure in t + 1 and life
56 Myth #1: The Healthcare System Is Failing
A last important argument to support the idea that health care is not necessarily
pushing countries towards collapse is the evidence that the health care sector is an
important driver of economic growth and that there is a mutual causality between
quality of the health care sector and economic growth. Ageing and longevity are
demanding more resources for health care but these circumstances can create the
opportunity of a growing sector instead of just representing a threat for public
systems. A “healthy” health care system attracts investments by companies, stim-
ulates human capital formation and ultimately generates value. The expansion of
partnerships with the private sector testifies that health care is not only a weight for
the system, but also a driver of economic growth. Many studies have investigated
the relationship between health care quality and expenditure and economic growth,
showing evidence of a positive and often bidirectional relationship (e.g. Baldacci
58 Myth #1: The Healthcare System Is Failing
2004; Bloom et al. 2004; Ogungbenle et al. 2013). Looking at health care in an
economic development perspective highlights its potential positive influence on
interdependent industries. To show how a high-quality health care system holds the
promise to positively influence the broader economic system, we can highlight at
least five crucial interdependencies. The hypothesis we want to support is that
investing in health care is not a pure deadweight cost, but that it is productive for
the whole economic system. Firstly, the health care system has important spill-overs
with the research system. A “healthy” health care system creates opportunities for
research in the domains of science (e.g. medicine, pharmacology, engineering, etc.),
management (e.g. how to efficiently organise services, testing innovative organi-
sational arrangements to unfold latent dimensions of value, etc.) and policy (e.g.
how to rethink the role of co-payment). The amount of research produced is a
benefit for the health care system, generating a positive loop between investing in
health care and investing in research. Secondly, the industries selling products and
services to the health care systems represent an important interdependency too. The
pharmaceutical industry, the medical device industry and the number of service
providers are often seen as “cost generators” for a public health care system.
However, beyond representing an important job market for local graduates, firms
selling products and services to the health care system are an opportunity for
enhancing the quality and specificity of the solutions on offer. The geography of
new business development of pharma and medical device companies testifies that
investments in health care also attract investments in these industries, contributing
to economic growth. The greater the willingness to invest in innovative products
and services, the greater the opportunity for local and global firms to grow, bringing
fresh resources to an economic system. Thirdly, the public health care systems are
becoming increasing complementary with private providers, either for-profit or
not-for-profit. The sustainability of a whole health care system will be increased by
the capacity of private providers to find business opportunities that do not increase
public expenditures. The sharing economy and the revisited role of co-payment can
play a major role, but also the ability of the public sector to efficiently drive the
evolution between internal production and externalisation can gradually improve
the overall efficiency of the system. Fourthly, health care systems are increasingly
open to the international market. The efficiency of a system can be reached by
accessing the international production system, where excess demand and productive
capacity can be matched. Moreover, this trend is an incentive for national systems
to find and invest in their distinctive excellences to attract foreign demand. Such
trend is nowadays growing but still very limited (e.g. in Italy, the net value of
international mobility has been around 150 million euros in 2013). Finally, a
“healthy” health care system is also attractive in terms of education. Students and
executives can be attracted by a health care system showing the traits of excellence,
bringing non-financial economic resources (e.g. knowledge) into the system.
In conclusion, we should be conscious of the challenges that health care systems
are facing, but we should also reject fatalistic and purely pessimistic views. In this
short contribution, we have presented three arguments to reflect on the real nature of
the challenges and on the latent opportunities concealed by the same challenges.
4.4 Behind the Clichés. Spending Review and Organisational Change in the Italian NHS 59
The link between healthcare needs and services paid by the public and private
healthcare system has been the key focus of studies and analyses which, over time,
have given rise to very extensive and in-depth management literature (Henry
Mintzberg 2012).
One of the trends that unite more strongly the experience of public adminis-
tration reform in Europe is that of rationalisation and reduction of operating costs of
their own organisational models, often labelled as Spending Review (SR) (Porter
and Teisberg 2006). These reforms have two main purposes: to contain public
expenditure and to increase the efficiency and effectiveness of public administra-
tions (Esposito et al. 2015).
Of course, the key issue is whether and to what extent it is possible to cut costs
without reducing service quantity and quality (Mercurio and Adinolfi 2005).
Twenty-first century healthcare systems face many problems which are inde-
pendent of resource availability, and often result in an over-medicalisation of
society: the variability of processes and outcomes, increased risks for patients,
wastage, the system’s inability to boost value, inequalities and the inability to
prevent disease.
In Italy, in particular, coinciding with the financial and economic crisis of recent
years and the strong need to limit public expenditure and stay within the budget,
there is a lively debate in political, social, media and academic spheres on the
subject of SR in the health sector. Mentioning SR is right and to be expected,
however, it should be stressed that reducing costs does not in itself ensure a con-
tinual virtuous cycle where there are both efficiency and the ability to meet the
increasingly strong and diverse needs of the community (de Belvis et al. 2012). SR
applied to health systems must be the highest expression of a method of managerial
and organisational change based on planning skills, managerial and leadership
abilities, as well as on management models and assessment, monitoring and eval-
uation techniques.
In particular, SR in the health sector must start with the political, managerial,
professional and social awareness that health care is perhaps the only market
affected by supply and is one of the main sources of consumerism among citizens. It
is an extremely complex market at the centre of numerous stakeholders’ interests:
politics (National, Regional and Autonomous Provinces), public and private health
care companies, managers, healthcare professionals and citizens, but also the
60 Myth #1: The Healthcare System Is Failing
In any process of change management, the essential backdrop that creates the
conditions for change to be successful is to have a shared vision: an end goal
expressed clearly and consistently for the benefit of all stakeholders involved in the
process itself. A future vision for an organisation investing in change must have a
managerial culture made up of a clear implementation schedule, individuals to be
involved in various types of partnerships and initiatives, and the costs and benefits
to be negotiated at the outset or during the implementation of the programme.
A sensible vision of the change process can help to build a common base of
knowledge, legitimacy and commitment between the stakeholders involved in the
project, thereby reducing any inevitable resistance. Moreover, there must be a
strong planning phase: a phase where the specific goals of the change are “inter-
preted”, modelled and adjusted—from the initial structural and relational conditions
—to achieve the much-needed harmonisation between the various items of
expenditure of the given organisational structure.
However, this kind of change process rarely provides effective and lasting
responses—compared, for example, to targets aimed at reducing the running costs
of a public organisation—if they are top-down and, especially, if they are enacted
uniformly to different administration populations.
Aside from the importance of the planning processes mentioned above, the truly
essential resource in any change in management processing often proves to be
managerial competence when managing “emerging” organisational models (van der
Voet 2014). Managers’ awareness and competence are essential to interpret these
patterns and to make a lasting impact on the running of administrations and, in turn,
on their actual spending levels. These skills and behaviours must go along with
“professionalism” when effecting change and building management support tools,
as well as distinct leadership qualities and negotiation skills. To make an explicit
reference to the Italian health sector, it should be noted that purchases are made by
Local, not Regional or National Authorities. Furthermore, there is clear disparity
among and within regions and individual Local Health Authorities.
results and programmes, often create a deafening “background noise” that sur-
rounds and restricts initiatives aimed at change. The implementation of organisa-
tional development projects are often hampered by the constant “reshuffling of
cards” that change the “rules of the game” and political power that controls and
determines the changes that are actually pursued.
More often, the weakness of local politics has been complemented by that of
regional government bodies that often passively support the SR choices made at
national level, yet without producing legislation and/or guidelines to tangibly
facilitate their implementation.
Therefore, there seems to be a strong resistance to change at all levels of gov-
ernment, whereby the rational and formally shared topics of SR clash with two
other systems of power, exercised in a negative form: the propensity not to decide
and to preserve structures established over time, for which it is all too easy to raise
“tactical” arguments.
This is the widespread expression of “dual power” in public organisations. This
critical situation, especially at an early stage, makes it very difficult to quickly
acquire the information needed to identify both the stakeholders and the main steps
of the process being analysed. In other cases—despite the legitimate and wide-
spread demands for innovation, which often naturally support identifying subjects,
content and the expected results of the change—the current internal dynamics
between political governance bodies and management are complicating the for-
malisation and legitimisation of the commitments.
establishing the standard costs of a service or staff costs). On the other, the same
benefit can be taken from central government measures which have transparent
mechanisms to enable technical adjustments of targets set—or rather imposed—by
SR. Regulatory provisions that allow some flexibility to establish target values and
indicators which are more in keeping with policies and, above all, with the specific
organisational conditions and context.
In other words, these two additional components may compete to create an
“institutional infrastructure” that can support the rationalisation of government
bodies’ organisational models. The autonomy and reputation of third parties that
could help to measure and assess, at national level, the desired performance stan-
dards—compared to families of well-defined work processes—serve as quality
assurance factors in the evaluation process.
In the current climate, the Italian National Health System is at the centre of
conflicting pressures: on one hand, the need for spending cuts and, on the other, the
constantly growing demand for personal care services.
In Italy, health spending is between 70 and 80% of regional spending and is
currently worth around 110 billion euro. The critical point, as mentioned above, is
whether it is possible to reduce spending without compromising services (Armeni
and Costa 2015).
Excluding the “health services” and “staff costs” items, the spending perimeter,
quickly attacked in the National Health Service, has shrunk to around 30 billion
euro. These are supplies and services ranging from medicinal products to diagnostic
materials, lab coats for doctors, cleaning services, canteens, heat and maintenance.
The recently adopted solutions were made up of three types: centralised pur-
chasing; adopting standard costs; the ability to renegotiate contracts (concerning
“personal” expenses).
Therefore, the rationalisation of healthcare costs focuses on purchases by setting
reference prices and establishing price “observers”: these are areas where there
seems to be real margins to boost the systems’ efficiency and make savings. And
where, typically, corruption can be endemic, which is perhaps the worst form of
inefficiency among government bodies. The recent ISPE-Sanità White Paper, for
instance, estimated that 23.6 billion euro was wasted in relation to corruption in the
health sector in 2013.
Returning to the subject of the SR policies adopted, centralisation—i.e. con-
centrating the purchasing function for an ASL/AO leader or dedicated institution—
aims to take advantage of public market power and seek economies of scale when
managing purchases and staff specialisation. Centralisation requires standardising
the needs and consumption processes. Standard supplies, like medical products, can
64 Myth #1: The Healthcare System Is Failing
SR cannot be seen as an “emergency” activity due to the crisis, but requires taking
action “step by step” on the purchasing processes and “production” processes
especially, while addressing redesigning organisational practices and models.
Boosting efficiency by offering better services is a medium-term goal; it requires
structural measures that are not dictated by urgency and above all requires invest-
ments: redefining the service network, redesigning care processes, staff training and
computerisation. It is necessary to adopt system actions and far-reaching structural
policies, which set clear goals and go beyond the cost of syringes or cotton wool. In
other words, SR should not take on the role of a system of extraordinary corrective
measures, but rather should be integrated within the entire process of redesigning
culture, organisational models and practices, as well as management performance, so
that it can become a systematic tool used to seek the most efficient and effective ways
to ensure the Essential Levels of Care throughout the country.
A sustainable health system—regardless of its nature (public, private or mixed)
and share of GDP allocated to health—is not possible without adequate investment
to improve the production of knowledge, its use by professionals, and the gover-
nance of the process to transfer healthcare knowledge. This is because most of the
waste is due to the difficulty in transferring research into clinical practice and into
the organisation of the health services.
4.4 Behind the Clichés. Spending Review and Organisational Change in the Italian NHS 65
The first step is undoubtedly to realign the diverging and often conflicting goals
of the various stakeholders. Policies to protect the Italian National Health Service
require adequate healthcare (re)programming. This must start with people’s care
and social needs while involving all categories of stakeholders and taking into
account the epidemiology of diseases and illnesses, efficiency, suitability and
cost-effectiveness of existing health care and services—a fundamental “triangula-
tion” which has never before been applied in Italy.
It is also essential to use the knowledge in all policy, managerial and profes-
sional areas that affect people’s health and to reduce imbalances in information
among citizens.
Lastly, more broadly speaking, one cannot fail to point out that one of the levers
for the reallocation of healthcare costs based on the actual needs of the community
can be found in information and prevention policies. This involves significant
investment at an early stage but produces significant economic and social benefits in
the medium and long term. With this in mind, it may be possible to improve the
effects of the reorganisation of the health systems, especially in the long term.
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Chapter 5
Myth #2: The Healthcare System Can Be
Fixed by Clever Social Engineering
5.1.1 Introduction
E. Lettieri (&)
Politecnico di Milano, Piazza Leonardo da Vinci, 32, 20133 Milan, Italy
e-mail: emanuele.lettieri@polimi.it
C. Masella
Department of Management, Economics and Industrial Engineering,
Politecnico di Milano, Lambruschini 4/B, 20156 Milan, Italy
e-mail: cristina.masella@polimi.it
C. Cuccurullo (&)
Department of Economics, Universita’ degli Studi Della Campania
“Luigi Vanvitelli”, Via Gran Priorato Di Malta, Capua, CE, Italy
e-mail: corrado.cuccurullo@Unina2.It
F. Giancotti (&)
Air Education and Training Command, Italian Air Force, Lungomare Nazario
Sauro, 37, 70121 Bari, Italy
e-mail: giancottif@gmail.com
of change that do not come from them. These anecdotes should probably confirm
that socially engineered, “silver-bullet,” solutions are not able to promote
long-lasting improvements in health care and are likely to be rapidly abandoned.
Looking back to our research on the “management innovation” in healthcare
ecosystems at Politecnico di Milano, three examples offer specific empirical evi-
dence that Henry Mintzberg might be on the right direction. They are (i) the
institutionalization of telemedicine-based services in the professional daily practice;
(ii) the implementation of Health Technology Assessment (HTA) programs at the
National/Regional levels in Italy; and (iii) the adoption of knowledge management
initiatives in hospitals.
In telemedicine, social engineers have paid extensive efforts to redesign the current
delivery of care through ICT-enabled innovations, and yet the expected positive
impacts on the whole system are still to come (Whitten et al. 2010; Zanaboni and
Lettieri 2011). Vice versa, changes were brought about by small-sized, focused
initiatives that originated from entrepreneurial physicians since they were able to
communicate the “value” of the innovation and thus involve all the relevant pro-
fessions (other physicians, nurses, healthcare assistants, technicians, etc.).
About HTA, while social engineers—such as the National Institute for Clinical
Excellence (NICE) in England and the other National Agencies—implemented
top-down, rational approaches to legitimize decision-making in a time of severe
resource constraints, physicians engaged in other initiatives—such as the recent
Choosing Wisely Movement (Volpp and Loewenstein 2012; Cassel and Guest
2012)—that through incremental, bottom-up, context-wise, and socially agreed
discussions, advance professionals’ action toward cost-effective choices.
As regards knowledge management, social engineers developed top-down,
advised-by-experts initiatives—such as the development of sophisticated knowl-
edge information systems, the enrollment of Chief Knowledge Officers, the adop-
tion of organizational practices as job rotation, interrupting meetings, etc.—to
organize knowledge flows within and outside hospitals (Mura et al. 2013;
Edmondson 2004). Despite these efforts, results fell short of the promises since
knowledge sharing is an individual, discretional behavior that managers cannot
mandate and that healthcare professionals have to self-organize.
Given such evidence, should we argue that bottom-up (professionals endorsed)
approaches overtake top-down (socially engineered) ones? With these—and many
others—examples in mind, our first answer would be “Yes, we do fully agree with
Henry Mintzberg.”
However, our position is different and in this chapter we would like to deploy
our arguments to explain why we do firmly disagree. In framing our thoughts, we
will start from the myth itself and from four concepts that need to be rhetorically
discussed. They are “social engineering”, “system”, “fixed,” and “clever”.
5.1 Fixing Healthcare Systems Through Innovation 69
Our researches on two recent changes in the healthcare domain do not provide
support to this claim.
With respect to the adoption of Electronic Medical Records (EMRs), physicians
had different roles along the (still undergoing) innovation process. While they were
not the trigger of this significant change/innovation, their involvement had been
essential in socializing the various proposals in order to identify the most promising
ones and in legitimizing the implementation phase. And again, while physicians
devoted their attention to “automatize” their paper-based knowledge repositories,
they did not really engage in “obliterating” the knowledge silos that prevent hos-
pitals to develop evidence-based managerial practices. Our researches show that
even if physicians as well as other healthcare professionals are the preferable
vehicle for institutionalizing new practices, they could fail in perceiving the
urgency and the scope of what has to be changed to fix health care at the organi-
zational or system level.
About the limited diffusion of Integrated Care Pathways in hospitals, it emerges
that physicians could also fail in the phase of socializing the preferable ideas as
5.1 Fixing Healthcare Systems Through Innovation 71
changing. In this regard, the normative actions in terms of taxation and incentives
were complemented with a number of initiatives—e.g., the establishment of
Sustainability Managers as new facilitating organizational roles, dedicated training
sessions, etc.—orchestrated by the Hospital Human Resource Management Units
aimed at creating a collective commitment to change and at facilitating profes-
sionals in engaging organization citizenship behaviors toward the environment.
Concluding, we believe that the current economic, demographic, social, and
technological megatrends are creating a bundle of opportunities for rethinking the
delivery of care as we know it. Professionals and social engineers—such as
politicians, consultants, technology-suppliers, and academicians—have the tem-
poral co-responsibility of putting in place new models, tools, and policy recom-
mendations that protect the needs of future generations. In this view, we hope that
future research will gather additional evidence that health care could be fixed by the
diffusion of “smart” collaborative approaches between social engineers and pro-
fessionals which complement each other along the phases of the innovation process
to produce significant, positive differences for citizens/patients.
Corrado Cuccurullo
5.2.1 Introduction
Myth #2 of Henry Mintzberg comes from the widespread perception that the
healthcare system in the industrialized countries is not economically sustainable
(“broken”) and, therefore, there is the need that a group of experts and not of
practitioners identifies the right solutions to fix it.
The recurrent element of these repairs is driving the change from the “top” (the
one best way!). Experts are expected to produce the best strategies as well as
step-by-step guidelines for carrying out the change in the health care so that the
practitioners could not get them wrong. In this way, the health sector is subject to a
never-ending process of change both at the level of the industry as at the organi-
zational level. What occurs is a disconnection between what is approved and what
is happening on the ground.
Italy is a very interesting experience for the Myth #2. At the organizational level,
we observe (i) processes of constant reorganization aimed at the better use of
resources, partly because of the hiring freeze that has lasted for many years and
(ii) the introduction and refinement of tools for performance measurement and
management. At the level of the whole industry, change is more evident for the
merging wave in place. The number of the public healthcare organizations (HCOs)
was reduced by 23% over the last decade, with an acceleration in the last five years,
5.2 Change and Innovation in Health care 73
especially in regions under cutback plans. Mergers are driven by Regions wanting
to play the role of HCOs holding to ensure better performance monitoring, espe-
cially the financial one. It is a real process of grip back in contrast to the “com-
panization” process during the 1990s. The paradigm is completely different. If in
the 1990s firm sizes were determined by the idea of manageability, today’s size
increase is driven by the pursuit of technical optimality (the scale). The economic
benefits, expected by this process, are slow to emerge, while negative effects on
patients are substantial. HCO mergers pursue abstract benefits and do not take into
account some hidden costs. First, there is a risk on actors’ coordination, especially
the external ones. The expansion of the firm boundaries may not mean an increase
in the population served, but it can result in increasing the number and diversity of
external stakeholders. The case of the Local Health Authority (LHA) of Trento is
paradigmatic. The provincial LHA has a catchment area of just over 550,000
inhabitants. This size is not dramatic in terms of operational complexity, but the
LHA CEO has to face 217 mayors of small towns. This is problematic! In addition,
internal complexity intensifies because business combinations broaden the diversity
of internal professional groups and cultures. This raises organizational tensions and
makes difficult efforts to ensure the unity of intent along with an efficient and
effective operational functioning. Second, another risk concerns the cognitive
complexity that emerges from dimensional enlargement. This complexity has
consequently the increasing organizational tensions which top management has to
govern. It is inevitable to reduce the amplitude of direct supervision as mechanism
of control. Thus, it requires a growth in middle management positions and
responsibilities. Each strategic choice in HCOs should be shared with the broad
range of actors who play a significant role in operations. This presupposes a patient
action by top management aimed at building the conditions for sharing
decision-making assumptions before, and decisions, then, between actors with
different interests and goals. If the resources of time and attention that management
can make available to this delicate process are not sufficient, risks of strategic stall
can emerge, with management proceeding in the absence of shared goals (lack of
strategic consensus), or of change dilution, that is goals are not realized in the
expected time and permanently postponed. Third, there is a risk that concerns the
internal and external stakeholders’ motivation because top management must be
able constantly to nourish it around the whole organization goals. Any institutional
rearrangement always involves strategic and organizational changes. Thus, top
management must be aware that change has to be managed continuously. Top
management must convince and motivate with perseverance over time internal and
external parties that are by nature oriented to defend their own interests and per-
spectives, even distorting the managerial processes and operating systems. The
expansion of the firm boundaries, increasing the number and the diversity of
stakeholders, ends up increasing the risk that top management cannot effectively
perform its function.
So from above this question arises, if these “reparations” do not match the
expectations, is it possible to reverse the paradigm, assuming that the change
emerges from the bottom?
74 5 Myth #2: The Health Care System Can Be Fixed …
The starting point of any reflection is based on the kind of context in which we must
bring change. HCOs as professional service organizations in a regulated industry
are typically pluralistic organizations shaped by the divergent goals and interests of
different groups, each of which has sufficient power bases to ensure that their goals
are legitimate to the strategy of the organization. The most obvious consequence is
the continuous tension between strategizing and organizing. Strategizing refers to
those planning, resource allocation, monitoring, and control practices and processes
through which strategy is enacted. The pluralistic organization produces conflicting
strategic objectives and goals in its attempts to respond simultaneously to multiple,
shifting, competing or contradictory environmental demands. Organizing can be
defined as the creation and use of structural practices and coordination processes by
internal stakeholders to enact the organization’s identity, culture, and interests. In
pluralistic settings, multiple interests emerge from different organizational groups
and these are associated with fragmentation of organizational identity and multiple
subcultures.
Strategizing in pluralistic contexts raises the problem of enacting a multiplicity
of conflicting strategic goals simultaneously. This situation arises from the com-
peting legitimate demands of powerful stakeholders. A goal cannot be pursued
either before or at the expense of another target. Following contradictory or
incompatible goals—simultaneously—produces conflict. For example, HCOs must
pursue multiple strategic objectives of quality in clinical practice, facilitating
medical research and teaching, demonstrating value for money and resource effi-
ciency (to satisfy government demands), and responding to required professional
codes of conduct and pressures from health service users. Strategies to maximize
resource utilization (e.g., beds, medical equipment, and medical staff) might com-
promise patient care strategies. As strategic objectives are legitimate to important
stakeholders, HCOs cannot afford to follow clinical practice at the expense of
resource efficiency. The reverse process is not suitable, too.
Organizing tensions are typical in the public sector and not-for-profit organi-
zations, which develop different bureaucratic organizing practices and processes to
cater to the interests of autonomous knowledge workers and cope with their
administrative pressures. Within professional organizations, the operative core is
the key organizational component. Professionals use their knowledge, skills, and
attitudes, which they have acquired over long periods of academic education,
training, and experience. Because in HCOs the application of medical standards in
specific situations implies autonomy and discretion, professionals can make
themselves relatively independent of the organization in which they work. So
organizing within HCOs is characterized by professionals who are autonomous and
who significantly decouple their daily work from HCOs’ organizational manage-
ment structures. As a consequence, management in HCOs has only limited
opportunities to guide and control the implementation of organizational change
within the operative core because, on this level, professionals have the autonomy to
5.2 Change and Innovation in Health care 75
decide if and how they are going to engage with change. Therefore, no social
engineering is able to limit this autonomy. Typically, pluralism in professional
organizations manifests itself at the broadest level as tensions between professional
and managerial cultures and interests, but the medical world is fragmented in many
diverse subcultures too. Moreover, organizing tensions increase during turnaround
or cutback period.
Extreme internal and external pluralisms in HCOs often generate a destructive
association between organizing and strategizing. When multiple strategic objectives
cannot be aligned, and organizing pulls are diverse and unable to be accommo-
dated, or are in active conflict with strategic objectives, the organization is pulled in
too many directions to resolve the multiple demands upon it, requiring major
change, or failing that, leading to organizational breakdown. Sometimes pluralism
favors an imbalanced mode between organizing and strategizing, creeping up on
organizations without managerial recognition of its sources or implications. The
imbalanced mode occurs when strategic objectives are blocked by organizing
practices, such as HR systems and incentives that deflect attention from some goals
towards others, while some strategizing practices emphasize the interests of some
parts of the organization at the expense of others, raising conflict between sub-
cultures and identities. This leads to block strategic and organizational change. To
mitigate clashes of interests, management must support an interdependent associ-
ation, which involves mutual adjustment to generate alignment between strategizing
and organizing. The accommodation of interests requires frequent and ongoing
dialog among organizational actors. The term dialog is used advisedly here, rather
than communication, which too often indicates a top-down dissemination of goals,
rather than a two-way discussion process that surfaces different interests and tries to
establish common ground, by placing these interests within the wider context of
multiple goals and interests. The different characteristics and managerial implica-
tions for action, as well as the potential risks of these different modes of association
between strategizing and organizing, are illustrated in Table 5.1.
are in day-to-day contact with aspects of the organization and its environment and
can advise senior management on what are likely to be blockages and requirements
for change. Moreover, they are a bridge between top management and members of
the organization at lower levels, such as doctors and nurses, and translate the
change initiatives in locally relevant way.
Along with middle management, even the “outsiders” can play an important role
for change. New management can increase the diversity of ideas, break down
cultural barriers to change and increase the experience and the capacity for change.
Consultants bring similar benefits and are typically facilitators of change processes.
Other actors can be powerful influencers of change, such as patients, the govern-
ment, and suppliers.
All of these actors have the potential to act as change agents on HCOs, and all of
them can impede change. Therefore, the style of management for driving change is
crucial (Table 5.2). Different styles are likely to be more or less appropriate
according to context. For example, in HCOs, direction does not fit. It involves the
use of personal managerial authority to establish a clear strategy and how the
change will occur. HCOs, due to the pluralistic nature, find the following styles
more effective:
1. Participation in the change process, that is, the involvement of those affected by
strategic change in the change agenda.
2. Education involves the explanation of the reasons for and means of strategic
change. This might be appropriate when the problem in managing change is
because of misinformation or lack of information and if there is adequate time to
persuade people of the need for change.
3. Intervention, that is, the coordination of and authority over processes of change
by a change agent who delegates elements of the process to project teams or
taskforces.
Styles of managing change are not mutually exclusive. For example, clear
direction on overall vision might aid a more collaborative approach to more detailed
strategy development. Education and communication may be appropriate for some
stakeholders. Participation may be appropriate for groups in parts of the organization
where it is necessary to build capability and readiness. Different organizational stages
require different styles of managing change or different styles to suit different man-
agers’ personality types. However, those with the greatest capability to manage
change may have the ability to adopt different styles in different circumstances.
In conditions of heterogeneous social worlds, managerial tools are the common
platform that practitioners adopt or devise to translate, negotiate, debate, triangulate,
and simplify in order to work together. Socially, tools provide a common language
(common syntax). Language reflects a way to represent meaning and intention.
Tools provide also semantic boundaries that permit to translate different meanings
into a shared framework. Finally, managerial tools are suitable for users and
transform their common interests in consensus and action, orienting their behaviors
(pragmatic boundaries).
Fernando Giancotti
A recent book of Yuval Harari identifies myths as the instrument through which
small groups of individuals could get beyond collaboration in small numbers,
establishing visions and behaviors allowing large-scale synergic interaction.
According to this interpretation, through shared religious, social, political beliefs,
people refer to some common “imagined order,” which exists actually just in the
imagination of the beholder and strongly influences individual behaviors and
therefore collective action toward functioning tribes, towns, cities, organizations,
states, empires, and so on. Apart from the different nuances and meanings that the
word “myth” can assume, such a perspective can frame Henry Mintzberg’s dis-
cussion on myths about health care as a system and the way to “fix” it and makes it
even more intriguing to me. That is also because to do it we must explore beyond
and well before the myths, looking at the nature of Man and Nature, and then
because we should try to imagine a better myth to inform collective action in order
to provide a more efficient and satisfactory healthcare system. Intriguing and very
challenging, also because it has to be done in a few pages, it took me forty years to
understand it! We will then focus immediately on two main conceptual frameworks
to show why “social engineering” in a reductionist sense is a recipe for failure for
fixing a healthcare system in particular, and any complex system anyway. The two
80 5 Myth #2: The Health Care System Can Be Fixed …
frameworks come then from the questions: who are we indeed, beyond and before
myths? What is a healthcare system beyond and before current myths? Thereafter,
we will try to propose a better myth to fix things, based on a long journey through
concepts and many, many facts and failures and a few successes…all that had very
little to do (fortunately, in a sense!) with healthcare systems, but a lot with the
ancestral and existential issue of the effectiveness of the collective action.
We generally see ourselves as very smart, sophisticated creatures, who dress smart
or elegantly, use smartphones and all kinds of amazing technologies. We drive
smart cars, go everywhere in the world in a few hours, perpetually connected
through social media, with a universe of information at our fingertips, powerful
computers everywhere in our lives and much more; we have rights and guarantees,
even if we think never enough and then…we are many billions: sure quite a
successful species! But…are we really so smart? Let’s investigate through an
“imagined” time machine.
If we clock back 20 years, smartphones, social media, powerful computers, and
low-cost airlines disappear. Traveling back, we would see continuous thriving
conflict, millions of deaths, widespread violence, mass migration, terrorism, and
huge sufferance of the people in many astonishing ways, continuously surprised by
events and dynamics generally out of control.
If we go back 200 years we get to a basically agricultural economy, our wealth
pro-capita drops by a factor of many hundred times, and pretty much the same for
the exchange of good and services, information, and ideas. Only very few dress
elegantly, most of the people see only the place where they are born, poverty,
diseases, and early deaths are the norm. Very few, the same who dressed fancy,
would rule the nations, mostly through coercion. In between, industrialization
produces huge wealth through a steep technological gradient and specialization and
its new-born culture falls in love with itself, comparing the world to the wonderful
machines it is producing: a complicated mechanism that can be built and fixed
through good engineers and mechanics; only to be shocked beyond understanding
by its own bloody failures and the constant generation of unintended consequences
for that “engineering”; such as in the first place the horrible wars of the 1900s,
dozens of millions of deaths, marked by genocide and ferocious dictatorships, and
then painful social problems and environmental disruption; our “measure of suc-
cess,” the billions of people we got to, becomes threatening overpopulation, and
much more. Any good history book is full of the challenges, unprecedented in scale
and intensity, produced by this era of humankind. The absurd and yet solidly
rational MAD, Mutual Assured Destruction through nuclear annihilation during the
Cold War is a paradoxical and yet a powerful symbol of this, well captured by a
famous movie from the sixties: Dr. Strangelove.
5.3 Health care, Complexity, and Change 81
If we go back about 10,000 years and beyond, we find a whole different world.
Throughout the planet Earth small bands of hunter–gatherers roam their environ-
ment, almost everywhere from the icy north to the hot equatorial latitudes. The
hunting business imposes its rules, which regulate all hunting animals: few indi-
viduals in any given hunting territory to allow prey sustainability, a nomadic
lifestyle to follow wandering herds and explore new grounds and, for social species,
a deeply cooperative hunting process, to multiply effectiveness and therefore
maximize survival chances. Thus, a small number of people, living a hard and
dangerous life, hunting, eating, defending together against many threats, often
saving each other’s lives would develop the deepest conceivable relation of inter-
dependence and trust among living beings, affection and emotion based, forced into
it by huge evolutionary pressures. The same pressures developed specific modes of
enhancements for the effectiveness of the collective action: a fundamental one is
leadership, since in highly challenging environments, adaptive coordination of the
cooperation makes the difference between success and failure, between survival and
extinction. The very first needs to which leadership had to correspond then were in
a sense “operational,” synergizing efforts and delivering guidance, but also social,
ensuring sustainment of group cohesion. That is done maintaining the very balance
that allows the miracle of cooperation: the one between the interest of the individual
and that of the group. In my view, the maintenance of this dynamic equilibrium is in
fact what we call ethics, applied. What scholars call “perception of justice and
fairness in the organization” is then a need as deep as the ancestral group human
relations: it is the perception of that balance or again of applied ethics, which could
be defined as the very glue of collective action. It is not a case that administering
justice was a leadership responsibility, until the French Revolution, and still is in a
more limited form.
If we go back past 10,000 years, to the very first common ancestor that we share
with the apes, following scarce fossil evidence and genetic studies, we eventually
get to about 7,000,000 years ago.
Since that time, at first as gathering–scavenging creatures, with a human gait and
a small, ape-like brain, then as hunters in the last 2,000,000 million years circa, we
have always lived in the small group pattern we just discussed. So, if 200 years may
seem a lot in relation to our next vacation or even to our far away retirement, they
are in fact nothing in relation to evolutionary times. 10,000 years as well are a tiny
fraction of our phylogenetic history: even if we consider only our hunting past, we
get to 0.5%. We are then biologically the same as our hunting ancestors of many
thousand years ago and the deep needs we have are rooted in our evolution. We
would still deeply need group interaction, effective leadership, close and engaged
leaders, collaboration and attention to people, perception of justice, and fairness in
our social contest, through shared ethics, which has statistically ensured our sur-
vival. Nowadays, our social, cultural, and organizational models place us far away
from those needs, even though since the Tayloristic era rediscovery of the “School
of Human Relations” up to the latest “Emotional Intelligence” theories, we have
been unknowingly trying to go back to the affective relation patterns fundament of
the effectiveness of the collective action and therefore of our survival as a species.
82 5 Myth #2: The Health Care System Can Be Fixed …
One definition of HCS I like among several is “the organization of people, insti-
tutions, and resources that deliver healthcare services to meet the health needs of
target populations.” Stop and think for a moment, picturing the millions and mil-
lions of elements of such a system and to the innumerable interactions among them.
Patients, doctors, nurses, support and administrative personnel, managers, suppliers
and logistics, infrastructures, tools and instruments, and much more interact in
constant flux 24/7 through processes, activities, exchanges of information, services,
goods, and emotions. They do so in a multidimensional network of feedback loops,
feeding inputs into millions of elements and receiving elaborated outputs by as
many others, through incommensurable, very complex dynamics… Stop and think
some more…you may have now a feeling of a system at work.
But what kind of system? Let us answer a few questions to try to identify some
taxonomical characteristics. First, are HCS open systems which exchange matter,
energy, information? Yes. Open in that they interact with the society at large,
institutions and exchange a lot, inside and outside of the system. Are they evolu-
tionary? They do change through time, through internal dynamics, for example
professional competence growth, external inputs, and legislation, not always
according to the established policy goals and often in a spontaneous fashion. That
answers the next question about linear behaviors: HCSs do exhibit nonlinear
behaviors, since output is not immediately and reliably related to input and the path
followed by events is seldom exactly the planned one. Our last question is about the
existence of networked feedbacks. Our mental reconnaissance of a HCS, picturing
it, and trying to grasp its functioning tells us definitely yes, networked feedbacks are
at the core of the operations of a HCS.
5.3 Health care, Complexity, and Change 83
We can now classify our system. Even though there is no single formal defi-
nition, studies of nonlinear dynamical systems converge in outlining the concept of
complex adaptive systems (CAS) as “open, non-linear evolutionary systems, such
as a rain forest, that are constantly processing and incorporating new information”
(Sanders 1998). Gandolfi (1999) defines CAS as “an open system, formed by
numerous elements interacting in a nonlinear manner, which constitute a single,
dynamic and organized entity, able to evolve and adapt to the environment.”
We think that, following our rather fast and necessarily shallow discussion, we
can state that Healthcare Systems are Complex Adaptive Systems (CAS). If we
share this view, we can then assume that it does exhibit characteristics and
behaviors of CAS, i.e., impossible to know all about them; made up of many
complex elements; driven by nonlinear relationships; built up of parallel, redundant
processes; impossible to forecast; decentralized, information dense, and resilient.
This has many implications for the construction of a better myth to fix things and
make them work more effectively and efficiently.
We have asked ourselves: “who are we indeed, beyond and before myths? What
is a healthcare system beyond and before current myths?” The myths we have
looked beyond are the ones which have built an organizational culture forgetting
who we really are and which have confused a very complex organization, a living
organism of living beings, with a machine, establishing linear fixes and systems to
manage it, measuring and rewarding nonlinear processes with a linear logic, thus
bringing it to a sustained but unsustainable underperformance.
Is there then a better myth to bring to bear on Healthcare Systems, to support the
noble enterprise of enhancing humankind’s health?
Part of the answer is in the “noble enterprise” part of the question itself. It is
rediscovering the value dimension of motivation to perform collectively. A widely
diffused, destructive myth, often held as self-evident truth, is that people care only
about money and that money drives all. That happens very often, but the huge
misunderstanding is that the urge for money is the fundamental root of behaviors,
while it is rather an effect of a void of other values and rewards. This void comes
from structural and cultural drivers which are largely born from a lack of under-
standing of very relevant factors, which we have tried to identify in our discussion.
I observe every day amazing and very effective motivational drives which have
nothing to do with money. That does not mean that money is not relevant for any
individual, on the contrary, it is relevant for all. But at the systemic level it is not the
main motivational factor, and not understanding that can be very costly, not only
for the wages that top managers get, but for the consequences of a
money-only-driven management and its metrics and bonuses.
So promoting and rewarding values related to the common good is one of the
basics to give heed to, especially appropriate dealing with HCS. That is also related
84 5 Myth #2: The Health Care System Can Be Fixed …
to some deep inclinations that evolution has bred in our genes and that any human
culture has always tried in some way to promote.
Then, leveraging the inborn drivers of the collective action is another powerful
enabler of its effectiveness. Of course culture has a great influence on modes and
contents of the group interaction, but when nature and culture align, the effect is
multiplied many times. High-performance groups work within this alignment: as
special forces squads in hostile territory are the closest thing to the hunter–gatherer
group roaming a dangerous savannah, with plenty of large predators and many
risks, or the icy steppe of the Paleolithic Europe. The highest technology fighter
squadron operations rely on very tight bonds among the members, also expressed
on the ground through very strong esprit de corps, while in the air tactics are based
on complex and highly cooperative action, where initiative and everybody’s con-
tribution is expected, very much like in the ancestral hunting of buffaloes or of the
huge cave bear.
So our next myth should establish a system based on teams who fulfill our deep
needs for a group and for a meaning that goes beyond our own self, as well as for
good leadership and teamwork. A system networks these teams through values and
solid exchanges, which organizes flat, keeping the strategic leadership close to the
operators, making sure to get their information, feed-back and ideas. A system
where intense communication throughout the organization is normal, and rewards,
metrics, and even sanctions are built to promote the values and not greed,
short-term achievements or unintended consequences, from looking at the tree and
not seeing the forest. Leadership as a system of leaders at all levels, well beyond the
hopeless bottleneck of the “heroic leader,” becomes the enabler of actual high
performance, sustainable results and organizational well-being. This “fractal lead-
ership” building up a structure of high-performance modules well connected with
the mainstream of corporate knowledge flowing top-down, bottom-up and
throughout, not only increases the results of the single organizational element, but
multiplies and boosts the overall capability of the organization, starting from the
decision-making process to all the relevant ones.
Unintended consequences, fractals, and system of systems lead us back to the
so-called “new science of complexity and chaos” framework, to see what opera-
tional indications we can draw from it. We can say that a HCS is a Complex
Adaptive System and it exhibits its typical behavior. To change a complex system,
we cannot rely on a linear, mechanistic approach; its non-linear dynamics defeat
classical social engineering, as we see so far from the gap between intentions and
results. We cannot forecast it precisely, cannot determine it, and we must try to
influence it. To manage change in a complex system we must then first leave alone
“heroism,” wear our “Humbleness Cap” and try to understand the fundamental
modes and content of the significant transactions at the various levels of the system.
Then we should try to figure out the influencing factors which steer modes and
contents toward the desired state for each level, reconnoitering the system to
understand where we should apply these influencing factors, defining subareas of
highest effect to concentrate resources and make the enterprise cost-effective.
Applying multiple vectors, in a sense, on various “centers of gravity” of the system,
5.3 Health care, Complexity, and Change 85
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Chapter 6
Myth #3: Healthcare Institutions as Well
as the Overall System Can Be Fixed
by Bringing in the Great Leader
6.1.1 Introduction
The recent global crisis has turned the spotlight on national health systems, and
Italy in particular, which is undergoing serious difficulties, has once again seen the
reigniting of the debate on the sustainability of its national health system.
Economic and structural reasons have led to reflections on whether what has
been built by the Italian community over the past 50 years, oriented towards pro-
viding health care to everyone, can still be sustained.
It is precisely in times like these, when historically there is a strong demand for
change, that we feel the need for references in large sectors of society able to guide,
steer and improve processes. The organization of health systems is no exception,
and in fact, especially for the reasons given above, these systems are steadily
investigating methodologies to ensure qualitatively acceptable results, notwith-
standing a substantial decrease in funding.
The challenges that healthcare decision-makers are faced with today are due to
factors that previously were not taken into account or were not always foreseen:
population growth, an increase in population age and a consequent upsurge in
chronic diseases (we all live longer and the number of elderly people to be taken
care of by healthcare systems keeps rising), the rationalization and modernization of
the structures along with the adoption of newer and appropriate devices.
These are the factors and scenarios, not experienced before, which healthcare
systems have been facing in years of debate on how the structures should be
organized for the better, and how best to guide them, i.e. its leadership.
In this regard, Henry Mintzberg has addressed the problem of rethinking and
reorganizing health care, by identifying and refuting some of the myths that often
accompany the reflections regarding health systems. One of these refers to solving the
problems of any system, including health systems, by entrusting it to a great leader.
Notwithstanding a certain tendency to escape the issue, one cannot help but
acknowledge that all systems, in addition to needing guidelines and basic princi-
ples, also need leading figures in order to achieve lasting goals.
The need is all the more pressing given the particular aim of the health system,
i.e. patient care, and taking due account of the ever increasing need to implement
health policies that cut costs without compromising the quality of use. In health care
a management system based on the figure of a leader and not merely bureaucratic
“managers”, each operating within their own sector, is essential.
The nature of the end “product” of such a “corporation” or system, featuring a
strong ethical connotation, i.e. the curing of a person, makes things even more
difficult together with the constant need for models aimed at achieving the goals in a
responsible and precise manner. Such models can, in our view, be conformed to
only when relying on a clear and shared leadership.
In fact, leadership contributes:
• to maintain the level of commitment and pressure required of the participants of
the various working groups;
• to consolidate group and corporate membership working towards bringing the
team closer together;
• to assess and collect the needs of team members.
6.1 Health Leadership: A Group Matter 89
This consideration leads us to seek what features and peculiarities leaders and
protagonists of health systems ought to have, also taking into account the context in
which they are called to work.
A leader is such, in fact, if he/she is acknowledged as a guide and often this does
not happen thanks only to his/her charisma, but when human groups and com-
munities share a common vision, common values, common rules, sharing the aim of
becoming organized hierarchically and above all accepting and respecting this
structure.
In fact, as important and often decisive the figure of the leader may be, he/she is
still part of a binary “system” in which the other subject is the community which the
leader is called to guide.
Over the years, the sociological but also philosophical debate has brought the
attention on the different components that make for a successful leader–community
relationship, and also in the management of health systems we would like to point
out a few features that this relationship should have:
90 6 Myth #3: Healthcare Institutions as Well as the Overall System …
Oath: human life is a supreme good to be safeguarded with the commitment and
behaviour appropriate to the solemnity that such an important goal carries.
This would help create valid reference points by operating not on the fear of a
penalty (which a good system must nevertheless include!), but on a strong team
spirit that we could almost call “common purpose”.
A concept that provides a hierarchically oriented structure, with an acknowl-
edged leader and in which, holistically, each member perceives their work as vital
for the reaching of goals as if they were the “vocation” of their team and their work.
Based on these assumptions, the doctor–patient relationship would acquire
greater importance: it should never be lost sight of and it goes without saying that
for its peculiarity it is defined and re-defined continuously in relation to the players
involved.
In the health system, a leader who does not take into account this relationship
should never consider goals as fully achieved because, although it is true that the
results should be pursued according to effectiveness and efficiency, it is equally
important not to forget the specific and human status of each single patient. In
relation to this status, in fact, pre-established patterns or actions cannot be applied.
This is the direction which, especially in recent years, seems to have been
followed, for example, in the re-organizational structuring initiated in hospital
centers and according to which management has stirred towards the creation of
Departments as large and homogeneous as possible.
It is in these very contexts that the assertion of leadership at every organizational
level becomes essential, because this is the only type able to combine the expec-
tations of organization boards as regards effectiveness and efficiency, the man-
agement of the staff/employees and, most importantly, user satisfaction.
Consider for example, the research and clinical activities addressing rare dis-
eases, working approaches, whose focus and goal are the patient, are spreading, but
their key feature should be the interdisciplinary approach.
In recent years, notwithstanding the increase of multidisciplinary approaches, we
have in fact also observed interdisciplinary types of organization through which,
from the physician to the biologist, nurses, data-managers and the patient’s direct
involvement, all take part in the common goal of care.
It is important to note that in health care the interdisciplinary approach is of
greater importance with respect to the multidisciplinary approach: in the latter
model we can in fact see individuals operating exclusively within the range of their
abilities, whereas in the former model we find, at the core, a cooperation aimed at a
common goal, toward which the various professionals work, each according to their
skills.
6.1.4 Conclusions
In health care, it is the awareness that “at the center of all goals there is the patient”,
not the search or the assertion of personal principles, to ensure the growth of work
92 6 Myth #3: Healthcare Institutions as Well as the Overall System …
teams and the continuity of care. All this thanks to the fundamental support of a
responsible sharing of information and actions. One example can be found in the
management of a hospital discharge. If everyone worked with responsibility and
shared aims, the information collected will be essential and decisive in the con-
tinuation of care, and will facilitate the work of the physician or workgroup called
to take care of the next phase of a patient’s treatment.
Moreover, it should be noted that collaboration and sharing are also what hold
together the physician–patient relationship.
This relationship is crucial in the achievement of goals and in the credibility of a
health system. The key element in the physician–patient relationship, on the
side-lines of all the considerations made earlier, appears to be one of the qualities
necessary for the establishing of a shared leadership: communication.
Given the condition of each patient, the first thing that he/she looks for in a
physician is the constant clarity on what action to take, the evolution of the disease,
disease history, on how similar cases were dealt with, on the best way of dealing
with the world around them.
Efforts are, therefore, needed towards the spreading and use of a shared lead-
ership able to stimulate all the professional profiles involved in the processes to
perform their tasks with the highest level of attention, responsibility and openness
to ensure an approach as inclusive as possible towards the patient. In order to guide
the system aiming at common goals, every leader needs to acknowledge that the
best strategy does not involve coercion but teamwork, in addition to the right dose
of decision-making.
Human history teaches us that we can win only if united, and the optimization of
health systems is one of the most exciting challenges that human beings will have to
face over the next 20 years. United.
As Barnes and Kriger (1986) have said, there is no good all-purpose definition of
leadership. In support of this statement, the authors refer to the studies of Burns
(1978) and Bass (1981) who maintain that there is no common set of factors, traits
or processes that identifies the qualities of effective leadership. The definition of
leadership ranges between two extremes: the leader who is a hero-person and the
leadership as a set of personal attributes (energy, charisma or style). In between are
the contingency theorists who argue that leadership depends upon anything, from
task conditions to subordinate expectations. Barnes and Kriger (1986) highlight that
6.2 Leadership and Management 93
all of these approaches are valid, however on their own they are insufficient, as
none:
• deals very well with the complexities that arise from the fact that managers are
both leaders and followers, given the very nature of organizational hierarchies;
• contends with another fact of organizational life—that informal social networks
exert an immense influence which sometimes overrides the formal hierarchy.
A person’s formal job status may be clear in the hierarchy, but that is only one
part of an organization’s network of relationships. Less formal network ties
often dominate the role behaviour of an individual or group.
Personal approach and cognitive style are factors that influence corporate
management. Those who embrace the “rational” approach believe that formal
analysis—the systematic study of issues—can help organizations make better
decisions (Langley 1995). In contrast, some scholars (Henry Mintzberg 1989,
Peters and Waterman 1982) have criticized the “rational” approach: for example
Peters and Waterman (1982) highlight its degree of abstraction from reality, its
inability to deal adequately with non-quantifiable values, its lack of flexibility and
bias against experimentation culminating in a tendency for paralysis.
Managers appear to fluctuate between two extremes: on one hand they assume
arbitrary decisions without systematic study; on the other hand they tend to collect
more information than strictly necessary for decision-making retreating “… into
abstraction and conservatism that relies obsessively on numbers, analyses, and
reports (“paralysis by analysis”)” (Langley 1995, p. 63). Consequently, the critical
issue is how to combine rationality and efficiency. Langley (1995) states that
leadership style and cognitive style can affect the quantity of analysis. A highly
directive leader will ignore analytical studies, insisting on his or her own viewpoint
and, in the long term, this leadership style will discourage analyses. At the opposite
extreme, a highly consensual leader might encourage numerous studies and anal-
yses that could easily increase the decision-maker’s confusion. Another impacting
factor is a leader’s cognitive style which can also condition their decision-making
processes. Many people are naturally intuitive, while others are more analytical. In
making decisions, the former require less information, consequently, the risk of
paralysis by analysis is highest for analytical managers. Langley (1995) reaches
similar conclusions to those of Barnes and Kriger (1986); the author defines
leadership styles not as better but as different. Sometimes “…more directive
leadership prevented diverging opinions from degenerating into vicious circles”,
other times—as in Eisenhardt (1989)—we find “… the superiority of “qualified
consensus”, in which top managers first attempt to develop consensus among
interested parties, air all views, and then impose a decision that accounts for these
views” (Langley 1995, p. 68).
The fact that no one leadership style is the best ever, stems from the extent of
organizational complexity depending on the diversity of organizational forms and
interactions among organizations that are evolving. This degree of complexity is
particularly evident in healthcare organizations.
94 6 Myth #3: Healthcare Institutions as Well as the Overall System …
The Health System is a complex adaptive system where any modifications in one
component of the system require changes in the other components to guarantee
balance and sustainability in the system. In this context, the term “complex” con-
notes diversity, i.e. numerous connections within a series of elements. In the same
definition, the term “adaptive” suggests the idea of change, resulting from experi-
ence while the term “system” symbolizes the idea of a set of connected or inter-
dependent things.
Economics and management theory are concerned with real life, dealing with
interactions, context and other evolving dimensions. Such conditions imply that
corporate leaders and managers should create sustainable systems by virtue of their
capacity for viability. Traditional management theories focus on the predictable and
controllable dimension of management. However, they lack consistent elements of
management. Complexity science invites us to study all the aspects of organizations
including those that are unpredictable. In line with Holder and Ramagem (2012),
our approach highlights the need to deal with management in the Healthcare System
from a systems perspective.
In many parts of the world, the Healthcare System is organized at various levels
and it is widely recognized that the management system occurs at three different
levels” (Holder and Ramagem 2012): macro (Health Systems), meso (Health
Services) and micro (Clinical Management). Holder and Ramagem (2012) in dis-
cussing the World Health Organization (WHO) conceptual framework for building
leadership and management skills, conclude that there are “appropriate compe-
tencies” specific to each of the three levels of management at:
• macro level, leaders and managers have to govern global health problems and
agendas, consequently they require negotiating skills to take part in global
health governance;
• meso level, the objective is integrated health care delivery services, so managers
require competencies to manage strategies for integrated health service delivery
networks to improve coordinated care as well as the efficiency and the effec-
tiveness of service delivery;
• micro level, integrated health service delivery is based on a model of care
organized around processes. At this level, management capacity is focused on
the efficiency and effectiveness of the processes.
Normally, Italian General Practitioners work alone with limited facilities and
equipment. However, some years ago, several healthcare organizations started to
put specific strategies in place (Heller 2004), in order to:
• encourage cooperation among General Practitioners
• use managerial tools.
General Practitioners are wary of adopting managerial tools because they think
their professional autonomy would be reduced. Confidence between General
Practitioners and the managers of healthcare organizations (Leese and Mahon 1999)
and guaranteed clinical autonomy (Warwicker 1998) are factors that would facili-
tate the acceptance of innovation. Heller (2004) analyzed three cases of Italian
healthcare organizations and stated that in most cases, the managers of healthcare
organizations and the Union of General Practitioners played a critical role in
introducing innovations. The top management of healthcare organizations pushed
for innovations and involved General Practitioners through their Unions. This
evidences a style of leadership that is in part managerial and in part cooperative.
96 6 Myth #3: Healthcare Institutions as Well as the Overall System …
The Italian Central Government, the Regions and other stakeholders are cur-
rently discussing a Reform in which General Practitioners are to liaise and coop-
erate with other General Practitioners, Paediatricians or Medical Specialists.
However, the incentive schemes to support such innovation have not yet been
defined. Warwicker (1998), in analyzing the relationship between General
Practitioners and Central Government in Great Britain and the 1980 and 1990
Reforms, detects two crucial aspects. The first is summed up in terms of empow-
erment and control: General Practitioners became fund-holders and their activity
assessed according to numerous indicators. The second is an attempt to reduce
substantially clinical autonomy by defining in more detail contractual duties with
respect, for example, to health promotion. This combined with financial incentive
schemes to achieve immunization targets. Furthermore, the 1990 General
Practitioners contract introduced constraints over prescribing and the status of
General Practitioners changed from that of Family Practitioner Committees to
Family Health Service Authorities (Warwicker 1998). The reason for the change
was the shift from an administrative to a managerial body. However, a new contract
and financial incentives were required. Barretta (2008) analyzed potential deter-
minants for promoting a mix of cooperation and competition among Italian
healthcare trusts. He pointed out the pivotal role of a regulatory body in encour-
aging a propensity for inter-organizational cooperation/competition. This perspec-
tive underlines that environment and rules affect management style. Many authors
believe that the characteristics of an organization can influence management style.
Henry Mintzberg (1979) defined healthcare trusts as “professional bureaucracies” to
underline the role and behaviour of professionals.
Villa et al. (2009) analyzed three innovative design projects that reorganized
patient flow logistics around patient care needs, at three Italian hospitals. The
authors highlighted a critical aspect “… to manage and overcome some cultural
barriers especially on the physicians’ side. In fact, especially in the transitional
phase, physicians (at least some of them) have complained about “wandering” to
and from inpatient units located on different floors of the building as well as about
having to share spaces and resources with other colleagues and specialties” (Villa
et al. 2009, p. 162). In the study, the critical role of communication is underlined:
“…it is important for hospital management to convey the message that changes in
patient flow logistics have been made around patient clinical needs and it is the
physician that retains final control over the patient’s clinical history” (Villa et al.
2009, p. 163). In the case of the three Italian hospitals, all made changes under
strong external pressures posed by Regional health authorities (Villa et al. 2009).
This further element confirms the critical role played by regulatory bodies and their
influence on management.
6.3 When Leadership Meets Change: Some Insights 97
6.3.1 Introduction
Earlier studies about management and leadership date back to the beginning of the
past century. Fayol in 1929 was the first to depict the function of executives, stating
that “to manage is to forecast and plan, to organize, to command, to co-ordinate and
to control” (Fayol 1949, p. 6), thus laying the foundation for next meaningful
studies about management. Barnard, among the first, highlighted, in 1938, the
features of leadership distinguishing it from management. According to the author
leadership is a question of faith: “… the power of individuals to inspire cooperative
personal decision by creating faith: faith in common understanding, faith in prob-
ability of success, faith in the ultimate satisfaction of personal motives, faith in the
integrity of objective authority, faith in the superiority of common purpose as a
personal aim of those who partake it” (Barnard 1968, p. 259). More recently,
Zaleznik (1977) pointed out that both management and leadership are necessary
within organizations, but they relate to very different kinds of people according to
their attitudes towards goals, conceptions of work, relations with others and sense
of self. Exactly leadership is the quality needed to promote and drive change within
organizations. Kotter (2001) expanded on this idea and claimed that management is
98 6 Myth #3: Healthcare Institutions as Well as the Overall System …
coping with complexity, while leadership is coping with change, a very essential
role of organizations operating in turbulent external environments. Even though
managers and leaders perform the same tasks, e.g. deciding, creating networks of
people and monitoring the performance, they do it in a very different way.
Managers set plans for the future, organize and staff to allow implementation and
ensure achievement through controlling and problem solving. Leaders, on the
contrary, set directions, try to align people towards and keep them motivated and
inspired.
Another leading body of the literature has emphasized the role of vision, passion
and enthusiasm of charismatic leaders crystallized in the theory of transformational
leadership (Burns 1978; Bass 1985) that focuses much more on change than past
theories. The leader would be an out-and-out change agent champion enhancing
involvement of staff towards new patterns of action. Even though this vision is
powerful to highlight the effects of leaders onto the environment in which they
operate and the role of followers, the risk to overestimate its possibility of success
remains (Yukl 1999). Kotter himself (1995) explained a reason why important
change initiatives fail: leaders would forget transformation is a process that
advances by steps and takes much time, not a discrete event. Following, on the
contrary, a well-established pattern of change would rise the likelihood of
succeeding.
Certainly, these interpretations improve the understanding of leadership and the
relations between leaders and followers, but the risk is to spread and exalt a vision
of “heroic” leadership. On the contrary, in order for organizations to face the
modern challenges, a more useful theorization would be the so-called
shared/distributed leadership, that discusses leadership as an emergent property
of a group or network of interacting individuals (leadership is a cohesive activity
not a sum of individual contributions), a phenomenon whose boundaries are opened
to a plurality of actors and groups and whose results stem from the huge variety of
individual expertise distributed across the organization (Bennett et al. 2003).
As stated, healthcare organizations need good management and good leadership,
as well. But what kind of leaders and managers? Doubtless, thinking about change
at a system level and major transformations, the role of the top management is of
paramount importance. The managerial behaviour of CEOs and their style of
leadership are strategic to achieve expected performance and innovate within the
healthcare organizations (Sargiacomo 2001, 2003). Consistently, the following
considerations relate to General Managers (CEOs) of public healthcare organiza-
tions but, mutatis mutandis, they can be applied to other leadership positions at
different levels (at middle and lower level or external—Region or State). Actually,
without claiming to be complete, the idea that CEOs of institutions with an “heroic”
style can effectively manage organizations and systems complex by definition is
difficult to be a priori sustained for at least three reasons: the features of healthcare
organizations, the environmental constraints to the action and the resistance to
change embedded in the organizational culture.
6.3 When Leadership Meets Change: Some Insights 99
“new” role of leader. This could not be easily achieved, but as Bohmer claimed:
“the only realistic hope”, to fix health care “is for existing general hospitals, clinics,
and physician practices to redesign themselves” (Bohmer 2010). In other words—to
put it simply—a new era has to come. It is worth extending to all the modern
healthcare systems the following statements concerning the UK NHS: “The NHS
requires complicated leadership arrangements with negotiated authority between
clinicians and professional managers, between clinicians from different professional
backgrounds, across one NHS entity to another and for innovations and change
projects that involve different directorates” (James 2011, p. 19). The effort should
be more than bringing into play leaders on the top capable of engaging people from
below (Heifetz and Laurie 1997). Healthcare organizations should enhance dis-
tributed leadership to face present complexity and challenges, but cautiously
without totally rejecting the role that key managers and transformational leaders can
have.
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Chapter 7
Myth #4: The Healthcare System Can Be
Fixed by Treating It More as a Business
Federico Lega
7.1.1 Introduction
F. Lega (&)
Department of Public Policy & Management, SDA Bocconi School of Management, Rontgen
1, 20136 Milan, Italy
e-mail: federico.lega@unibocconi.it
E. Vendramini (&)
DISES—Department of Economic and Social Disciplines, Università Cattolica del Sacro
Cuore, via Emilia Parmense, 84, 29122 Piacenza, Italy
e-mail: emanuele.vendramini@unibocconi.it
G. Festa (&)
Department of Economic and Statistical Sciences, University of Salerno, via Govanni
Paolo II, 132, 84084 Fisciano (SA), Italy
e-mail: gfesta@unisa.it
E. Coscioni
Department of Ascending Aorta and Thoracic Surgery, University Hospital “San Giovanni e
Ruggi d’Aragona”, Salerno, Italy
has further contributed to this discourse in the context of public healthcare orga-
nization, with emphasis put on privatization, on commissioning to private providers
rather than providing through public ones, and on the introduction of quasi-market
configuration for health systems (Degeling et al. 2003; Ham 2012; Ackroyd et al.
2007). The new rhetoric-viewed business-like approaches as the panacea for the
enduring problems of health systems, especially with regards to the cost escalation
and the sustainability challenge. Yet, there is no evidence of these benefits. While
we have clear signs that business-driven health systems cost more and have greater
problems in equity in access to healthcare delivery, variation in outcomes, adverse
selection and opportunistic behaviors, such as disease mongering and more (Blank
and Bureau 2013). Further, and more important, even if it is arguable the fact that a
business approach could be beneficial for some aspects, to develop a constructive
debate we first have to agree on what is meant by “treating health care as a
business.”
In the following of this article, I will argue how we need to look beyond rhetoric.
Igniting a serious debate about when and how business-driven approaches are
useful to support the quest of health organizations for improvement of their per-
formance. The work will proceed as follow, with the aim of illustrating why treating
health care as a business is not the right thing to do, but could be helpful to do
things right:
• first, I will recollect the aims of health systems and health organizations and
their implications for management practice. This is to provide a broad but more
bounded definition of what we can consider “treating health care like a
business”;
• second, I will demonstrate why health systems and organizations have specific
features and dynamics which, although they can certainly benefit from business
techniques and logics, do require different management practices;
• third, and finally, I will argue about what health care can positively learn and
import from business, and vice versa why we should avoid treating health care
as a mere business.
With regards to the aims of health systems and health organizations, there are
thousands of publications that investigate and discuss in detail the scopes and goals,
better than I could ever do here. However, in short, it would be difficult to disagree
that the end point is taking care of and curing patients, providing access to edu-
cation, prevention, expertise, technology, and everything else that is necessary to
perform and deliver health services. In recent times, most of the debate has focused
on how to provide all this while securing the sustainability of health systems and
health organizations. Universalism and sustainability have become popular issues
(Value in Health 2013). Quite often, sustainability has become the dominant issue.
7.1 Some Remarks Beyond Ideology and Fashion 105
So, “treating health care like a business” could refer to two different meanings.
First, the emergence of competition, marketization, corporatization, profit-driven
rather than mission-driven health organizations, etc. Second, the introduction of
business tools and practices. Support the corporate and marketing processes will
also improve efficiency, efficacy, robustness and quality of the delivery of health
services within any organizational and cultural context. The latter may require
further analysis and exploration, for the benefits it promises and the challenges it
encompasses with the introduction of such tools and practices in the context of
health organizations.
There is one simple sentence that sums up the distinctiveness of health organiza-
tions: “they are certainly more than just the sum of their professionals, as they
require resources, technology, logistics, etc., but they’ll never be better than what
their professionals want them to become.”
This remark underlines a huge difference. In businesses the human side is
important, but not as much as in health organizations (Freidson 1994; Fitzgerald
and Ferlie 2000; Borgonovi and Landau 2008). Businesses need leaders, but then
the job of the leaders is to make the people (employees) fit the system. The
employees are selected, trained and “indoctrinated” to support the system (orga-
nization). The system is the independent variable. In healthcare organizations, it is
rather the opposite: the system is mainly engineered to support the practices of
healthcare professionals. The practices are the independent variable. They are
introduced and changed by professionals. Not by the system. Obviously, we do not
have to build health organizations around all professionals’ wants or needs,
otherwise we will be back to the old days when they were idiocrasies or profes-
sional bureaucracies (Lega and De Pietro 2005), but a degree of customization is
required. This characteristic brings consequences and managerial implications.
Such as the fundamental role that the processes of alignment of interests play, the
so-called sharing of minds among the professionals and the management (Lega
2012; Lega and Cuccurullo 2001). Which is even more vital when professionals
play the hybrid role of doctor–manager (Lega et al. 2014, 2015; Lega and Sartirana
2015; Drife and Johnston 1995; Davies and Harrison 2003).
We do have evidence that management matters in health care. We do have
evidence that the introduction of managerial practices makes the difference in
performance of healthcare organizations (Lega et al. 2013). But we also know that
this introduction and development does not mean we can treat healthcare organi-
zations as mere businesses.
First, decision-making in health organizations cannot be driven exclusively by
market opportunities. Their focus is the mission, its definition and operation are not
7.1 Some Remarks Beyond Ideology and Fashion 107
approach (Lega and Cuccurullo 2001). Performance targets are often not imposed,
but are built and “shared” with professionals (Lega et al 2013; Spurgeon et al.
2011). Quality is often defined by external professional bodies (Freidson 1994).
Mintzberg stated: “So again, let’s try it differently: Healthcare functions best as a
calling, not a business; as such, it needs greater cooperation, not competition,
among its many players and institutions. Physicians may be well paid, but these are
smart people capable of earning large incomes elsewhere. What keeps many, if not
most, of them in healthcare is the sense of service. This applies equally, if not more
so, to the nurses, who don’t earn that kind of money, and many of the managers
too.” The whole discussion of the previous paragraphs supports this view.
Yet, we also alluded to the fact that some business-like approaches can be
positive. Specifically, the management side of business. Health systems and health
organizations face tremendous challenges, and they struggle to answer the funda-
mental question: what makes them valuable. Prioritization, decision-making,
resource allocation, reconfiguration of services are difficult and complex tasks, but
at the same time essential as ever. Though it requires specific customization, the
introduction of business-like techniques and practices seems to be the way to go
(Lega et al. 2013; Bohmer 2009). To support health systems and health organiza-
tions in selecting the right things to do, and then do them right.
In the end, in these turbulent times—a new normality—health systems and
health organizations require a greater “discipline” to manage their specific orga-
nizational dynamics. Business tools—such as performance management, quality
systems, lean techniques, operations management, business planning, humans
resource strategic management, etc.—would allow health organizations—public as
well as private—to manage more effectively and efficiently the “black box” of
healthcare delivery (Lega et al. 2013; Vissers et al. 2001; McCarthy 2006; Davies
and Walley 2000; Lega and Calciolari 2012). Where it is clearly understood that if
it is true that no margin = no mission, it is also even more important to remember
that margin is not the mission.
This is the business suit that can help them. A customized business suit dressed
in a context dense of healthcare values.
Not a business context with healthcare suits dressed by doctors–business men
longing for market success.
7.2 Business Versus Nonbusiness Model in Health care 109
Emanuele Vendramini
7.2.1 Introduction
Henry Mintzberg (2012) in his article “Managing the Myths of Health care” takes
into consideration the different Myths related to the healthcare sector; specifically
Myth #4 states that: “The healthcare system can be fixed by treating it more as a
business” and highlights the reasons why this assumption is not true:
• Health care functions best as a calling, not a business
• Physicians are motivated by the sense of service and not, just, by large incomes
• Cooperation and not competition.
Most of the aforementioned points are related to the dichotomy “business versus
nonbusiness” and precisely: if an organization is business it means it has to be
market driven while a nonbusiness should be related to cooperation, motivation, a
call, and not a business.
The paradigm “business versus non business” could be elaborated and discussed
taking into consideration the specificities of healthcare organizations; in fact Myth
#4 could be analyzed and discussed using three words:
1. Ambidexterity (Duncan 1976)
2. Professionalism (Bartol 1979; Noordegraaf 2015)
3. Accountability (Kaplan and Norton 1996; Scally and Donaldson 1998).
7.2.2 Ambidexterity
7.2.3 Professionalism
The second word is strictly linked to one of Mintzberg’s points and specifically
“Physicians are motivated by the sense of service and not, just, by large incomes.”
That is true but it is important to highlight that physicians have to be recognized as
professionals in terms of knowledge, in terms of autonomy, in terms of freedom of
deciding what is best for their patient. So the concept of sense of service has to be
elaborated taking into consideration different dimensions such as the following:
• Competences development
• Career path development
• External perceptions.
The main purpose of a healthcare organization is to provide care, so for the
physician it is important to have the right number of cases (and case mix) to be able
to tackle all the different situations and be able to offer a state of the art service. This
point is strictly linked to how the hospital is organized; maybe too many small units
focused on a never-ending turf war is not the most effective and desirable working
environment.
Career path and career development are other important elements of profes-
sionalism mainly because in a professional environment the organizational structure
is more fluid and less hierarchical so having common values, clear rules, incentives,
produce the right motivations. In a professional environment, the most powerful
incentives are nonfinancial not only because the marginal benefit of an incentive
decreases but also because physicians consider them relevant for internal recog-
nition. Being recognized, as a valuable professional by a colleague is the most
powerful and relevant incentive.
Healthcare organizations provide a specific product: health, so the impact of
their performance on external stakeholders is massive (e.g., effects on the media
about malpractice cases) and the main implication is that it is important for
physicians to work in a well-recognized/reputed organization.
These three dimensions are strictly linked, the best physicians work in the best
organizations (and vice versa) where competences, development, and professional
upgrades are structured in a meritocratic system with shared values.
7.2 Business Versus Nonbusiness Model in Health care 111
7.2.4 Accountability
they are the Doctors and they work in a professional environment where professional
autonomy is guaranteed. This point is also linked to the previous parts and specifi-
cally to the implications of professionalism and the ambidexterity of healthcare
organizations. But if the aim is making physicians accountable as to which are their
first choice drugs that have to be prescribed and make them understand that a non-
necessary MRI has financial implications on the unit’s budget, it is clear why health
care is not business as usual and the uniqueness of healthcare management.
The third point addressed by H. Mintzberg is related to the need for more
cooperation and less competition in the healthcare system. Many publications were
produced on this point mainly in the 80s and many approaches were provided but in
the 90s, 2000s, and 2010s literature produced many more publications highlighting
how a “more cooperation less competition” perspective of analysis should be
considered from a different point of view and the debate in the healthcare sector has
been shifted to the effectiveness of quasi markets (Le Grand and Bartlett 1993; Le
Grand et al. 1998; Mays et al. 2000; Porter and Teisberg 2005; Propper et al. 2008;
Mays et al. 2011) and on the governance mechanism that better fits the system and
its effectiveness (Shortell et al. 1996). So the third point of Mintzberg’s approach is
very valid mainly taking into consideration the variety of solutions that are in
between the two extremes: cooperation versus competition.
The possible analysis of the three points provided by H. Mintzberg to support
that “The healthcare system can NOT be fixed by treating it more as a business” is
very robust and supported by many other contributions and publications and add
value to the actual debate within the healthcare system.
The strongest feature that we can ascribe to the health sector concerns the nature of
the asset in question, namely the health service. Historically distinct from health,
defined by WHO as “… a state of complete physical, mental and social well-being
and not merely the absence of disease or infirmity,” then to be understood as a
condition, health care is characterized by the nature of performance (service).
While not specifically “health,” health care is the set of activities that allow
producing health and therefore the two are naturally commingled. In this synthesis
is the main torment of health: how is it possible to combine health care and
economics in the same reasoning, i.e., forcing a human condition to be treated in a
way that must take into account money?
7.3 The Corporatization/Humanization Binomial 113
care and health: the United States, for example, which have made the economic
vision of health care a cornerstone, complain of a blatant contradiction.
At the same time, there seems to be a widespread awareness of the necessity and
not only the opportunity to address the problems related to the financing of health
care costs, especially in times of crisis such as those recently experienced by the
more developed countries (and in some ways still strongly ongoing). Not surpris-
ingly, some healthcare systems, such as the Italian one, only fairly recently, but
with clear determination, have given a purely corporate rank to health facilities (see
especially Legislative Decrees no. 502/92, no. 517/93 and no. 229/99).
Cooperation and not competition, vocation and not entrepreneurship, humanity
and not market: Mintzberg’s words seem more like those of a physician that of a
business economist. For the careful reader, however, there can be no surprise in
these statements, which, in hindsight, support a heartfelt accusation to a
business-like but, as said, hypertrophic and inefficient management of health care:
in other words, they prompt addressing a nontrivial application of managerial skills
to health care.
A more careful analysis of Mintzberg’s words suggests the real problem that
persists at the core of the myth of the healthcare corporatization: the individual-
ization of the economic perspective of the health service, the economic perspective
of the physician-patient relationship and the economic perspective of health as an
institutional service (of society for society). “In the name of competition, American
health care in fact suffers from individualization: every professional and every
institution for his, her, or itself” (Mintzberg 2012, p. 5).
Therefore, it is not a matter of managing or not, it is not about corporatizing or
not, it is not about business or not. This is instead about addressing the dramatic
problems that prevent better organization of the overall available resources to
provide the best possible health services to those who really need them: it is clear to
everyone that an individualistic (and not social) vision is born inherently lame in
walking that line, because the union of forces, if well governed and managed, can
only bring benefits.
Moreover, health professionals should have identified, in the above words,
concepts and tools by now wellknown to clinical practice: appropriateness, clinical
governance, healthcare networking, and so on. The lesson that we can draw from
the “demythologizing” of the myth of health as a business is therefore very clear:
we must reject the vision of corporate health care led not by the sustainability of the
system, but that remains trapped in merely addressing the cost of each individual
case, perhaps to be handled in a standard manner to honor a false economic
inspiration.
Of course, this rejection of individualization weighs on Mintzberg’s own
reflections specifically in the economic perspective, it not being at odds, but taking
instead justification, from clinical and health individualization. “It is more impor-
tant to know what person the disease has than what disease the person has” is the
aphorism traditionally attributed to Hippocrates, in whose work “… the lack of
anatomical, pathophysiologic, pharmacologic knowledge is compensated by an
7.3 The Corporatization/Humanization Binomial 115
Fig. 7.1 A synoptic view of corporatization and humanization. Source developed by the authors
vision, can be generalized but is however always personal), a problem that requires
some operational action by the health professional, who works in a healthcare
organization, which is integrated in a healthcare system, hopefully organized for the
community.
It is therefore clear that corporatization and humanization are not antithetical
dimensions, but rather complement each other. In the more personal relationship
with the patient, humanization scores better than corporatization, especially because
of that healthy, mainly clinical individuality (and far less economic) which was
mentioned earlier, while in the broader relationship with society, corporatization
scores better than humanization, trivially by virtue of a planning intended to
organize and ensure a priori the potential satisfying of the right of all to health care.
Rightfully, some might not (personally) be satisfied with this dynamic, but on
one essential point there seems to be no compromise. Health organizations, which
are acknowledged as such even formally (as today in Italy) or not (as in the past in
Italy), are always businesses, each with its own specific economic purpose (for
profit or nonprofit) (Festa 2003).
The theoretical investigation on the economic justification (cost effectiveness) of
the governance and management of health care can undoubtedly serve to better
streamline, organize and implement healthcare activities to serve the community
(Marinò 2008). However, to imagine having health organizations, up to the func-
tioning of health systems, not addressed as businesses not only is impossible
because of the times, strongly characterized by the need for economic sustainability
and not only (Borgonovi and Compagni 2013), but it is deeply wrong in cultural
terms, obviously in the view of a healthy business culture.
118 7 Myth #4: The Health Care System …
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Chapter 8
Myth #5: Health Care Is Rightly Left
to the Private Sector, for the Sake
of Efficiency
8.1.1 Introduction
in the system where most of provision is public, there should be some trade-offs
between equality and efficiency.
Whether privatization of healthcare provision actually leads to the improvement
in efficiency has been the subject of what appears to be a considerable amount of
research, both theoretical and empirical (Shen et al. 2007). According to standard
economic theory private hospitals are predicted to outperform public hospitals in
terms of efficiency. However, the existing theoretical literature as well as empirical
studies, offer conflicting and inconclusive evidence on this issue (Burgess and
Wilson 1996; Eggleston et al. 2008; Tiemann et al. 2012). In this short commentary
on Henry Mintzberg’s myth #5, we briefly outline the most common theoretical
frameworks and provide a short summary of empirical studies conducted to
investigate whether ownership matters for hospital performance in terms of effi-
ciency. The final aim is to illustrate and provide arguments that could support or
contrast the commonplace of private primacy in healthcare provision expressed by
Henry Mintzberg.
In a nutshell, there are three fundamental theories that can be drawn upon when
comparing public and private provision of healthcare services:
(1) agency/property-rights theory; (2) public choice; and (3) organization theories.
(Villalonga 2000)
According to agency/property-rights theory, since private providers have well
defined control rights they have a strong incentive to invest in innovation, maximize
their profits through a high degree of technical efficiency. The property rights model
predicts that private owners achieve lower costs in service provision than their
M. Drummond
Centre for Health Economics, University of York, Alcuin a Block, York, North Yorks YO1
5DD, UK
e-mail: mike.drummond@york.ac.uk
R. Tarricone
SDA Bocconi School of Management, Milan, Italy
M. de Cicco
Viale G.B.Stucchi, no. 110, 20900 Monza, Italy
e-mail: maurizio.de_cicco@roche.com
S. Russo
Department of Management, University of Venice, Dorsoduro 3246, 30123 Venice, Italy
e-mail: salvus@unive.it
L. Del Bene
Department of Management, Polytechnic University of Marche, Ancona, Italy
8.1 Public Versus Private Provision of Healthcare Services 125
is ex-ante cost covering in Germany and covers only 50% of hospital costs in
Austria. Here, a federal law establishes every year how much of the extra costs have
to be covered ex-post by the government or its municipalities. The remaining costs
have to be borne by the respective owner, whether an investor or the federal state. In
this sense, in Germany public cost coverage for private and public hospitals is more
equally distributed within a tough competitive environment, whereas in Austria
financial risk is considerably higher for private not-for-profit hospitals, thus spur-
ring more efficient behaviours. For the sake of completeness, one should also
acknowledge a more recent publication by the same German authors where the
impact of privatization on hospital efficiency was estimated (Tiemann and
Schreyogg 2012). By applying an innovative difference-in-difference regression
model to matched longitudinal data with bootstrapped data envelopment analysis
(DEA) efficiency scores as dependent variables, they showed that conversion from
public to private for-profit status in Germany was associated with a significant
improvement in efficiency than a comparable sample of hospitals that remained
instead public. However, this efficiency gains were negatively associated with the
introduction of the DRG-payment system meaning that it became more challenging
for hospitals that were converted to private status to realize their performance
improvement in the post-DRG era.
On a similar note, Barbetta and colleagues (Barbetta et al. 2007) investigated the
impact of different proprietary forms (public vs. private non-profit) and reim-
bursement systems on hospitals efficiency in Italy between 1995 and 2000. Within
this time frame, the funding system of Italian hospitals moved from ex-post cost
coverage or bed-day rate, for public or private organizations, respectively, to a
prospective payment system based on DRG that applied to all types of hospitals.
Using both nonparametric (i.e. data envelopment analysis) and parametric (i.e.
corrected ordinary least squares and stochastic frontiers) approaches, the authors
test the hypothesis that differences in public or private non-profit hospitals technical
efficiency disappear after the introduction of a common DRG-based payment
system. They found some evidence of convergence in efficiency scores of the
different ownership structures, thus supporting the claim that differences in eco-
nomic performances are more the results of institutional settings rather than the
consequence of incentives systems embedded in the different proprietary forms.
Any meaningful discussion around hospital performance should also take quality
of care into consideration. There are different ways of measuring quality in health
care, e.g. waiting lists, patient satisfaction, innovation or adherence to guidelines,
however, these have been rarely included in empirical evaluation of hospital effi-
ciency and proprietary forms. In most quality-adjusted efficiency scores, (inpatient)
mortality rates are used. In 2005, Milcent (2005) analyzed the effect of hospital
ownership and reimbursement systems on mortality rates in France. Here hospital
care can be provided by the public or the private sector. The former is funded under
a global budget system, whereas the latter is paid on a fee-for-service mechanism.
A crude comparison of mortality rates across hospitals reveal an 8% reduction in
mortality rates in for-profit hospitals compared to public ones. However, rankings
of hospital quality are easy to misinterpret if patient characteristics are not factored
128 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
into the analysis. After implementing a duration model applied to panel data that
allows controlling for the fact that disease severity of patients admitted to private or
public sector may be different, she found no significant differences in outcomes,
although heterogeneity was greater in for-profit hospitals. Indeed, a meta-analysis
of 31 studies examining findings regarding hospital ownership and quality of care,
as measured by mortality or adverse events rate, yield a pooled effect size statis-
tically equivalent to zero, suggesting no difference between for-profit and
not-for-profit hospitals (Eggleston et al. 2008). In a subset of studies representative
of the US, private for-profit hospitals tend to show lower quality than non-profit
counterparts, thus highlighting the importance of data source selection, timing and
regional context in this type of empirical assessments.
8.1.4 Discussion
In the last few years, healthcare systems of developed countries have been char-
acterized by the attempt to manage the tension between two apparently opposite
pressures: the increase in the demand of healthcare services, due to the ageing of
populations and the development of new treatments, and the reduction of resources
available for funding healthcare systems, as a consequence of the economic crisis.
Both these dynamics have required healthcare organizations to improve their
efficiency in order to survive. Efficiency measures if healthcare resources are being
used to get the best value for money and are concerned with the relation between
resource inputs (costs, in the form of labour, capital, or equipment) and outputs
(numbers treated, waiting time, etc.). As suggested by Palmer and Torgerson
(1999), “inefficiency exists when resources could be reallocated in a way which
would increase the health outcomes produced”. The authors identify three different
forms of efficiency: technical efficiency addresses the issue of using given resources
to maximum advantage; productive efficiency, of choosing different combinations
of resources to achieve the maximum health benefit for a given cost; and allocative
efficiency, of achieving the right mixture of healthcare programmes to maximize the
health of society.
The main trends experienced by healthcare systems in the last ten years can be
explained as an attempt to reach the three different categories of efficiency.
The first trend observed within many healthcare systems (especially
Beveridge-like) has been the reduction of inappropriate treatments. For example, in
the Italian NHS, hospital discharges have been reduced by approximately 20% in
the last ten years. This result was reached not only by eliminating inappropriate
inpatient services but also by converting them into outpatient activities. This is an
example of allocative efficiency and it has equally impacted private and public
providers.
However, outputs cannot be endlessly contained without affecting universal
coverage, if any, and leaving unmet healthcare needs. In that respect, a second
observed trend refers to the attempt to reduce the amount of inputs used. In fact, in
many countries initiatives of spending review have been developed in order to
contain costs incurred for the acquisition of all relevant healthcare inputs: personnel
(in Italy, many regional governments have cut personnel costs by even 20% in the
last five years), drugs (ceilings on the overall drugs consumption has been defined
in many countries), services. At the same time, in an attempt to gain scale benefits,
130 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
accounting system should be able to account for all the resources used by a patient
as she or he traverses the system.
Given this evidence, many healthcare organizations have developed systems that
are able to measure the costs incurred in delivering healthcare processes.
If we look at the Italian NHS, Florence Local Health Authority no. 10 provides
one of the first cases analyzed by healthcare scholars of process-oriented costing
systems (Vannozzi and Fedeli 2011). More specifically, this organization has
implemented a bill of material, namely a sort of matrix mapping the association
between resources and activities along surgery processes. The project started with a
detailed analysis aimed at describing and codifying the phases of each process;
then, for each phase, a standard full cost has been computed. One of the key success
factors of this project was the cooperation between the management control team
and physicians/nurses, traditionally represented as two conflicting roles. The main
objectives of the implemented innovation were to support some key decision
processes:
• internal benchmarking, by giving the opportunity to physicians to codify and
compare their surgery practices in order to identify best practices;
• external benchmarking, since the system now allows a comparison between
costs incurred for surgical procedures (inputs) and the official rates provided by
the DRG system (value given to the output);
• planning and control, a process that can be now linked to a different object of
analysis. While traditionally the budget is prepared with a departmental per-
spective, the new system allows a process-oriented planning procedure;
• business process reengineering, as a result of the evidence provided by internal
and external benchmarking.
A similar innovation was implemented by the IEO—European Institute of
Oncology (Dallocchio et al. 2016), an Italian private hospital awarded with the
accreditation from the Italian NHS. In order to analyze day surgery procedures, IEO
has developed a process-oriented costing system. More specifically, also in this case
a bill of material for each surgery process has been created, supported by the
implementation of a new information system allowing the monitoring of materials
consumption on a single patient basis. In IEO too, the implementation of the bill of
material required a close cooperation between the controlling department and
physicians. The adoption of the new system was one of the key drivers of the
company turnaround: IEO registered a €18 million loss in 2011, while in 2014 the
net profit was €6.5 million. The information provided by the new costing system
fostered attention on resource consumption not only in the control department, but
also among physicians. More specifically, after one year of adopting this innova-
tion, all the day surgery procedures experienced a significant reduction in resource
consumption, without affecting quality. Thanks to these results, all the procedures
analyzed had a positive margin net of full cost. This can be considered as a real cost
management (and not cost-cutting) initiative, since apart from generating cost
132 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
savings, it allowed the optimization in the use of the two most important capacity
resources: operating theatres and beds.
Many other healthcare providers have adopted analogous measurement systems.
As the two above-mentioned cases demonstrate, innovation in management
accounting systems is not a peculiarity of private hospitals, since it often arises in
public organizations.
The two cases also show how measurement systems can create value and, more
specifically, efficiency only when the information produced is linked to managerial
decisions.
In the last twenty years, the scientific debate highlighted the need to move from a
pure efficiency and cost measurement perspective to an efficiency and cost man-
agement approach. This change of paradigm is consistent with the above-mentioned
link between economic information and managerial decision; in fact, cost man-
agement can be defined as the deliberate decision-making aimed at aligning the cost
structure of organizations with the strategy and optimizing of the use of resources
(Lord 1996). In a broad sense, cost management can be defined as “a proactive
process of identifying causes of costs, with the objectives of managing and mini-
mizing the total costs associated with the provision of products and services to
customers” (Chivaka 2007, p. 38). This means that cost management starts with the
identification of cost drivers within the organization’s value chain, with the aim of
taking a proactive stance in reaching efficiency.
If we look again at the Italian NHS, we can find many examples of cost and
efficiency management initiatives. One of them refers to the Giovanni XXIII
Independent Hospital, a public hospital, operating in the North of Italy. The
Giovanni XXIII implemented one of the first projects of intensity-of-care operating
model. Traditionally, the operating units were the main cost object for the hospital,
however, this system was not consistent with a business model by intensity-of-care,
hence the collection and segmentation of data had to be turned around
cross-functionally (across the operating units). A cost analysis suggested that drugs
had a high incidence in the cost structure of many healthcare processes. The
Giovanni XXIII, then, launched a project aimed at reengineering logistics and
distribution of drugs, pharmaceuticals and medical products (Morelli and Lecci
2014). The project can be broken down into two phases: (i) the implementation of a
new stock management policy for medical devices; (ii) the digitalization of drugs
prescription. As a result, the implementation of the first initiative has allowed
decreasing the ratio Average Inventory/Purchases for high value items from 25.6 to
2.5% over seven years; while the digitalization of drugs prescription decreased
average inventory levels (−30%), wrong prescriptions and related legal arguments
(−30%) and insurance costs (−4.5%).
8.2 Managing Efficiency in Health care: A Matter of Private and Public Processes 133
Not so far from the Giovanni XXIII, another relevant innovation was experi-
mented by Humanitas, a highly specialized, privately owned teaching and research
hospital. Accredited by the National Health Service, Humanitas has been granted by
the Ministry of Health the status of “Research Hospital” (IRCCS) with a focus on
diseases of the immune system, ranging from cancer to rheumatoid arthritis. Since
its foundation, in 1996, Humanitas has combined lean factory and total quality
management approaches in order to maximize efficiency and effectiveness. More
specifically, the Humanitas management model is based on ensuring demand,
ensuring that patient move rapidly through the system and that the system is never
blocked, therefore reducing paths variation. This allowed the hospital to experience
a 300% growth in sales in the period from 2000 to 2013 and to increase its
operating margin from 7 to 12% (Lecci and Longo 2015). Other healthcare pro-
viders, both public and private, have implemented lean management and other
efficiency management approaches (Francesconi and Lecci 2014). Such models
may apply to the organization as a whole (e.g. the AOU Senese Independent
Hospital, a public provider) or to specific segments. The Lodi Local Health
Authority, a public organization, implemented a business process reengineering for
redesigning the diabetes diagnosis and treatment plan. The Ospedale Pediatrico
Bambin Gesù (a private IRCCS) applied lean management to the transplant
department. The AOU Riuniti di Trieste Independent Hospital (a public provider)
implemented a kaizen costing project for the laboratory.
Is health care rightly left to the private sector for the sake of efficiency? The cases
presented in this chapter show how measuring and managing efficiency is not a
peculiarity only of the private or of the public sector. Additionally, the analyzed
cases both refer to service providers (hospitals) and regulators (Local Health
Authorities). Thus, efficiency is not driven by the governance structure (public or
private), but it is the result of the ability to manage input–output relationships
within delivery processes. In this sense, at the moment, public organizations have a
great opportunity: since in many countries they are both regulators and providers,
they may have an end-to-end perspective of healthcare delivery processes. In fact,
managing efficiency at individual department, service, support activity, or even
provider (company) level often encourage the shifting of costs from one type of
service or provider to another, or to the payor or consumer: gaining efficiency on a
specific phase of the value chain does not necessarily imply increasing the effi-
ciency of the healthcare system as a whole. This is the reason why the processual
end-to-end perspective is so important to manage efficiency.
The difficulty often experienced in health care in implementing efficiency
measurement and management initiatives is not linked to ownership (public or
private), but to characteristics embedded in all healthcare organizations (Lega
2009): the clash between professionals and administrators; coordination problems
134 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
8.3.1 Introduction
The debate about public versus private health care has two components: the choice
of public or private financing and the choice of public versus private provision. In
this paper we address the financing question. Torbica and Ciani (2016) address the
issue of public versus private provision. In his discussion on this myth, Henry
Mintzberg (2012) rightly states that, for many individuals, the choice between a
public or private sector healthcare system is driven by a desire to have equity in
access to health care. The equity arguments are discussed later in the chapter
dealing with Myth #6 below, but it should be acknowledged that the desire for
equity of access is not universal and depends on the culture and values in the
country concerned (Torbica et al. 2016). Therefore, it is important to address the
efficiency arguments, since if publicly financed healthcare systems were more
equitable but less efficient, we would still have to consider the trade-offs between
these two laudable, but different, objectives.
The main argument for private funding stems from the notion that a perfectly
functioning market should lead to both technical and allocative efficiency.
However, two major characteristics of health care, uncertainty and asymmetry (of
information), potentially leads to market imperfections (Folland and Rocco 2014).
The existence of uncertainty (i.e. the consumer does not know if and when they are
likely to become ill) means that some form of insurance is required. Insurance
mechanisms are a sensible institutional response to the problem of uncertainty, but
healthcare insurance markets often fail because of moral hazard. The term “moral
8.3 Public Versus Private Financing 135
hazard” refers to the change in the attitudes of consumers of health care, resulting from
them becoming insured against the full costs of such care. Since the consumer faces no
cost at the point of use, the levels of demand are greater than would be the case in a
perfect market with fully informed consumers paying the full costs of their care.
The existence of asymmetry of information (i.e. consumers cannot easily assess
the likely benefits of receiving health care) means that they need to rely on the
provider (i.e. a health professional) to act as their agent. The consumer becomes
reliant upon the doctor/supplier because (1) the search costs associated with the
acquisition of information (e.g. a second medical opinion) may be very high and
(2) also because the search costs are generally coupled with what can be called
“anxiety costs” arising from the fact that the consumer is ill. The patient and the
doctor are therefore in an “agency-relationship”. However, the agency relationship
in health care is quite different from the usual agency relationship, in which the two
actors—the “principal” and the “agent”—seek to maximize their interdependent,
but separate, objectives and utility functions. Conversely, in health care the doctor’s
ethical obligation is to act in the patient’s interest. The doctor is expected to take the
patient’s place and to maximize his or her utility function. This suggests that the
doctor has full knowledge about his patient’s needs, utility function, tastes, pref-
erences and so on. This is unlikely to be the case and it is therefore unlikely that a
perfect agency relationship will exist. Since a perfect agency relationship is unlikely
to exist, healthcare providers can manipulate patients’ choices, to the extent that
they might exploit consumers’ willingness to pay for their own personal benefit.
Although codes of ethics and compliance to internationally agreed clinical guide-
lines can effectively limit supplier inducement, it is not in doubt that the supplier of
health care has the potential to exploit consumers’ willingness to pay. This is
sufficient to affect efficiency in the healthcare market, usually manifested through
supplier-induced demand and escalating healthcare costs. Providers and hospitals
may also face other incentives to provide more care, depending on the fee payment
system, especially under fee-for-service.
Another potential source of inefficiency in private markets for health care is the
existence of externalities. Externalities are spill-overs from people’s production or
consumption of commodities, which affect other individuals in either a negative or a
positive way. The costs and benefits of such spill-overs cannot be accounted for in
market transactions, because consumers and suppliers consider only costs and
benefits to themselves. Health care creates external benefits. These benefits may
arise from knowing that others can consume a public health intervention, such as
vaccination, which has direct effects on risks to one’s own health (selfish exter-
nality) or may arise from knowing that someone is receiving needed health care
which does not necessarily affect one’s own health status (a caring externality). As
unregulated markets do not account for individuals’ willingness to pay for external
benefits, such markets will lead to underproduction of health care (Donaldson and
Gerard 1993). The clearest manifestation of this is the failure to achieve herd
immunity levels in some vaccination programmes if individuals only consider the
costs and benefits to themselves and not the benefits that the protection that their
vaccination confers to others.
136 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
So what are the main arguments for or against, the public financing of health care?
The first argument is that, under public financing, it may be easier to prevent
escalating costs. As mentioned above, since the consumers of health care often do
not know the value of the services on offer, they have to rely on the providers of
those services (i.e. their physicians) to make the choices for them. This leaves open
the possibility of “over-selling” the benefits of health care, leading to a continual
escalation of expenditure.
Of course, there are many actions that can be taken, within a privately financed
healthcare system, to counteract these forces. Patients could be required to make
co-payments at the time of receiving care, physicians and hospitals could be given
appropriate incentives to provide care efficiently and utilization reviews could be
conducted to ensure that appropriate care was delivered. However, it may still be
more difficult to control the growth of expenditure than it is in a publicly financed
system with a single paper, mainly because there are multiple sources of funding
that need to be controlled. Reinhardt (2003) points out that, in comparing the
Canadian and US healthcare systems, the existence of public financing (through
national health insurance) in Canada has helped to reduce cost escalation, with no
apparent reduction in the outcomes, in terms of improved health, produced.
The second argument is that the administrative costs associated with the private
financing may be higher than those for public financing. It was mentioned above that
many policies may be required to ensure that the private market functions efficiently.
In addition, with private health insurance the costs of marketing, writing insurance
contracts and processing claims are substantial. Comparisons of administrative costs
show that these tend to be higher, as a percentage of total expenditure in privately
financed systems. For example, Woolhandler et al. (2003) reported that, in looking at
the insurance element, the Canadian single payer insurance system operated with
overheads of 1.3%, comparing favourably with Canadian private insurance overheads
of 13.2%, US private insurance overheads of 11.7% and US Medicare and Medicaid
overheads of 3.6 and 6.8%, respectively. Of course, these types of comparisons are
fraught with definitional judgments and the administrative costs of publicly financed
systems are often regarded as a cause for concern. Nevertheless, it is likely that the
administrative costs of operating a privately financed system are high. In addition, it
is often cheaper to raise the funds for publicly financed systems, since raising funds
through taxation is relatively inexpensive and the costs of borrowing are usually
lower for governments than for private industry.
The third argument relates to the level of control over how the funds are allo-
cated within the healthcare system. Even when the funding has been raised and the
overall level of expenditure controlled, it is still important to ensure that those funds
are allocated efficiently, since the signals provided by a perfectly functioning
market are absent. In the last 30 years, one of the major forces to increase the
efficiency of health care has been the increased use of health technology assess-
ment. Here, the benefits and costs of treatment alternatives are compared in order to
assess which treatment strategy will deliver the greatest value for money. Henry
8.3 Public Versus Private Financing 137
Maurizio de Cicco
(+1.7%). A sum that, divided by every citizen, amounts to 570 euro per year, or
2000 euro per household.
This result becomes even more significant if we consider the deflationary
dynamic, relevant in the case of some health products and services.
10 million Italians resort more to the private sector and 7 million to Intramoenia
because they cannot wait. It is not by chance that one citizen out of two—26 million
—affirms he is likely to accede to integrative health solutions.
More than half of the population believes that those who can afford a health
insurance policy or who work in a company where integrative health care is
available should take out a policy and stick to it. On one side, this would bring
public benefits because many people would use private facilities therefore freeing
up space in the public sector, and on the other side this would introduce more
resources in the health system.
The need for concrete and sustainable solutions will surely increase. In June
2016 the Lancet published a study of the Institute for Health Metrics and
Evaluation, funded by the Bill & Melinda Gates Foundation. The researchers
carried out the forecasts for 184 countries. The global healthcare spending, both
public and private, will increase from 7.83 trillion dollars in 2013 to 18.28 trillion
dollars in 2040. During this period, health spending per capita will increase by 2.7%
per year in high-income countries, by 3.4% per year for those with upper middle
income, by 3% for those with low and middle-incomes and finally 2.4% in
low-income countries.
In Italy an annual growth rate of 2.6% is estimated which would lead in 2040 to
a total (public and private) health spending per capita of $5968 (with a range
between $5013 and $6804), compared to $3077 in 2013 with almost 80% covered
by public health spending and the rest as private spending.
The conclusions of the study do not sound positive for many countries, including
Italy. Despite the many advances made in the field of health, the low and
middle-income countries will not be able to effectively meet health expenditure
objectives at a global level by 2040. Even the health expenditure gap between the
poorest and the richest countries will not significantly shrink in the coming years
unless action is taken today, with important policy interventions and concerted
actions.
Italy is currently ranked fourth among the G7 countries with a share of private
spending higher than Japan, the UK and France, not much less than Germany and
Canada and well below the United States, where private health expenditure is
always more than 50% of the total expenditure and health insurance represents a
substantial proportion of this share.
What differentiates Italy from other countries is the high incidence of
out-of-pocket spending rather than the overall private spending, with consequences
less and less equitable from the viewpoint of distribution and with some concerns
for the future stability of the overall health system.
Our National Health Service recognizes the opportunity for citizens to supple-
ment the benefits provided by the public service by resorting to private insurances
or forms of voluntary mutual aid. The health funds are included in supplementary
140 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
mutuality and thus in the non-profit sector being directed to provide additional
benefits to those provided by the NHS according to a logic based on the principle of
solidarity between occupational categories and groups of citizens. The regulatory
framework distinguishes between the matching funds into two categories: so-called
funds “Doc” and “non Doc.” The former are traditionally defined matching funds of
the National Health Service, while the latter are corporations, welfares and mutual
aid societies which have exclusively charitable purposes. These not only integrate
the performance of the NHS, but also offer support measures related to performance
which fall within the essential levels of care guaranteed by the NHS. Along with
these types of funds there are private insurances.
Currently integrative health plays a marginal role, the prerogative of a “few priv-
ileged people”, even if someone believes today it is considered a way to obtain
additional benefits (avoiding queues, shortening time, improving the hospital stay,
etc.) and not really used in case of particularly complex situations, where the NHS
remains the first choice.
In the last couple of years private expenditure has increased by 6.5% and since
2010 beneficiaries have nearly doubled, amounting to 88%.
Nevertheless, the percentage of private health expenditure negotiated by insur-
ance fell from 14 to 13% of the total, although more and more Italians think they
can one day join some form of supplementary assistance.
Moreover if we consider supplemental health insurance policy costs, on average,
about 70% of what each citizen spends on visits and examinations in a year, the
opportunity coming from this form of funding becomes more evident, also because
big funds can provide much more affordable prices than those a single person or
patient could ever obtain.
According to politicians, policy makers and technicians, private health care
should be extended to the entire population as far as possible, with a general
objective of safeguarding public health.
Some technical commission representatives believe the role of collective policies
could be a good opportunity for risk-pooling, thus enabling those people with a
higher risk to obtain insurance coverage.
Certainly, opportunities from integrative health care have not yet been fully
grasped and it could become a synergic element of the System. Like collective
health funds, to which from the past subscriptions have been encouraged and in a
near future they could substitute lots of services of the NHS, promoting a better
efficiency and a deeper transparency for future development.
According to Censis—RBM Salute research, massive adherence to these sys-
tems would free up about 15 billion euro of additional resources in health care.
8.4 The Future of Complementary Health care 141
In the last 10–20 years the health revolution has started. Firstly, a new approach
in Government policies and in people’s mindset: moving beyond the notion of
merely treating disease towards prevention and wellness, with several pioneering
programmes leading the way. Secondly, pharmaceutical companies have altered
their Research and Development focus from primary care—where the medical need
has been reduced and the most common diseases can be adequately treated with
established and mostly generic treatments (i.e. cardiovascular, pain, GI,
anti-inflammatory/infections, etc.)—to speciality care, where there is the highest
medical need, in disease areas with currently no or inadequate treatment options.
New treatment options (i.e. for certain cancers, HCV, hospital infections) offer
significant additional clinical and economical value, compared with the standard of
care, or offer, often for the first time, treatment options for orphan/rare diseases (i.e.
IPF) which result in higher costs per treatment/patient. The more therapeutic
solutions become available, the more budget pressure will increase with access
issues for all eligible patients.
At the same time these are the areas where it has become increasingly difficult
for Pharma to demonstrate incremental value and cost-effectiveness versus new
options brought by effective generics and achieving adequate pricing rewarding the
investments made in R&D.
One thing is clear: a healthy storm of innovative drugs is here to come, and it
will require to be driven, guided and controlled.
If on one side, Italian political and technical healthcare institutions have been
putting in place really praiseworthy efforts, such as the creation of a dedicated fund
for innovative drugs or the reconsideration of pricing mechanisms, on the other side
we should admit they certainly move in the right direction, but this will not be
enough in the medium term.
Our National Health Service alone can no longer cope with the new health needs
of citizens, with the care needs of people that have changed considerably since the
end of the 70s when the NHS started to rule health care in Italy.
Beside the demographic development with ageing societies in the whole of
Europe—the need for, or the consumption of, medical care and treatment (in par-
ticular for specialty care products such as in oncology, in CNS or in immunology) is
strictly correlated with the ageing phenomenon and strongly contributes to budget
constraints. Immigration into the EU has significantly increased and considering
how many immigrants cannot immediately find employment and are therefore not
contributing to financing health care, this has further strained existing healthcare
budgets.
The result of this mix of factors—increasing costs (due to the increasing number
of patients) for primary, secondary care and rehab—leads to growing budget
pressure and in parallel reduces saving potential in these healthcare areas.
Consequently payers, that have to secure the financial sustainability of the health
system without undermining the values shared by the universal coverage, solidarity
in financing, equity of access and the provision of high-quality health care, are
looking for increasing resources progressively driven by cost-minimization rather
8.4 The Future of Complementary Health care 143
than value based decisions. As a direct result they keep on drawing from the pharma
sector.
On the contrary, today we need to fund research, prevention, new drugs and face
the challenge of longevity.
There is no one to blame but, if the NHS, like that of the rest of the major OECD
countries, is definitely shaky and at risk of sustainability, we do need to take stock
of things and act to identify the necessary countermeasures. We need to firmly
focus on a health system reform in our country, with the contribution of all the
healthcare stakeholders, including insurance companies, supplementary health
funds but also pharmaceutical companies, to identify additional sources of financing
to enable citizens to maintain adequate levels of assistance.
Some argue that it might be useful to start this process at national level for the
definition of healthcare priorities with the active participation of citizens. The
process has been running for over 20 years in many European countries such as
Sweden and Norway, where there are still national health services that certainly
have not been “dismantled”. The answer to the growing needs of the population on
the basis of ethical criteria of solidarity could therefore make it possible to identify
priority classes, by which to allocate the available financial resources. The lowest
priority classes may be included in the supplementary forms of assistance in a
perspective of cooperation and “take care” of the patient in shared assistance
pathways.
Our country is called upon to make choices.
We are certainly proud to have a model that is universalistic but with all its
differences of which we are perfectly aware. At least 50% of the out-of-pocket
expenditure is due to the fact that the universalistic health often does not work.
Considering the actual situation and the future scenario, one of the points under
discussion is related to the possible benefit coming from a specific treatment and on
the role a pharmaceutical company could play in the identification of new paths.
From my perspective, if on one side pharmaceuticals should take part in this
evolution, on the other side insurance companies should identify and present a
business model which can be applied to drugs, and in particular to innovative
treatments.
What is to come, are really revolutionary medicines, able to treat or control not
only diseases with a high social effect, like Alzheimer Disease or Parkinson, but
also many types of tumours which can now be considered chronic.
For all these reasons it is crucial to find a new model to sustain our Healthcare
System, and certainly the solution is not to increase the healthcare fund defined year
per year.
“The” decision maker—which is the institutional role that is predominantly
called to manage this matter—has to take the opportunity coming from this his-
torical moment, when different players are debating about possible solutions,
analyzing models and benchmarking other countries’ systems, finally admitting it is
no longer possible for the actual universalism to go on.
Taking stock of all above positions and considerations, I would like to offer
some final food for thought. A few years ago we started talking about “health
144 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
8.5.1 Introduction
The long wave of PPPs is rooted in the changing context of the New Public
Management (NPM). Consequent reforms, through a redefinition of the boundaries
between State and market, have encouraged the acceptance of a contractual
approach to public service delivery (Hood 1991; Lane 2000; Osborne 2000).
Despite the different labels by which public agencies decide to provide a public
service with a private business support, the political meaning is the same. PPPs
have been coherently considered an “extension” of the NPM agenda for change
(Broadbent and Laughlin 2003) and their introduction “has largely been evaluated
through conceptual lenses that emphasize either the administrative, managerial,
financial or technical dimensions of this reform strategy” (Flinders 2005, p. 215).
Originally, the Private Finance Initiative (PFI) was launched in the UK in 1992
as part of the Conservative government’s initiative to increase the level of private
sector involvement in the delivery of public services and tap the funding capacity of
private financial institutions, and followed a series of popular privatizations of
publicly owned utilities. This policy was introduced to increase the involvement of
the private sector in the provision of public services (Spackman 2002; Pollock et al.
2001; Broadbent and Laughlin 2003). In 1997, with the advent of the Labour Party,
146 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
the same formula was proposed under the label of PPP and was still used more than
before. The objective was “to accelerate the process by which PPP contracts are
agreed, in part by taking equity stakes in projects and in part by providing loans to
public bodies” (Parker and Hartley 2003). In the UK in fact the PPPs have been
abundantly used, despite all the criticism and obvious weaknesses. The echo of the
PPPs had a diffusion in other countries across Europe, including Italy and after a
first phase of experimentation, in 2004, the European Commission issued the Green
Paper on PPPs and Community Law on Public Contracts and Concessions to launch
“a debate on the application of Community law on public contracts and concessions
to the PPP phenomenon”. More recently, many countries have started a review of
the procedures, keeping in consideration limits and criticalities emerged in the
previous experiences. For instance UK has been promoting a series of reforms and
adjustments in the transition from PF1 (the old PPP model) to PF2 (the new PPP
model) with the most radical changes relating to the provision of equity finance
(Buisson 2013).
Among the advantages of a PPP, the opportunity of mixing public and private skills
is one of the most relevant, being a contract where partners, public and private, act
for distinctive purposes but for mutual benefit. So, they have to find a composition
in organizational and managerial terms.
A PPP is usually a long-term contract between a public party and a consortium
of private companies—referred to as a Special Purpose Vehicle (SPV)—under
which the private company is required to Design, Build, Finance and Operate
(DBFO) an infrastructure in return for payment for both the cost of construction and
operation of the related services (Grimsey and Lewis 2004; Yescombe 2007). The
facility remains under public-sector ownership, or reverts from private partner to
public-sector ownership at the end of the PPP contract. Its economic relevance
depends on the fact that:
• cash flows generated by the operating process are the main guarantee and the
source for covering the debt service;
• implementation of the private initiative should be accompanied by an adequate
level of project certainty and reliability deriving from a rigorous analysis and an
indispensable risk adjustment;
• sustainability of the initiative does not depend on the reliability of a company
but concerns the quality of the single project (including the capacity to generate
the cash flows with reference to a given level of risk);
• the initiative takes advantage of a project autonomy—due to the constitution of
an ad hoc company to safeguard the stakeholders’ interests;
8.5 The Challenge of Public–Private Partnerships in Health care 147
• the operational phase represents the critical success factor as only a management
based on a high level of performance can contribute to generate the cash flows
that are indispensable to satisfy shareholder expectations;
• the most significant guarantees connected with the initiative have a contractual
nature rather than a real one (this is the so-called “without recourse operation”);
• all the phases of the operation converge in a negotiation process, which has a
variable duration and is considered to be a decisive factor in the risk allocation
between public and private partners.
This partnership procedure cannot be explained just by the concession of both
the construction and the management of an infrastructure to a private partner
because of the lack of financial resources, but it must be based on an effective
assessment of both value for money, through the appraisal of the public sector
comparator and risk transfer (Gaffney and Pollock 1999; Edwards and Shaoul
2003).
A reflection on PPP leads us to consider some sort of hybrid problem. The public
entity remains the owner of the function. The private body intervenes in order to
financially support and to provide support to the production process. PPP is a broad
term that can be applied to anything from a simple, short term management contract
(with or without investment requirements) to a long-term contract including
funding, planning, building, operation, maintenance and divestiture. PPP arrange-
ments are useful for large projects that require highly-skilled workers and a sig-
nificant cash outlay to get started.
The public sector should benefit from the presence of the private party, above all
in terms of reduction of the total financial commitment, investment promptness and,
consequently, the timeline of service use. This implies that the convenience of the
operation must be analyzed under two different profiles. On the one hand, it would
be advisable to verify the advantage for the Public Administration by taking into
account value for money and, on the other hand, risk transfer. Value for money is
the key rationalizing motive for partnership. As Edward and Shaoul (2003) assert,
“its meaning in the context of PFI is no more precise and is similarly based upon the
economy as reflected in the use of discounted cash flows over the lifetime of the
project”. Value for money depends on the “estimate of future costs and operates
only at the point of procurement”. Many studies and reports have been carried out
in the UK on this topic given that accountability depends on the detailed recog-
nition of value for money, by discharging accountability to the stakeholders, the
lack of which in PPP has been persistently criticized (Demirag et al. 2005; Demirag
and Khadaroo 2008). Risk transfer and uncertainty seem to be the crucial elements
under discussion since under PFI private sector borrowing, transaction costs and the
requirements for profits necessarily generate higher costs than conventional public
procurement (Broadbent et al. 2008).
148 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
Italy is a country where healthcare services are largely public. In the last decade
some actions have been undertaken with the purpose of making rules more flexible
in the context of public procurement and facilitating private participation in the
realization of public infrastructures (most frequently by the DBFO formula). In
particular, at the local level, where the requirements for investment increased
because of the partial introduction of the fiscal federalism rules, PPP has shown
itself as an innovative instrument. According to data collected by Finlombarda
(2012), in 2011 there was a decline in PPP use, although the government has
repeatedly encouraged the use of the procedure. However, several obstacles seem to
stand between the launch of initiatives and financial close, mainly due to the
shortage of liquidity together with lengthy procedures and unpredictable times. The
awards amounted to approximately EUR 6.6 billion a year, but in the last four
years, the financial close has stopped at EUR 1.8 billion.
The normative point of reference is the model of the “concession” with or
without private initiative. The PPP is, in fact, regulated by law as in other countries
(Belgium, Poland, Spain, Portugal) even if it is widely known that a specific PPP
law is not a necessary condition for PPP development. The legal framework can
also be provided by changing existing legal provisions which may have an impact
on the PPP project (EPEC 2011). Even if an explicit program has not been laun-
ched, the Italian Government created a centralized office, the Technical Unit for
Project Financing (in Italian: Unità Tecnica Finanza di Progetto, UTFP) to facilitate
privately financed infrastructures. This organization as a taskforce of the Ministry of
Economy and Finance has the aim of promoting the use of PPPs, also supporting
the public administration at the regional and local level, for its implementation.
After the uncertain debut of the implementation procedures and an unclear meaning
attributed to the PPP, the UTFP (2002) outlined a stable framework tending to
identify PPPs in three main subcategories: (1) the granting of construction and
operation; (2) the granting of services; (3) other residual formulas.
The typical features of PPP concur therefore to make some observation about its
advantageous application in the Italian National Healthcare Service, by considering
an increasingly higher need for buildings and hospital modernization (Amatucci
and Vecchi 2009). By taking into account the continuous technology evolution and
the strategies implemented for a rationalization of the health expenditure, hospital
sector has appeared particularly interested in a PPP utilization. Health policy and
guidelines have aimed to reorganize the hospitals. So they are no longer considered
the only source of healthcare services delivery, and currently new typologies
influenced by the technological progress seem to succeed in a renewed vision of the
primary care, in a position to absorb a considerable quota of services that tradi-
tionally were of hospital care type.
The main factors behind the need for modernization are attributable to the
following:
8.5 The Challenge of Public–Private Partnerships in Health care 149
• the gradual increase in the average age of the population (involving an increase
in per capita expenditure);
• innovation and advanced technologies;
• the scientific and cultural progress of the population catalyzing the demand for
services in health care in terms of quality and quantity.
In addition, there has been a gradual reduction in the number of ordinary
admissions (acute patients) and a greater development of day hospital and day
surgery care.
Moreover, a certain importance is given to the long-stay structures, where health
care needs are to be considered together with the request for comfort of the
accommodation and the quality of the service.
Between 2002 and 2005 there was a 30.6% rise in the number of projects
(27) and a 56.7% increase in spending (EUR 1298 million). In value terms, 93% of
the initiatives promoted involved the building or refurbishment of healthcare
facilities, with nonmedical support services (non-core) entrusted to the conces-
sionaire. This proportion has remained unvaried over time (Finlombarda 2005,
2012). The use of PPPs can therefore be defined as swinging for several difficulties
in implementation. The main obstacles are derived from the complexity of the
procedure and a not always convenient financial solution. According to the expe-
rience observed in the first enthusiastic wave (2000–2006) of PPPs, the method
focused on a cost-benefit evaluation for both the public health care institutions and
users/patients, although this appraisal has led to large uncertainties.
In this kind of PPPs, the private partner (frequently financing not more than half
of the total amount) typically takes on the responsibility for the management of the
services mix regarding the functioning and maintenance of the structure and part of
the core and non-core services. In particular, the system of services includes the
following categories:
• the facility management for buildings and supporting systems such as the
thermic heating system, refrigerator system, air conditioning, electrical equip-
ment and plumbing, medical gas supply systems;
• hotel services (catering for in-patients and staff, cleaning, disposal of waste
material, reception, reservation centre, parking);
• other services (stock management, hospital information systems, supply man-
agement, chemist, set-up of operating theatres, etc.).
Another criticality derives from the composition of an annual fee and a tariff.
The annual fee is paid by the healthcare institution when a new hospital starts
running (from the service availability date). This consists of two components, fixed
and/or variable, and has to cover the services management, the facility management
and the assistance to the medical structure. The private partner is thus allowed to
have a return on investment. The fee is determined and paid according to different
criteria. The tariff relates to the operating costs of both commercial spaces and
services. The payment consists of revenues deriving from the lease or direct
management of the adjacent commercial areas.
150 8 Myth #5: Health Care Is Rightly Left to the Private Sector …
Such a payment concerns the volume and typology of activities regarding the
structure itself and is a function of the management system defined and/or con-
tracted, from time to time, between the SPV and the healthcare institution. For this
revenue, the commercial risk is borne by the SPV. It is, however, clear that the main
risk concerns demand. This means that any compensation arising from the opera-
tions of additional services partially affects the risk simulations contained in the
business plan. These two heterogeneous components justified the potential appli-
cation of the PPP in the specific case of the hospitals making it possible even in the
presence of a public payment (subsidies). Hospitals appeared initially as belonging
to a not-self-financing category because of the lack of correspondence between
utilization and payment of tariffs by users reimbursed by the healthcare institution
on behalf of the patients (Amatucci 2002).
Through hospital activity development and a clear identification of its compo-
nents, it has been possible to postulate the application of PPP for hospital con-
struction. On one hand, the fee is like a shadow toll, paid by the healthcare
institution for supporting services; on the other hand there are the prices paid by
users for commercial services. This mechanism does not rule out placing the
instrument of the public contribution side by side with the two mentioned above
(Amatucci and Biondi 2002). In fact, the application of shadow tolls is commonly
considered inappropriate because it implies such a low risk transfer as to put the
project back on the public sector balance sheet (Yescombe 2007, p. 235).
Last but not least, the structure of the fee. It consists of a fixed part corre-
sponding to the equivalent amount in order to cover building availability; and a
variable part, representing the equivalent sum in order to reimburse the services
delivered by the SPV, according to volume and quality parameters (payment for
usage, volume or demand). The fixed part is now under revision in many PPP
contracts because of its excessive way of protecting the private partner from
demand risk.
8.5.5 Conclusions
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Chapter 9
Myth #6: Health Care Is Rightly
Controlled by the Public Sector,
for the Sake of Equality
9.1.1 Introduction
The healthcare sector has all the characteristics to be considered a complex system.
Indeed, its extrinsic complexity is related to its openness, since the health system is
affected by the political, social, and financial context where it operates. Moreover,
health systems are intrinsically complex, since many components should be in place
in order to ensure their proper functioning (De Toni and Comello 2007). A healthy
workforce is a prerequisite for the delivery of qualitative services. Adequate
funding, drugs, and technologies should be guaranteed. Moreover, policy-makers
should govern health systems appropriately and inform their decisions according to
reliable and timely health information (WHO 2007).
The overall aim of health systems is to ensure that everyone, everywhere, can
access quality health services without facing financial hardship as a result. This
principle is widely known as Universal Health Coverage (UHC). UHC entails that
all people must have access to needed promotive, preventive, curative, and reha-
bilitative health services, of sufficient quality to be effective, while also ensuring
that people do not suffer financial hardship when paying for these services.
Therefore, UHC is profoundly intertwined with the dimension of equity, since
achieving UHC means crafting health systems around the inspiring principle of
equity. But what is equity and how is equity embedded in health systems? It is
crucial to shed light on the concepts of equity and equality. Equality means “the
same.” No one would presume that the use of healthcare services should be equal
among individuals. Conversely, equity is related to the concept of social justice.
Sick people should have higher access to healthcare services than healthy indi-
viduals. The same applies to financial contributions. The wealthier should pay
more. Inequities in health are defined as the “differences in health that are not only
unnecessary and avoidable, but in addition unfair and unjust” (Whitehead 1992).
UHC fosters the establishment of a health system shaped around the principle of
equity. Equity in health systems means that people should get the health services
they need and fund the health system according to their ability to pay. Access
should be granted according to needs, funding according to ability to pay.
Achieving equity in health care is a challenging exercise. The Final Opinion of
the European Commission “Expert Panel on Effective Ways of Investing in Health”
recently acknowledged that both financial and access equity in the European Union
is massively changing and advocated change (EXPH 2015). Despite past
achievements, the Panel concluded that the financial crisis reversed the positive
trends and inequities are on the rise. Budgetary cuts have shrunk the provision of
health services and reduced their quality. The growing dissatisfaction has made
privatization appealing and undermined “social justice.” In an editorial published in
the British Medical Journal, Martin Mckee and David Stuckler reaffirmed the
crucial role played by universalism in supporting social justice. Indeed, the authors
argued: “who would benefit from a privatization of the healthcare system?
Obviously not the lower classes who could not afford private care. And not even the
middle-classes, since an individualized system is more expensive than what existed
previously, often of poorer quality. The real beneficiaries of such policies would be
the highest social classes, who no longer have to pay for services they never used
anyway” (McKee and Stuckler 2011).
Interestingly, the calls for privatization are profoundly misleading. Robust evi-
dence clearly highlights that privately funded health care systems are not equal.
A thorough assessment of equity conducted across different countries highlighted
that the US health care system is the least equitable, compared to France, Canada,
and Great Britain. Indeed, it is the only health system where a significant portion of
the population is uninsured and where access to healthcare access is based on the
ability to pay. In the US, systematic inequities exist in the health services received
by the insured compared to the uninsured (Università Cattolica del Sacro Cuore and
Abbvie 2015).
The conclusion is that publicly funded health systems are critical for equity.
Unfortunately, it would be unrealistic to craft tomorrow’s health systems only
around the principle of equity. Indeed, health systems cannot be isolated from the
external context, where financial resources are constantly shrinking. Moreover,
patients’ expectations are on the rise and the epidemiological transition to chronic
disease will place an additional burden on health systems resources. By 2050, 37%
of the European population is expected to be over the age of 60, overstretching the
capacity of the health systems to respond (WHO 2000). European health systems
are being required to deliver more and better services, with reduced financial
resources. Whether they want it or not, policy-makers will have to shape and tailor
the upcoming health systems according to these givens. In such a scenario, the
opponents of a publicly funded system might argue that privatization should be
encouraged as it boosts efficiency in health care. However, are privately funded
health systems more efficient? Robust evidence highlights that such a preconceived
158 9 Myth #6: Health care Is Rightly Controlled by the Public Sector …
idea is misleading. The World Health Report 2000 unequivocally highlighted that
public health systems are or could be extremely efficient. Seventeen publicly funded
European health systems populated the top-twenty list. The privately funded US
health system ranked 37th (Bloomberg 2015). Bloomberg recently confirmed these
findings. By analyzing data from the World Bank, IMF, and WHO, it concluded
that the US health system is the 44th health system in the world, in terms of
efficiency (Koh and Nowinski 2010). Health systems do not need to be private to
perform well. They could be rightly left to the public sector.
Publicly funded health systems could foster equity while working efficiently.
However, the legacy of the financial crisis will not be mitigated anytime soon and
there is an urgent need to transform the threat of budget cuts into an opportunity to
scale-up performance. Moreover, inequities are widespread both across and within
countries. Reforms are urgently needed. Italy represents a perfect case study to
explore in order to advocate for reforms. It has a long-established publicly funded
health system, accounting for more than 70% of the total national health care
expenditure. Ensuring equal access to uniform levels of health services, while
controlling health expenditure, is one of the inspiring principles of the health
system. Therefore, the Italian Ministry of Health defined a package of essential
health services to be provided to all its citizens nationwide. Furthermore, internal
market mechanisms as well as managerial elements were introduced in order to
control health expenditure. However, over the past years, inequities have increased
and are nowadays clearly manifested. A striking example is provided by the
adoption of cancer screening policies across the regions. Such policies were not
uniformly activated nationwide, leading to massive internal inequities. The result
being that Italy has one of the best public healthcare systems in the world, which
only applies to a minority of Italians. Unfortunately, the problems faced by the
Italian health system are shared by several publicly funded health systems.
Therefore, how to protect the universalistic model? How to drive changes in public
health systems in order to ensure equity while operating efficiently? Several recipes
should be adopted.
First, governance for health is the driver for change in health care and the core
energy that makes change happen. It has to be performed by all actors of the system
regardless of formal management or leadership position. The new leadership that is
required of managers and formal leaders in health care is to lead a widespread
leadership. Tackling disparities and achieving true health equity will only come
through a leadership—collective and individual—that embraces the powerful
integration of science, practice, and policy to create lasting change (Koh and
Nowinski 2010).
Second, a greater sense of responsibility by health professionals and civil ser-
vants should be promoted alongside citizens. Within the healthcare system, the
9.1 Future for Publicly Funded Health care… 159
main challenge for leaders is to link actions aimed at transforming structure, sys-
tems, and culture. These actions are often inconsistent with each other because of
the time needed to influence each issue: it is relatively short for structure changes,
longer for organizational system transformations, and much longer for culture
transformations (Muir Gray 2011). This requires that societies invest in future
leadership and that governments strengthen and modernize education for health care
professionals, overcoming formal education and moving forward to a transcultural
education focused on how to tackle inequities and address social determinants of
health, while operating within limited resources (Institute of Medicine 2016).
Third, designing appropriate policies, establishing monitoring platforms, and
evaluating achievements is critical for every healthcare system. Policies should be
informed by reliable and timely health data, and monitoring their implementation
should be an integral part of each health plan since this would allow addressing
corrective actions, and evaluating the achievements should inform the design of
forthcoming strategies. For publicly funded healthcare systems, performance
measurement is an extremely challenging task, which should be conducted across
all the dimensions of health care, including the equity-related aspects at local,
regional, and national levels.
Fourth, reforms need to be informed by strong evidence and by
cost-effectiveness. Bridging the gaps between implementers and research is crucial.
Health system research evidence is not always communicated effectively or in a
timely manner, and health system managers, policies, and decision-makers do not
always have the skills, tools, and capacity to find and use research evidence.
Policies should be designed carefully and monitored closely. Research should be
operational and target real-life health-service delivery questions. A growing body of
the literature is addressing inequities in health care. Such findings should exten-
sively feed and promptly inform policy-making.
To conclude, it is critical to reaffirm that policies should not be driven by
financial constraints and interests, but rather by Rawls’ “theory of justice.” Rawls
argued that a fair society is one designed as if from behind a “veil of ignorance,”
meaning that class and social forces are to be removed from policy-making. As he
put it, behind the veil “no one knows his place in society, his class position or social
status, nor does anyone know his fortune in the distribution of natural assets and
abilities, his intelligence, strength, and the like.” Rawls argued that in such cir-
cumstances decision-makers would create a society that does not privilege one
group over another, as no one can know where they will end up. Universalism is
critical in maintaining equity in health care. Undermining the welfare state that
European countries have struggled to implement would have a massive repercus-
sion on Rawls’ “theory of justice.” Public systems should be protected since they
ensure universalism. However, several challenges should be overcome in order to
prevent the rise of the misleading calls of private interests. Health systems have to
reframe its management as distributed, its strategy as venturing, its organizing as
collaboration and as a system beyond its single parts.
160 9 Myth #6: Health care Is Rightly Controlled by the Public Sector …
9.2.1 Introduction
In the last half century, legislation in several countries has converged to establish a
relevant role of the public subject in several sectors (e.g., railways, local trans-
portation, education). Currently, the prescription of fixing major problems by
treating such sectors in a more business-like manner is quite popular (Mendoza
2015). As far as health care is concerned, it is rare to find a Western country where
the policy maker does not significantly limit this business with a heavy regulation
and direct interventions in the financing and provision of services. Therefore, the
recipe of fostering business-like dynamics has many champions in health care.
At this point, any physician could assimilate such a recipe to a drug prescription
and legitimately ask: if this is the cure, what is the diagnosis? Anybody less
knowledgeable about medicine may recall the answer of the Cheshire Cat to Alice’s
request: “Would you tell me, please, which way I ought to go from here?,” “That
depends a good deal on where you want to get to.” If the “where” is not much of a
problem, then uncertainty only concerns how long it will take to get somewhere.
However, can patients wait until a reform will get the system somewhere?
The uncertainty around (and the burden of) any reform is sustainable if its
changes, at the very least, are designed to address specific problems. Therefore, we
suggest starting by summarizing the main challenges of advanced health systems
and then providing recommendations about appropriate changes aimed to enable
health systems to deal with such challenges.
The first driver, together with the rapid expansion of medical knowledge, is
responsible for the major advances in medicine but it is also associated with the
growth of clinical specialization and the consequential fragmentation of patient care
in advanced health systems (Calciolari and Ilinca 2016; Lega and Calciolari 2012).
As far as the second driver is concerned, population aging is a pervasive and
enduring phenomenon with profound implications for health care—not to mention
the social and political spheres (United Nations 2001). In 2015, over 16% of the
population was 65 years or older in developed countries, a proportion which will
exceed 22% by 2030 and approach 26% by 2050 (World Bank 2016). Aging is
closely linked to the prevalence of chronic conditions, which account for an
overwhelming share of the total burden of diseases (WHO 2008). This epidemio-
logic trend is associated with emerging clusters of patients characterized by com-
plex needs that cut across disease categories and medical specialties. Addressing
such needs—belonging not only to a disease, but also to associated conditions,
complications, and circumstances—calls for organizing care around the patient.
This requires coordinated processes that might involve professionals from different
disciplines, organizations, and sectors to integrate all the resources (from simple
information to concrete services) necessary for a single patient (Goodwin et al.
2014; Porter and Lee 2013).
On the one hand, technologic advances and medical knowledge expansion tend to
orient health professionals toward pigeonholing and care fragmentation; on the
other hand, patients need more and more cooperation among health providers and
institutions.
In this situation, increasing competition between players does not help health
care to accommodate the present growing needs. One might use the classic argu-
ment that competition contains costs. However, competition does not address the
challenges of population aging and its associated argument is questionable.
Actually, in 2007 Bernasek (2007) pointed at the higher share of U.S. health costs
dedicated to administration compared with the Canadian single-payer (i.e., much
less business-like) health system; in 2015 the first evaluation of the introduction of a
prospective payment system to finance Swiss hospitals—a competition-oriented
reform with cost containment as one of its main goals (Consiglio Federale Svizzero
2004)—did not show evidence of improved efficiency after three years of imple-
mentation (OFSP 2015).
If we consider the previously depicted health care scenario, providing appro-
priate care (in terms of quality, patient satisfaction, effectiveness, and
cost-effectiveness) is a matter of collaboration between healthcare professionals and
organizations. The cooperation between healthcare professionals takes different
paths: multidisciplinary teamwork and collaboration between specialists of same
discipline and/or different professions (e.g., between doctors and nurses).
162 9 Myth #6: Health care Is Rightly Controlled by the Public Sector …
9.2.4 Conclusions
Sometimes doctors may not have a clear diagnosis for their patients. In such cir-
cumstances, one may argue that integrating knowledge with experience and intu-
ition—always keeping in mind the best interest of the patient—is reasonable and
can help. Likewise, in the policy or management field, a rational approach to
change consists of assessing the diagnoses, experience, intuitions (and interests) of
164 9 Myth #6: Health care Is Rightly Controlled by the Public Sector …
9.3.1 Introduction
Equality is a general aim but in the field of health it is a must. Equality in health
care is met when everybody has access to the services and benefits they need, which
should be the best available, and sustainable. Only a publicly driven health sector
can ensure impartial distribution of resources and provision of benefits ideally, but
in reality this is not always achieved.
Public health authorities should first identify the unmet needs of the population and
set priorities according to criteria not only of equality but also of solidarity. This
means, for instance, looking at emergencies arising in society, such as diabetes or
senile dementia in Western countries. But they must also consider neglected dis-
eases, such as the 6–7000 rare diseases that affect more than 30–40 million people
in the European Union, though each one affects no more than 1 in 2000 inhabitants.
Instead, it is the private sector which establishes what people mostly need. Privately
owned businesses follow commercial criteria together with marketing opportunities
which satisfy their stockholders’ wishes, not necessarily people’s health priorities.
Private hospitals often select remunerative pathologies and interventions (obe-
sity, plastic surgery, etc.) but pay little attention to multiple chronic diseases in the
elderly or expensive and risky emergency interventions. Industry prefers to invest in
R&D on products (diagnostics, medical devices, and medicines) that people want or
attract professionals’ interest, though most often meeting secondary needs. It is
surprising that among the pharmaceutical blockbusters of the last decade there are
9.3 Equality in Health Care: A Mirage or a Reality 165
drugs addressing erectile dysfunction, which may be a cure for a minority but are a
plaything for the majority. It is the latter that ensures a return on investments.
When a no profitable pathology such as the one mentioned can be identified, the
industry invents diseases and leads people to believe that they need interventions.
This strategy is called “disease-mongering,” which essentially involves trying to
convince healthy people that they are sick, and mildly sick people that they are very
ill (Moynihan et al. 2002). Examples include the so-called chronic fatigue syn-
drome, restless leg syndrome, fibromyalgia, motivational deficiency disorders, and
so on. This strategy also involves lowering the thresholds that define disease status
or risk factors (blood pressure, hyperglycemia, or hypercholesterolemia, etc.). All of
a sudden, many previously healthy people become sick and need intervention.
All this is a consequence of a lack of strategy in the public sector, which ceases
to drive the process. Identification and selection of health priorities would educate
the public, and at the same time would satisfy its real needs. People would not be
abandoned to a marketing pressure that tries to convince them they have needs in
addition to or in place of the ones they actually have, as happens with any com-
mercial goods.
Of course, the industry also develops innovative technologies for real diseases. Its
efforts have produced a great deal of innovation and improvements over the last
century, substantially contributing to longer survival and improving people’s
quality of life, at least in developed countries. Huge progress in the prevention and
treatment of infections, cardiovascular diseases, and cancer stems from the research
carried out by the industry. Moreover, industrial production scale-up could make
the costs of innovative diagnostics, medicines, and medical devices sustainable for
the most part, which is becoming rarer and rarer.
The pharmaceutical industry’s innovative attitude, however, has gradually lost
impetus with the realization that promotion yields more than research, and me-too
products for widespread conditions, such as hypertension, guarantee greater profits
than innovative orphan drugs for rare diseases (Joppi et al. 2013).
An impartial public sector, instead, should ensure that any medicines brought
into the market not only provide a benefit, but are also better than those already
available in terms of effectiveness and/or safety and/or cost. This goal is rarely
achieved, since pharmaceutical legislation does not require it.
The regulatory bodies themselves state that “the most common primary objec-
tives for pivotal clinical trials [those backing the marketing authorisation applica-
tions] are to demonstrate superiority to placebo control, or to demonstrate
non-inferiority […] to an active control.” (Committee for Medicinal Products for
Human Use 2011). Besides being unethical (Garattini and Bertele’ 2007a, b),
placebo-controlled and non-inferiority trials may allow products into the market
that are less effective or less safe than those already in use, and do not help patients
166 9 Myth #6: Health care Is Rightly Controlled by the Public Sector …
Since public health leaves it to industry to select targets and how to address them, in
the end it has to deal with products whose clinical value is questionable and
place-in-therapy uncertain. Lacking this information, how can health authorities
approve a product, establish its economic value, and negotiate appropriate condi-
tions for its reimbursement with public funds? Nevertheless, products like these are
allowed onto the market and even into national reimbursement schemes by the
public authorities. We are facing a situation in which the industry can produce
whatever it reckons it can sell, useful or not, innovative or me-too. The regulatory
bodies (the EMA, European Medicine Agency, in the EU) assess medicinal prod-
ucts only on the basis of their quality, safety and efficacy, with no cross-comparison
with other available therapies and therefore no (verifiable) added value. Thereafter
the political level (the European Commission) allows them onto the market. In the
meantime, the pharmaceutical companies promote the alleged secondary advan-
tages of their products to patients and physicians and eventually set prices. At this
point national public payers have no margin for negotiation as, responding to the
marketing effort, patients and doctors demand the supposedly innovative products,
whose real clinical value is unknown; the industry argues that prices cannot differ
much across countries in order to avoid parallel import–export. As a result there is
no way health authorities can assess whether the alleged benefits are worth paying
for, rather than using public resources to adopt other health technologies or satisfy
other public health needs (Bertele’ and Garattini 2015).
To ensure equality, health authorities should mostly protect the poor. This does not
always happen. Even a system like the Italian one, which in theory aims at uni-
versality, equality, and solidarity, suffers from several drawbacks. As an example,
the distribution of skills and facilities is not even throughout the country. Most
people and their relatives have to travel, usually from southern to northern Italy, to
receive adequate care.
In addition, there is a co-payment system to obtain services or diagnostic tests or
medications. The so-called “tickets” which patients have to pay vary among the
different regions, not necessarily according to local financial ability. Some people
are exempted from paying tickets, but exemptions are granted based on disease
rather than income. This may meet the solidarity aim of the National Health
Service, not equality, which should really base exemption on individual purchasing
power.
Another distortion of the system is the so-called intramoenia (i.e., “within the
walls”) activity. This term covers physicians/clinicians who usually serve as public
168 9 Myth #6: Health care Is Rightly Controlled by the Public Sector …
employees being allowed to work as private professionals within the hospital where
they work. As a result, wealthy people who can afford private visits have privileged
access not only to hospital physicians/clinicians but also to the diagnostic and
therapeutic interventions they prescribe. All the others have to put themselves on
waiting lists that may be weeks or months long. This looks more like the inequality
expected in a private-driven health system.
9.3.7 Conclusions
Equality in health is an elusive goal that is hard to achieve. Public institutions are
the only ones that can aim for this goal as they could and should devote themselves
exclusively to it, while private institutions have to set other goals first or at least
take them into account. However, the public sector often gives up its role, and
appoints the private sector not only to provide services and goods but even set
policies, rules, and the means to follow them. This implies an uneven and inefficient
distribution of professional and economic resources and, in the end, of health.
In recent years, both the “myth” of public control over health care and the “myth”
of the dynamism and high quality of health services managed by private sector have
shown their weakness. As it is known, the creation and consolidation of these
“myths” concern country-specific peculiarities of the different healthcare systems.
In particular, the “myths” refer to the dominance of a professional institutional logic
typical of the public intervention or that one led by market forces and the inter-
vention of private business in the health management and social issue. Henry
Mintzberg and other scholars such as Porter and Teisberg (2006) have analyzed
weaknesses and strengths of these myths in the health systems of several countries,
highlighting inefficiency of both entirely “government-controlled” and
“market-controlled” solutions.
There are many studies that have shown both government and market failure in
the management and financing of social economy (e.g., Cheng and Mohamed 2010;
Murray et al. 2010; Noya 2010; Phills et al. 2008).
9.4 Beyond Public and Private. Social Innovation in Healthcare System 169
In Italy, the need to overcome these approaches and to explore new organiza-
tional models is related to two main reasons. On the one hand, in the last decade, we
were looking at an astonishing growth in the demand for health care; on the other
hand, market dynamics are having a strong impact on healthcare services (Chauvin
et al. 2015). We are witnessing a steady increase in private health expenditure,
€32,971 bn in 2014 with a 2% increase compared to 2001 (22.4% on the operating
health expenditure of NHS that in 2014 was €114,057 bn) (Armeni and Costa 2015)
which inevitably is having a negative impact on a large part of the population.
Regarding the latter aspect, in 2014 the percentage of out of pocket (private
expenditure not covered by any insurance type) on total expenditure is one of the
highest in Europe, at about 22%, with €33 bn (Del Vecchio et al. 2015). In addition
to these two reasons, we should add the radical change of public policy patterns, in
order to respond to the crisis of welfare (e.g., Cicellin and Galdiero 2009).
In this context, new paths are increasingly arising referring back to the concept of
low cost, low profit, and light health care. Such experiences have been created to
meet the social demand of health that cannot be completely satisfied by either public
or private health. They are based on the bottom-up complex world of services and
needs and can be labeled as social innovation models (Leadbeater 2007). In the
healthcare field, all the European countries are giving relevance to the social inno-
vation issue. The European Parliament published a series of documents underlying
the strict need to create a new welfare system built on the model of the Civil
Economy, in order to recognize the crucial role of actors involved in the social
economy sector, and to take steps to ensure their development (see the Report on the
Social Economy 2008/2250 of the Commission on Employment and Social Affairs).
The aim of this chapter is to analyze the concept of social innovation in health
care as an alternative path to the two “myths.” From our point of view, the para-
digm of social innovation is the main key to understand the phenomenon of
low-cost services in health care. We are interested to shed light on the current
experiences of low cost for health care in Italy, in order to understand organiza-
tional paradigms, motivations, services offered and arrangement, compared to the
established “myths.” This work represents a very first attempt to link these concepts
in health care field.
The recent evolution of the low-cost services in health care is likely to be a very
interesting opportunity for the development of social initiatives beyond public and
private sectors. Henry Mintzberg talks about “plural sector,” that is the social sector
which includes associations, NGOs, cooperatives, etc. (Mintzberg and Azevedo
2012). The low-cost services try to reread the interconnections between public and
private sectors, profit and non-profit, efficiency and equity, and appropriateness of
care models. The main goal of low cost in health care is to overcome a context
where the public segment operates in a totally separate manner from the private one,
in order to create an interconnected healthcare industry, both in terms of goals to be
pursued (the best of health care involving both the public and private resources
available) and of operational activities (what happens in a segment positively
impacts on the other). This phenomenon goes through and beyond the debate on
mutualism for integrative health. Actually, low-cost services projects arise mainly
170 9 Myth #6: Health care Is Rightly Controlled by the Public Sector …
for health specialists and are based on the ability to connect economic (in terms of
efficiency), social (in terms of relationships), cultural (linked to values), and
institutional aspects (in terms of social capital that is generated) (Rago 2012; Donati
2011).
Social innovation in the healthcare sector is still under study, and in Italy is closely
related to the change sweeping the welfare system. The (re)definition of welfare
policies appears today as one of the main goals in the field of health care. Alongside
the increased demand for health, there is a deep change affecting types and quality
of needs, referring to a renewed emphasis of aspects such as patient identity and its
relational dimension (Rago 2012).
Social innovation, while having as its main goal the creation and maximizing of
common good, pays great attention to the issue of economic sustainability, and
aims at developing the sense of civil society (Phills et al. 2008). Profitability,
pursuit of efficiency, and ability to boost employment are some of the key words of
social innovation, which seeks to overcome the antagonism state versus market and
the cage of the “tout court” associations. Moreover, this model is based on
bottom-up participation and the concept of “extended enterprise,” where the
boundaries between internal and external resources are no longer so clear and
defined (Murray et al. 2010).
Social innovation in health care can be viewed in the development of new
networks of cooperation between public healthcare organizations, private and
non-profit organizations, changing the relationship between patients and physicians.
The incorporation of a social innovation view leads to an increase in knowledge
bases and the information provided to patients also thanks to the ICT and the Health
2.0 (Eysenbach 2008).
Therefore, innovation is the emergent result of a collective action of society,
rather than an action promoted by an individual or a small group of innovators. This
leads to new roles played by managers, professionals, local administrators and
communities, volunteers, workers, and patients. Therefore, social innovation not
only aims at increasing life quality standards, but plays a crucial role in terms of
competitive improvement, efficiency of the resources employed, sustainability, and
scalability (Hulgård 2011). It is noteworthy that this aspect is an opportunity for the
development of new products and processes, in line with the criteria of appropri-
ateness in healthcare delivery. In this view, Henry Mintzberg’s thinking (2012)
about “The Sector Issue” fits well, because of the understanding of the social sector
in health care, halfway between public and private ones.
The features of participation and originality of contents, the application of new
ideas for services, processes, and organizational forms to better well-being and
9.4 Beyond Public and Private. Social Innovation in Healthcare System 171
social value, let us to claim that social innovation is a pivotal key for an emerging
reality in health care: the low cost. In particular, as we will consider in the next
paragraph, in the low-cost services logic, we find many organizational character-
istics referring to social innovation, as it allows linking health services demand and
supply in a faster and more flexible manner.
In health care, the low-cost service business model represents a breakthrough that is
increasingly gaining success, showing great potentiality. Low-cost concerning
health care is a true model of social innovation because it is a real response to the
call for health, overcoming the income issue. From the demand point of view, the
low-cost model puts the patient back in the center, focusing on the “customization”
of the relationship between individuals and health (Castelli et al. 2010). The model
has as its main strengths: specialization, attention to price and combination of
quality, continuous upgrading and fast access to health services. These are elements
that the Italian NHS is not always able to offer due to the constraints imposed by the
semi-free access conditions and because, at the same time, those are the strengths of
the private sector, for which patients often have to pay very dearly. The low-cost
services approach is therefore created to provide citizens with an affordable alter-
native to conventional private health care, in terms of price but not quality.
Moreover, this alternative can also be an answer to citizens demotivated by the low
quality of public health care (e.g., poorly welcoming environment, long waiting
lists, lack of supply individualization, etc.).
The low-cost health care is a new economy path already well established in other
countries, such as Great Britain. It is important to emphasize that Italy is achieving
good results, as shown by the first experiences started in the North and which are
now spreading to the South too, thanks to specific areas in which different new
actors can enter and offer services with competitive pricing and quality.
The low-cost service logic identifies the process of change occurring in the
Italian welfare system, allowing the coexistence of the everlasting State intervention
and the customization of the needs that drives its orientation. Price is not the only
distinctive element. Another one refers to a new concept of care and self-care,
which in some way, reopens the debate on modern mutualism for integrative health.
In fact, low-cost services projects mainly arise for specialist healthcare programs
and for specific fields. In this sense, the model aims to reduce waste and duplica-
tion, focusing on the core of health services, according to the principle of appro-
priateness of care provided.
From the supply point of view, low-cost services are expanding into areas of
intervention where SSR (Regional Health Services) do not provide full coverage,
such as dental care, blood tests, ophthalmology, psychology, and psychotherapy,
but also in some more specific areas. The annual Assolowcost Report (the asso-
ciation of companies and service organizations that aim at reducing costs while
172 9 Myth #6: Health care Is Rightly Controlled by the Public Sector …
maintaining high quality) argues that people who choose these structures supporting
the low-cost code of ethics, can save up to 30% on health services (Del Vecchio and
Rappini 2011). In this regard, Assolowcost coined the “low cost high value” for-
mula. Behind this concept, there is a strong motivation of many health specialist
centers, clinics, and day hospitals to decrease the recent national (from one Region
to another) and international health tourism trend (Castelli et al. 2010).
Low-cost service organizations in health care have a strong focus on the idea of
service standards. Apart from low cost, there is a high attention on communication
and marketing aspects to better reach out to patients, highlighting physicians’
professionalism and employing advanced 2.0 technologies. In all the low-cost cases
and apart from the specific and different projects implemented, the aim is to offer a
qualitatively higher service than those currently available on the healthcare market.
For this reason, there is no doubt that low-cost services projects cannot be ascribed
to a mere logic of affordability, but they set up a radically new model, especially if
compared to the standard offered by private health care (Del Vecchio and Rappini
2011).
The great potentialities and the peculiarity that can facilitate the implementation
in the Italian healthcare sector have been proven by several studies. Among the
more detailed ones, we emphasize the one conducted by scholars of the CERGAS
(Bocconi University, Milan) research center, which analyzed the main Italian
low-cost services experiences in the OASI Report of 2011. The most significant
cases studied were based on the following criteria: attention to quality, long-term
continuity, economic sustainability, location, and mapping of specializations. The
cases studied are three organizations of the Assolowcost Association: “Centro
Medico Sant’Agostino” in Milan, the dental project “Amico dentista” in Apollonia,
“Welfare Italia Servizi,” that started a project to develop medical group practices
involving public and private partners, together with the CGM cooperative group
(the National Consortium for social cooperation “Gino Mattarelli”); “Città di Nuova
Capurso” near Bari, the first low-cost outpatient clinic in Southern Italy; and the
case of “Medical Division” (MD).
These low-cost service cases unavoidably focus on the idea of price as an
expression of social commitment.
We assert that the idea of opportunity and sustainability and the relational
dimension are the most definite elements of social innovation spread in the low-cost
service model. The study by CERGAS is geared toward a consolidated definition of
low cost for the Italian health care, emphasizing the elements of originality, and the
pervasiveness of social value that cannot be underestimated by the welfare system,
in changing its policies and role.
Health for everyone, against any fiction and according to the principles of appro-
priateness of care, is no longer a real and indisputable fact. Private health care is
9.4 Beyond Public and Private. Social Innovation in Healthcare System 173
nowadays very widespread among the Italian population for two main reasons:
attempting to overcome the waiting time list of the public service; avoiding the
inconvenience of health trips for those people in areas less covered by the NHS.
This situation certainly entails a cost that many people are no longer able to afford
and that makes health care a luxury service and no longer a right.
As a result, low-cost service has been analyzed as a “no-waste” option instead of
a low-quality one. Although the model still displays a limited diffusion and
application, also because it is little known and acknowledged by citizens, it is an
alternative and a valid process worth being employed. In this view, the low-cost
service paradigm does not merely consist in the slogan “low prices for
high-consumption” as a competition strategy. On the contrary, it focuses on the idea
that the social sector can offer something more than “all public” or “all private”
models do. Therefore, as already stated, low-cost services provide a primary ser-
vice, making it available and open to everyone, generating participation and new
social inclusion and cohesion. Innovation is the key word of each low-cost service
project, and this aspect fully strengthens its pivotal role in the healthcare sector,
thanks to the promotion of patient centrality, (re)starting from their needs and
wishes. These aspects represent a positive mark to be enhanced.
Although it is early to draw final conclusions, our work needs to shed light on
the link between the social innovation paradigm and health care, analyzing the
low-cost service model as one of the clearest and best answers to this link.
It is important to highlight a few considerations recently drawn. Del Vecchio
et al. (2015) state that the whole low-cost sector does not seem to be overall
sufficiently responsive. At the moment, the actors of low cost appear unable to
establish themselves in the “private-private” track (out of pocket) and to intercept
the demand migrating from the public health.
We wish to contribute to the debate on low cost in Italian health care taking into
account different aspects. First, we will highlight some critical issues relating to the
most profound changes that are still ongoing in the world of health care and welfare
and that in our opinion should be better explored, for example in terms of public
versus private, of roles and responsibilities of actors involved, especially referring
to the relations between NHS organizations and low-cost service providers. Second,
the specific purposes of low-cost service projects are yet to be defined: in fact, some
of these refer to the so-called “light” health, where the boundary between health and
well-being is still not well defined. We also stress the potential “free riding” issue of
operators and patients who, however, have to deal with the Italian dominant public
logic. Finally, another aspect is the price flexibility of demand. This could lead to
the risk of a value judgment biased more towards price and less according to the
real services offered. It should not be forgotten that price is the much-criticized
starting point for the transformation of patients into customers. In our opinion, this
shift, as well as the nature of low-profit that characterizes low-cost service projects,
could weaken the role of the State as guarantor of the collective public health as
174 9 Myth #6: Health care Is Rightly Controlled by the Public Sector …
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(3):429–445
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worldbank.org/data-catalog/health-nutrition-and-population-statistics. July 2016
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improve health outcomes. World Health Organization, Geneva
World Health Organization (2008) The global burden of disease: 2004 update. WHO Press,
Geneva, Switzerland
Chapter 10
Myth #7: The Myth of Measurement
The mantra that inspires healthcare systems is: “If you can’t measure it, you can’t
manage it.” The measuring process is closely related to the epistemological ideal of
modern science. This has been developed through a world simplification, which is
considered useful to disclose principles that work under surrounding reality. The
search for natural laws carries a distinctive component: phenomena are not accepted
as they are, but they are instead transformed through abstraction and
M. Motterlini (&)
Philosophy Department, Center for Experimental and Applied Epistemology,
University Vita-Salute San Raffaele, Milan, Italy
e-mail: matteo.motterlini@unisr.it; matteo.motte@gmail.com
C. Canepa
Center for Research in Experimental and Applied Epistemology,
University Vita-Salute San Raffaele, Milan, Italy
S. Nuti (&)
Management and Healthcare Laboratory,
Sant’Anna School of Advanced Studies, Pisa, Italy
e-mail: sabina.nuti@sssup.it
M. Davoli
Department of Epidemiology, Lazio Regional Health System, Rome, Italy
C. Marinacci (&)
Italian Ministry of Health, Rome, Italy
e-mail: c.marinacci@sanita.it
R. Botti
School of Management, Italian Ministry of Health, Rome, Italy
G. Iuliano G. Matonti (&) P. Tartaglia Polcini P. Adinolfi
CIRPA (Interdepartmental Centre for Research in Economics, Law and Management of
Public Administrations), University of Salerno, Fisciano, Salerno, Italy
e-mail: gmatonti@unisa.it
E. Cinque
Department of Economics and Management, Second University of Naples, Caserta, Italy
F. Bevere (&)
AGENAS—National Agency for Health Services, Italian Ministry of Health, Rome, Italy
e-mail: bevere@agenas.it
10 Myth #7: The Myth of Measurement 179
The World Health Organization data shows that more than half of all years of
healthy life lost are as a result of behavioural factors—including smoking, diet,
alcohol and unsafe sex—which are entirely avoidable. How can behavioural
approaches help, for example, in the fight against tobacco smoking? Cigarette
packages with strongly emotive images are more effective than written information
warnings, like olive green standardized packages, whose aim is to reduce both
10 Myth #7: The Myth of Measurement 181
social effects (which commercial brands use especially on young people) and
perceived quality of the tobacco. Captivating design packaging propels purchases,
while anonymous packaging influences negatively on the perception, taste and
associated consumption of tobacco by smokers. Another introduced intervention
consists in reducing the visibility of smoking products inside stores, which are often
purposely displayed to catch the consumer’s attention.
Using economic incentives is part of traditional models utilized in changing
behaviours. The novelty of the behavioural approach consists in taking advantage
of incentives in a behaviourally informed way, i.e. taking into account how citizens
really react to incentive modifications and not how citizens ought to react according
to classical economic models. In the fight against tobacco, this method has shown
encouraging results. A study by Kevin Volpp and colleagues has found that it is
possible to obtain an increase of 15% of subjects who stop smoking in a 12-month
period, thanks to an economic incentive—in this case a $100 bonus offered to
employees of an American multinational. The same results have been found using
incentives to reduce tobacco abuse by pregnant women in lower middle class
families.
Small contextual changes in the choice environment can guide citizens towards
healthier eating habits, reducing the incidence of phenomena like obesity and being
overweight on the costs of the healthcare system. In this domain, research focuses
on the disposition of items in canteens and supermarkets, and how it affects the
consumers’ choices. The way in which food is unveiled and the significance of
plates and glasses, influence what people will eat and in which quantities. In a
study, Paul Rozin and colleagues manipulated two factors in a self-service canteen:
the proximity of high calorie dishes, which were distanced 25 cm from the con-
sumer’s usual location; and a spoon which was replaced by tongs as a serving tool.
Both modifications, which work on the location and accessibility of dishes (and not
directly on their quantity), have led to a decrease of unhealthy consumptions from
16 to 8%. Similar research has shown how the order of the names in a menu affects
the choice of dishes. Those located at the top and at the bottom of the list tend to be
chosen twice as often as those located at the center.
With regard to vaccinations and screenings controls, Katherine Millikan and col-
leagues have shown that active commitments, which oblige employees to write the
date and hour of an influenza vaccine, have increased the percentage of vaccina-
tions by 4.3%. With regard to colonoscopy screenings, the same method has
obtained an increase by 15%.
182 10 Myth #7: The Myth of Measurement
Greg Chapman and colleagues have shown how default options can enhance
vaccinations inside a university. Two different messages via email were compared.
One group was informed that flu shots were free, with the possibility of booking a
vaccination online. Another group was informed that every member had been
included in an anti-influenza vaccination, with the possibility of deleting the default
visit online. The second group, with the opt-out system, has showed a 45% vac-
cination rate, against the 33% of the first group, in which an opt-in system was
applied.
Not only citizens, but also doctors can benefit from better choice architectures. How
can we help physicians to make more precise decisions and to avoid errors? At first
it is possible to simplify the complexity of the environment where decisions are
made. An effective tool is by using control lists. Checklists, with orderly steps to be
applied, can have a huge impact on surgical operations. Many post-operative
complications are due to human avoidable errors. In 2009, The World Health
Organization published a report to subsidize the diffusion of checklists for security
in the operating room. It contains 19 items as a guide for supporting surgeons
(which instruments to be used, which anaesthetic, etc.), systematically favouring
adherence to security standards recommended to prevent mortality. The report,
based on a study sample of 3955 patients, showed post-operative mortality drop-
ping from 11 to 7% after the implementation of checklists.
The nudge approach provides policy makers with the capacity to face present and
future challenges inside health policies, without intending to substitute traditional
tools. The newness is twofold: (i) evidence-based behavioural policies help citizens
fill the intention-action gap, which characterizes the majority of health-related
behaviours. (ii) it fuels the culture of experimentation inside institutions, which
enables the efficient allocation of resources and award interventions that work and
which are based on: evidence of effectiveness. Future research should focus on:
(i) long-term duration of changes in choice architectures; (ii) understanding how
people interact with them in a social network, and not only how they individually
make decisions; (iii) the importance of the replication of applied interventions.
In their ultimate complementary relationship, cognitive psychology and eco-
nomics provide the opportunity to construct decision-making models able to
mediate between abstract principles of rational behaviour and real human behaviour
in action. These particular and integrated models are the best chance we have for
future success in mapping out efficient and targeted interventions for the world we
live in rather than the abstract world of abstract theories. When the moment of
10 Myth #7: The Myth of Measurement 183
Sabina Nuti
10.2.1 Premises
Many authors have underlined that governance of any complex system has to rely
on planning and control systems with performance indicators (PIs) and targets
based on a set of measures are able to represent social complex phenomena. This
translation process—from social phenomena to quantitative measures—requires
careful design.
First, only a part of the phenomena can be represented by quantitative figures,
because indicators portray the “measurable” part of the observed object.
Second, the measurement process can have different degrees of accuracy.
Inaccuracies in the measurement process may bring about false positives and false
negatives.
The process of governance by PIs and targets relies on the assumption that
available indicators are both representative and accurate.
The so-called “synecdoche” principle assumes that the measurable part is able to
satisfy both conditions (representativeness and accuracy) by representing the whole
object. However, measurement systems almost never comply with the
10 Myth #7: The Myth of Measurement 185
10.3.1 Introduction
This paper focuses on Henry Mintzberg’s considerations about the correlated myths
of measurement and scale. According to Henry Mintzberg, measurement is
mythologized by managers and policy makers, as well as by clinical professionals
under the guidance of evidence-based medicine. Henry Mintzberg is challenging us
by claiming that “too much of healthcare at both the administrative and clinical
levels has been thrown out of balance by their obsessions with measurement.”
Recently, Greenhalgh et al. (2014) have identified five possible reasons for the
crisis of the evidence-based movement:
188 10 Myth #7: The Myth of Measurement
health service management. Although quality measures and quality monitoring are
a relatively recent exercise in Italy, there is already considerable evidence of its
impact in improving healthcare quality (Pinnarelli et al. 2012; Nuti et al. 2012,
2013; Colais et al. 2013; Renzi et al. 2014).
The Italian National Health Service is based on the principles of universal coverage,
social financing by general taxation and aims at creating an effective and uniform
health system covering the entire population, irrespective of income or contribu-
tions, employment status or pre-existing health conditions.
Italian regions are responsible for providing healthcare to their residents, through
local health units, while the central level is responsible for defining the essential
levels of Healthcare (LEA) and monitoring their application to all citizens by the
Regional Health Services.
The Ministry of Health is responsible for monitoring the provision of LEA at
regional level, and the healthcare outcome at hospital and local health unit level,
through the National Outcome Programme, developed by the National Agency for
Regional Health Services. The regions adopt their own monitoring systems in order
to measure compliance with LEA at local level. The different monitoring systems
are described in a recent EU publication (Expert Group on Health Systems
Performance Assessment 2016).
Among the main challenges related to LEA provision assessment is the capacity
to translate the defined essential levels of care into measurable indicators.
Moreover, some methodology limitations particularly affect the “LEA grid,”
resulting in a recent ongoing review of the evaluation system focusing on: (1) the
need to describe analytically at each level of care, the individual qualifying attri-
butes of the process through which it is provided; (2) the fact that, relying on
regional syntheses, each LEA grid indicator does not take into account sources of
geographical heterogeneity within the regions in the targeted service provision,
which might result from the concurrent presence of sub-regional populations ade-
quately cared for—or high performing providers—with groups or providers where
LEA are not guaranteed. Nevertheless, it is worth mentioning the significant value
of measurement in monitoring the performance of Regional Health Services
according to LEA provision, as an objective way to evaluate system equity and
promote its continuous improvement (Expert Group on Health Systems
Performance Assessment 2016; Ministero della Salute 2015).
The main objectives of the National Outcome Programme (PNE) are benchmarking
among health providers, useful in identifying potential critical organizational or
clinical factors, and benchmarking among areas, for the evaluation of residents’
health protection and equity in access to effective health care (Agenas 2015). PNE
investigates the heterogeneity of access to health care across both geographical
areas and hospitals, focusing on those healthcare interventions for which evidence
of effectiveness is available. The outcome indicators measure the result of a
healthcare process in terms of clinical outcomes (e.g. mortality, morbidity, hospi-
talizations). The process indicators measure the healthcare process adherence to the
standards of evidence-based best clinical practice. For this reason, they are con-
sidered proxies for health outcomes and their predictability of clinical outcomes
depends on the strength of recommendations and level of clinical evidence on
which they were based.
and quality of the health care provided by public and private structures. A very
limited minimum set of outcome indicators has been included among the required
quality standards of each hospital in Italy. The standards have been chosen because
of a sound evidence base and validity of the measures. Minimization of adverse
outcomes of some surgical processes (30 days mortality after CABG surgery), or
the maximization of outcomes affecting survival and quality of life of patients (PCI
within 90 min in patients with AMI, and timely surgery for hip fractures) have been
included.
Another recent example of measurement-based regulation has been included in
the Law 28 December 2015, n. 208. All public hospitals, teaching hospitals,
national trusts, and research hospitals are called upon to address critical points in
both efficiency and effectiveness. The former is measured as the unbalance between
revenues and expenses, while the latter is measured on the basis of a set of
healthcare quality indicators included within the National Outcome Programme.
Finally, at regional level, more and more regions have introduced measurable
quality standards to set up specific goals for the CEOs of their hospitals and
healthcare units, linked to mechanisms for the evaluation of the management
activity carried out, leading to possible resolution of contracts.
Henry Mintzberg challenges the myth of scale by saying that “Too much of the
management of health care has come to be about using scale to reduce measurable
costs at the expense of difficult-to-measure benefits, leading to economies of scale,
rather that effectiveness of scale.”
Indeed much of the discussion is strongly connected to the controversial issue of
closing hospitals with low volume of activity. Besides efficiency and scale economy
issues, in many clinical areas volume represents a process measure that proved to be
significantly affecting effectiveness of interventions. The association between vol-
ume of activity and outcome was documented in several systematic reviews.
A recent review of systematic reviews and empirical analysis of Italian data (Amato
et al. 2013) showed a strong improvement in outcomes in the first part of the curve
(from very low volumes to higher volumes) for the majority of the studied con-
ditions. In some cases, the outcome improvement remains gradual or constant with
the increasing volume of care, in others the analysis could identify the level of
threshold values beyond which the outcome does not improve. However, we cannot
identify a volume threshold on the basis of scientific evidence alone. A good
knowledge of the relationship between treatment effectiveness and costs, the geo-
graphical distribution and the accessibility of healthcare services are necessary to
choose the minimum volumes of care, under which specific health procedures in the
NHS should not be provided.
192 10 Myth #7: The Myth of Measurement
10.3.6 Discussion
The number of quality measures has increased exponentially in the last decade and
there is an open debate on balance and parsimony in measuring quality (Meyer et al.
2012).
We are aware that investing in measurement systems cannot be the only way to
achieve performance improvement targets; in its recent editorial in JAMA,
Berenson (2016) points to the emphasis on measurement given by health policy
experts, as summarized by the popular quotation “if something cannot be measured,
it cannot be improved,” to share some reflections on the sole use of statistics to help
improving performance. In this regard, he resumes Deming’s cautioning arguments
on measurement requirements to guide management decisions, observing that the
most important data needed to manage are often unknown and unknowable.
According to Berenson, the measurement requirement as being essential to man-
agement and improvement is a fallacy. Surely public reporting of performance has
changed medical culture, leading to a growing acceptance that the quality of clinical
practice does not depend on the unmeasurable “art of medicine.” Comparative
public performance using meaningful and accurate measures has led to quality
improvements, as clinicians and hospitals reflect on their own comparative per-
formance and seek to improve their public standing. In most clinical areas, how-
ever, we lack readily available measures to use as valid benchmarks to assess
performance. Another major problem with the current concern with measurement,
as the central route to improvement, is the assumption that if a quality problem is
not being measured, it basically does not exist: an important example is diagnosis
errors.
Related arguments are synthesized by Carroll (2015), on the specific issue of the
increasing push to pay for quality and not quantity. Paying hospitals differently
according to their performance relies on the mandatory capacity to validly differ-
entiate between those who deserve higher payments and those who do not. Carroll
discusses the adequacy of these capabilities and the bias of quality metrics, as
related to things that clinicians and hospitals could not control. For instance, poor
patients may be more likely to be readmitted to the hospital than wealthier patients,
as might patients with substandard housing or low education, leading to the worry
that safety net hospitals which care for low-income patients might appear, through
no fault of their own, to be delivering lower quality care than those which do not.
Some have argued that factors like individual patient race and socioeconomic
status, insurance, education and home environment, play significant roles in read-
mission risk and that we might still be able to use these metrics to measure per-
formance accurately, by adjusting for these factors. Much of this has been
theoretically and empirically documented in the USA context where patient char-
acteristics, outside of hospital’s control, account for a large amount of the variation
seen in readmissions, above and beyond the quality of the hospital’s performance.
Quality assessment systems often use the available data, mainly administrative
information, instead of the data properly needed to measure quality, and
10 Myth #7: The Myth of Measurement 193
consequently tend to penalize those hospitals already caring for the most disad-
vantaged patients. Trying to get more comprehensive information might make
measurements more accurate, but could be too expensive. We then need a balance
within the field of measurement, from a less accurate but systematic measure to a
more “ad hoc” investigation to measure determinants of variation and change.
In conclusion, we argue that it is not just a question of measurement overload but
it is mainly a question of selecting proper quality measures, differentiating the level
of measurement (national, regional, local, organizational, etc.), and identifying the
proper use of measurements. We suggest here some possible recommendations for a
better balance between measurement and judgment:
• Choose quality standard measures assessing the quality and safety of the process
of care delivery, based on critical evidence-based practices strongly related to
health outcomes.
• Clearly separate external, independent quality measurement from internal
measurement, within each organization, the former focused on outcome and
value and the second focused on process analysis.
• Select measures taking into account the cost of data collection and reporting,
relative to the measure’s impact on quality, outcomes and costs.
• Establish a systematic process of data quality control and a systematic update of
measures used, involving different stakeholders.
• Ensure transparency of methods and operational definitions, giving the possi-
bility, for all the assessed administrations and/or providers, to replicate mea-
sures, and to define their own targets according to measures and clinical and/or
organizational processes required to achieve them.
• Use measurement for different purposes, avoiding automatic applications:
– Medical education and professional training.
– Performance management.
– Budget management.
– Provider payment mechanisms including case-based payment.
– Communication of entitlement to patients and their families.
– Clinical audit and provider benchmarking.
– Provider regulation and accreditation.
As far as the myth of scale is concerned, it is again a question of balance
between measurement and judgment. Closing or reconverting hospitals require the
appropriate consideration of numerous factors (“judgment”), including epidemio-
logical context, geographical constraints and organization of outpatient and com-
munity services. The issue here is to ensure an adequate organization of the whole
social health and proximity supply system; too often hospitals have been used
inappropriately on behalf of other type of services for community care. In the inner
areas of some Italian regions (Piemonte, Lombardia, Marche, Abruzzo), the process
of reorganizing the hospital care system presented an opportunity to accelerate
processes towards the ongoing improvement of outpatient and community care
through a new healthcare organization, as, for example, improving proactive care
194 10 Myth #7: The Myth of Measurement
models for patients (Agenzia per la Coesione Territoriale 2016). Empowering cit-
izens, adopting telemedicine services and increasing home care might facilitate the
humanization of the care process and bring services to the patients, rather than the
opposite. Actually, we could falsify the myth of the economy of scale by saying that
closing small hospitals, by itself, does not automatically reduce healthcare costs, but
often requires more investment in better community care.
Eventually, reducing the gap between evidence and practice is a desirable aim
for both patients and payers. Healthcare providers should offer their patients the
highest possible quality, using the latest knowledge and most efficient technology,
and healthcare funders should get the best possible value for their money.
The systematic measurement of selected quality standards and wise use of
measurement for healthcare planning, rather than an automatic use of measurement,
should be promoted in order to facilitate improvement of healthcare quality, effi-
ciency and safety.
Giuseppe Iuliano, Gaetano Matonti, Paolo Tartaglia Polcini and Ettore Cinque
10.4.1 Introduction
the best manner, in an efficient and effective way with regards to financial sus-
tainability. Moreover, healthcare expenditure represents a major use of a nation’s
financial resources and has been growing rapidly over time. Factors such as the
ageing population, the increased personal use of health care, and medical advances
that have opened the way for more treatment options and diagnostics have con-
tributed to a rise in the demand for health care. Increased pressures on healthcare
resources have led policy makers, administrators and physicians to search for more
efficient ways to deliver health services (Peacock et al. 2001). Efficiency
improvements in the health sector, even in small amounts, can yield considerable
savings of resources or expansion of services for the community.
Managing with patients is a collective and cooperative effort that requires
continuous communication of performance data and is subject to emerging con-
tingencies that require specific actions. Since patient responses to care can never be
fully anticipated, treatment is never really routine. The healthcare system is further
characterized by distributed decision-making by people with different perspectives.
In performing these purposes, healthcare organizations manage with several human,
technical and financial resources (Stahr et al. 2000), which are used in a series of
processes aiming to improve the medical condition of the patient and contribute to
healthier communities (Rivers and Boe 1999). Value for the patient is created by
healthcare providers’ combined efforts over the full cycle of care, and the benefits
of any intervention for ultimate outcomes are related to the effectiveness of other
interventions throughout the care cycle (Porter 2010). Finally, the National Health
System of some countries (e.g. Italy, UK) is mostly tax-funded and financial
resources attributed to healthcare organizations are related to their performances
and results (Jommi et al. 2001).
To deal with the complexity of healthcare organizations, New Public
Management (NPM) policies have been introduced into public health care across
most OECD countries since the 1980s (Malmmose 2012).
Theory (e.g. Andrews 2013; Alonso et al. 2015) suggests that policies based on
NPM may enhance the efficiency of public service delivery, such as healthcare
provision. According to the NPM philosophy, performance measurement becomes
a central concept for audit and overseeing bodies (Lapsley 2008; Gasper and
Mkasiwa 2013) in doing their job.
With regard to the usefulness of a measurement system in a healthcare organi-
zation, in the literature, two points of view compete with each other.
The first one criticizes the measurement system because it distracts physicians
from their mission. In more specific terms, some literature criticizes performance
measurement in healthcare organizations because the overuse of the measurement
systems may stress physicians. In fact, in adopting NPM philosophy, physicians
become administrators (Jones 1999), and their jobs and results (performances) are
stressed by the limited financial resources available for the healthcare system.
Several researches have shown that physicians would like and need more stability,
less administration and closer contact with patients and colleagues (Brorström and
Nilsson 2008) which are in conflict with implementing new organization models
and performance measurements (e.g. Mannion et al. 2007). Moreover, chief
196 10 Myth #7: The Myth of Measurement
executives and directors in the health care in the UK are not motivated by financial
rewards and personal reputation, but by more responsive service to patients,
opportunity to increase staff moral and increased quality of results (Mannion et al.
2007). This approach is not consistent with the NPM that focuses on financial
sustainability and effectiveness of healthcare organizations.
Vakkuri and Meklin (2006) highlight that methodologies, techniques, standards
and indicators (Brown et al. 1993) were implemented in healthcare organizations by
transposing them from private organizations, without considering the nature of
these non-profit organizations. Probably, these methodologies are less suitable for
healthcare organizations (Lapsley and Mitchell 1996) because of their organiza-
tional learning capacities, the specificity of their output, and/or the incomplete data
systems (Vakkuri 2003).
Propper and Wilson (2003a, b) highlight that the risk of a measurement system is
the misinterpretation and the misrepresentation of performances. In the U.S.
healthcare system, performance measures and measurement have resulted in inap-
propriate care and have decreased the focus of hospitals on patient concerns and
services (Powell et al. 2012). In the UK, performance measurement has caused long
waiting lists (Propper and Wilson 2003a, b). Moreover, performance measures have
resulted in manipulation of evidence (Gasper and Mkasiwa 2013).
Healthcare performance measurement systems are focused on the costs of care
and limit the degree of freedom a physician has as a way to cut costs. In particular,
Porter (ICHOM 2015, p. 32) highlights that physicians have to pay great attention
to costs, to comply with the hospital budget. Spigelman (2006, p. 3) in discussing
about the measurement of court performances (public sector), points out that not
everything that counts can be counted and measured. Some matters can only be
judged, in the sense that they can only be assessed in a qualitative way.
The second point of view, instead, supports the measurement systems in
healthcare organizations because it helps management in controlling efficiency,
effectiveness and financial sustainability of these organizations.
Healthcare providers share a common goal: providing high-quality care to their
patients. Measuring performance can help in understanding how well a healthcare
organization is accomplishing this goal. A measurement system allows manage-
ment for an analysis of where and what changes need to be made in order to
improve performance and the quality of care provided (the focus is the patient,
taking into account the financing system). Moreover, measuring performance also
allows providers to understand what is working well and this information can be
shared with other providers who can learn from these successes.
According to this point of view, explicit formal measures of performance are
promoted all over the world as an important tool to improve organizational effi-
ciency and effectiveness (Hood 1995; Halachmi 2012), because they encourage
productivity, contribute to the legitimacy of the organization, stimulate learning
processes and generate information that may enhance an organization’s intelligence
(de Bruijn and Van Helden 2007). In other words, a major part of the NPM purpose
to implement management accounting and managerial performance measurements
systems in these organizations in order to control costs and become market-oriented
10 Myth #7: The Myth of Measurement 197
to meet patients’ needs. At the same time, these systems make the healthcare
organizations accountable for their measured performance and increasingly base
resource allocation on performance. Thus, one of the core issues of NPM is the
health system performance (and outcomes) measurement (Dunleavy et al. 2006) in
order to increase value for patients and the public in general. Information (the
output of a measurement system) plays a central role in the ability of a health
system to secure improved health for its population. It can be used in many diverse
ways, such as tracking public health, monitoring healthcare safety, determining
appropriate treatment paths for patients, promoting professional improvement,
ensuring managerial control and promoting the accountability of the health system
to the public. Underlying all of these efforts performance measurement drives the
decisions of different stakeholders (e.g. patients, clinicians, managers, governments
and the public) (Smith et al. 2008). The fundamental role of a performance mea-
surement system is to help stakeholders to make informed decisions (Smith et al.
2008, p. 1).
Based on the above, taking into account the organizational complexity, the
particular output (outcome) and the financial sustainability of healthcare organi-
zations, a performance measurement system should be needed in order to monitor
their efficiency, effectiveness and financial sustainability. Probably, these healthcare
organizations need specific measurement systems, taking into account the nature of
the outcome and the specificity of the health services.
Measurement is an important part of any effort to improve the quality of
healthcare systems, because measurement helps in understanding the change in
organization and in management in order to improve the patient experience.
Hibbard et al. (2005) state that most proponents of the public release of healthcare
performance information believe that making this information public will increase
healthcare providers’ motivation to improve. The identification of reliable and
scientifically valid performance measurement strategies would be of benefit to the
policy makers and stakeholders (Hollingsworth and Street 2006). Inefficiency
measures could be also incorporated into schemes designed to improve the per-
formance of the healthcare system (Peacock et al. 2001).
Performance measurement also offers policy makers a major opportunity to secure
health system improvement and accountability, enabling national priorities for health
reform to be translated into organizational and individual objectives (Smith et al.
2008). Therefore, its role is to improve the quality of decisions made by all actors
within the health system, including patients, practitioners, managers, governments at
all levels, insurers and other payers, politicians, and citizens as financial supporters.
According to this point of view, measurement of performance is vital for healthcare
organizations and for the distinct nature of the financing system.
To conclude, performance measurement should measure performance and out-
comes, enabling innovations in care and generating value for patients and society.
Nevertheless, a measurement system should not exceed some limits as regards what
is measured (scope of measurement) and how it is measured (level of measure-
ment), because if the measurement is excessively stressed it can produce much
more damage than benefit.
198 10 Myth #7: The Myth of Measurement
According to this point of view, the next section highlights what should and
should not be measured.
There are three basic areas to consider: (1) Health Plan, when we assess the overall
performance of providers in the network of a plan; (2) provider, when we assess the
quality of a provider’s facilities and/or his/her overall quality of care; (3) Healthcare
Professional, when we assess the quality of care provided by an individual
healthcare professional. Structure measures evaluate healthcare infrastructures, such
as hospitals or doctor offices. These measures assess the structural characteristics,
including facilities, personnel and organizational models (for example, we can ask
if an intensive care unit has a critical care specialist on staff at all times).
Structural measures should be considered a key part of a suite of quality mea-
sures, but they should never be relied on as the exclusive measure of quality.
Although structure measures provide essential information, it is important to note
the limitations of these measures. For example, the fact that a hospital has the
ability to perform certain functions does not capture whether or not these functions
actually occur, nor does it capture whether those functions improve patient health.
Structure measures are necessary to provide essential information about a pro-
vider’s ability and/or capacity to provide high-quality care, but they cannot measure
the actual quality of the care.
Process measures are used to determine to what extent healthcare providers give
patients specific high-quality services. They appreciate the ability of services pro-
vided to patients to be consistent with routine clinical care and with procedures or
treatments that are known to improve health status or prevent future complications
or health conditions.
10 Myth #7: The Myth of Measurement 199
Outcome measures evaluate patients’ health as a result of the care they have
received. More specifically, these measures look at the effects, either intended or
unintended, that care has had on patients’ health. For example, measures can
answer the following question: what is the survival rate for patients who experience
a heart attack? In fact, outcome measures frequently include traditional measures of
survival (mortality), incidence of disease (morbidity), and health-related quality of
life issues. The problem of these measures is that they do not assess the full extent
of the patient’s experience because they often do not incorporate patient-reported
information about how satisfied they are with the healthcare services received.
Another critical consideration is related to developing, evaluating and using out-
come measures, because outcome parameters are often influenced also by social
determinants, as well as critical differences in patient populations. In other words,
outcomes are often the result of factors outside the control of the health system and
for this reason using these types of indicators represents a critical activity. These
problems are noticed, as we shall see later, not when we choose these measurement
systems but in the operating mode and when we attribute meaning to them.
10.5.1 Introduction
Over the years, the myth of measurement has characterized the development of the
healthcare system. At least two phenomena stand out in this regard. On the one
hand, the worsening financial sustainability of health systems, which has resulted in
a greater focus on the ability of health organizations to manage the resource
available more effectively and efficiently (Birch et al. 2015), and on the other hand,
the control-obsessed approach promoted by the legislator in the aftermath of the
business-oriented reforms addressing the health system (Verbeeten and Speklé
2015). Some empirical studies have pointed out how the marked
measurement-oriented approach, not integrated by an assessment-oriented
approach, has prevented meaningful and tangible improvements in the outcome
of healthcare organizations. Measuring systems have been interpreted as super-
structures that, instead of subsidizing managerial decisions, introduce additional
rigidity and organizational inertia and, therefore, they often have proved to be a
source of resistance to change (Aryankhesal et al. 2015). In this perspective, the
myth of measurement has resulted in a “management-by-objectives” unable to
reflect and embrace the complexity typical of healthcare organizations.
Common practice shows that measurement has rarely been combined with staff
assessment, as indicated in the “performance plans.” “Performance plans,” imposed
by law, have been usually introduced top-down by the strategic apex of organi-
zations, without involving middle managers. Due to the lack of synergy between
measurements and human resource evaluation (and, more broadly, human resource
management), measuring systems have not been able to provide substance to the
“performance plans,” which are mostly incapable of stimulating the implementation
of strategies and the improvement of effectiveness and sustainability over time. The
measurements have been used for feeding the information needs of a bureaucracy
unable to identify and reward the contribution of individuals to organizational
performance, thus being relegated to an aseptic and sterile exercise. Typically a
fragmented approach has been followed, focused on the measurement of single
departments or sectors: administrative, managerial, organizational, clinical, all
separated from each other and independently of the strategic mission of the refer-
ence organization. This approach has not favoured the identification of indicators
able to mediate and create a link among the various areas of the health care and the
different components of the performance, determining, for example, a separation
between the often negative assessment of the economic and financial performance
of hospital sectors characterized by high levels of clinical complexity and the results
achieved, most of the times brilliantly, in terms of effectiveness of diagnostic and
10 Myth #7: The Myth of Measurement 203
Most of the problems above mentioned stem from an acritical and simplistic
approach to measurement. This is particularly evident when looking at the effects of
measuring without assessing as regards the implementation of spending review
policies.
Normally, one of the first cost items to be addressed by the axe of cost-cutting
policies in the health sector is the staff. Taking into consideration that staff accounts
for about 2/3 of the budget of healthcare organizations, and that in the public sector
there is a natural trend to increase staff, in most developed countries restrictive
manpower policies have been implemented, affecting both medical and support
staff. It is interesting to note that this type of linear intervention affects situations in
which there is either staff surplus or staff shortage, on the one hand cutting costs
but, on the other, creating irreparable imbalances in the operating processes.
If there is a staff surplus, cost-cutting actions, because linear, may still result in a
surplus. Normally, such residual staff surplus is not offset by investing in space and
equipment, which would offer the possibility of boosting the productivity of clin-
icians and technicians. In fact, in the absence of a culture of evaluation rather than
measurement, organizations usually do not assess the costs of idle space, unused
equipment and staff, not recognizing that unused capacity costs much less than
unused staff. The obvious consequence is their inability to manage excess capacity
and to optimize the productivity of the most valuable assets of the healthcare
system, i.e. staff.
If, conversely, there is a situation of under-staffing, simplistically linear
cost-cutting promotes excessive and harmful staff exploiting, in an attempt to
compensate for lower productivity. Shortening patient visit time will inevitably
affect service quality, with negative consequences on patient safety. As an example,
Kaplan and Haas (2014), in an article published in the Harvard Business Review
titled “How Not to Cut Health Costs,” estimated that, in the case of chronic kidney
disease, the reduction of the standard visit duration by 15 min produces savings
which are only 1% of the additional costs incurred because of the inappropriateness
204 10 Myth #7: The Myth of Measurement
of the service provided: in fact, if the time for medical front-end counselling is
reduced, dialysis is usually started sub-optimally (with a catheter rather than with a
fistula or a graft), resulting in a negative impact on life expectancy and compli-
cations which the patient is not able to co-manage.
If healthcare providers are not able to meet healthcare needs by stressing
clinician/technician productivity, they tend to resort to alternative solutions, such as
temporary work agencies, HS-covered external specialist centres, and internal
subcontracting. We are talking, in any case, of solutions that have higher costs than
directly employing staff. In particular, internal subcontracting, in addition to costing
much more than employing ordinary staff, has negative effects on safety, because of
the excess of stress placed on healthcare staff.
The myth of measurement has also affected management decisions, addressing
the purchase of goods and services. While some interventions, such as reducing the
number of contracting authorities and centralizing purchases, may be reasonable, a
linear approach is not beneficial in this case either, because of a narrow focus on the
cost of single items that does not take into account their use over a patient’s
complete cycle of care. As an example, the price paid for the purchase of bone
cement varies greatly across hospitals, but the type of more expensive bone cement
may be premixed antibiotic cement or hand-mixed cement, linked to reduction in
the need for antibiotics or in the amount of cement used, with a positive impact on
the overall costs of the process (Kaplan and Haas 2014).
These examples provide evidence of an exaggerated and simplistic approach to
measurement in the management of health care, which is unrelated to the organi-
zation of resources and the quality of outcomes. It is necessary to acknowledge that
to reinvigorate the sustainability of the health system, the only effective approach
involves in-depth analysis of the processes involved in treating each medical
condition, and identifying (also through benchmarking) best practices including the
best combination of resources for each complete cycle of care.
Organizations or individual professionals often tend to take care paths for
granted, without questioning them (although these will differ greatly among various
organizations and even within the same organization). This precludes the identifi-
cation, through experimental evidence-based studies, of what works best in specific
contexts, of innovative connections between unconnected resources that would
appear under-utilized in the light of a new cultural framework, a frame that goes
beyond the traditional idea of the typical industrial economy value chain, adopting
instead a more complex approach, according to which all the parties involved form
a value-generating system, and, ultimately, a health-generating system.
10 Myth #7: The Myth of Measurement 205
In addition to the points so far discussed, the myth of measurement has produced a
further negative effect in the health system. In their obsessive focusing on costs
based on the financial measurement of clinical performance, healthcare providers
have typically neglected to focus on quality and security of healthcare, thus
neglecting the risk of medical mistakes, which is a very significant issue. Referring
just to Italy, an analysis of the history of accidents and reports published by
insurance companies and regional bodies, based on data collected by health pro-
viders that have adopted “risk management” strategies, shows that, in the face of a
slow decrease in medical malpractice, albeit with differences between North and
South, there has been a steady increase in medical error-related costs and an
increasingly widespread practice of the so-called defensive medicine.
It seems quite urgent to tackle the problem of defensive medicine and medical
error in a radical and thorough manner. To this end, beyond the actions recom-
mended by the law (including the introduction of clinical risk units as enforced by
the latest Italian Stability Law), it is essential that risk assessment becomes an
integral part of financial evaluations carried out within the management control
cycle.
Despite the growing sensitivity on the issue of expenditure control and health
risk, solutions addressing the problem in an integrated manner are yet to be found.
Currently, the available supply is mainly advisory and is confined to: staff training
on costs, risk and quality issues; financial analysis aimed at a better recognition of
the benefits produced by the diagnostic-related groups; process certifications based
on IT modelling; document management procedures aimed at better legal
protection.
When going beyond mere document management protocols, inspired by a
defensive administrative approach—which adds to the defensive medicine one—
the typical approach is aimed at identifying the “best practice” for specific proce-
dures, or related to specific risk management aspects. In most cases, there is
acceptable compliance with one or more “best practice” models, but also a dramatic
drop in reliability and consistency when evaluating the process on the whole. Even
when managing to achieve full application of the entire treatment process devel-
oped in the literature with the input of the relevant national and international
scientific associations, there is hardly a context-specific scope of application,
involving ICT-based tools able to create the necessary interconnections across the
various clinical and health information systems involved, and promote the analysis
of critical areas and possible innovative connections that include all the assets and
the subjects involved in the value chain. To allow for an integrated evaluation of
costs, risks and outcomes.
In order to take a positive new path pursuing effectively and sustainably the
problem of healthcare expenditure in the regional health systems, it is necessary to
adopt an integrated approach that, overcoming the myth of measurement, would
206 10 Myth #7: The Myth of Measurement
lead to the achievement of key goals in the rethinking of health management. This
first entails attaining the development of innovative tools for the analysis and
formal modelling of social healthcare processes, in order to produce integrated (and
even inter-organizational) paths featuring a flexibility capable of accommodating,
on the one hand, the established scientific references and, on the other, the local and
structural variables related to individual patients, in a complex perspective in which
all actors (including the patient and his/her family, as well as suppliers) are part of a
process of creation of health as a value. These tools need to adopt standardized and
easy to use/adapt protocols consistent with national and European guidelines
regarding interoperability. To reach such a goal, it is essential to adopt patient-based
cost evaluation models, i.e. based on process, activity-based methods capable of
replacing the traditional top-down measurement techniques.
All this would not lead to significant results without the presence of risk
assessment models taking into account the various steps of the healthcare processes.
Such models could be derived from algorithms used in other fields, according to the
principles of reliability science, but specifically adapted to the healthcare setting.
Obviously, it is essential to ensure a validation of the algorithms, through a com-
parison with the data available referring to past management (i.e. accident timeline),
in order to define a risk score for the processes. Moreover, it is necessary to develop
tools to help in choosing the optimal path, based on measurable indicators of cost,
risk and outcome; similarly, the implementation of monitoring tools of diagnostic
and care paths is essential, in order to track protocol adherence and provide
real-time feedback on deviations and possible alternatives, giving immediate
indications on costs/risks/outcomes. It might also be useful to create a national
database of risks, costs and outcomes of clinical processes, interconnected with
international databases, with indications on general technical–legal–regulatory
aspects and on update and access procedures for healthcare staff.
These innovations can only be developed and designed involving the whole
organizations and, therefore, involving the main actors of each organization and
citizens as users of the services.
When the culture of measurement reaches this level of maturity, we will be able
to have a dynamic dashboard of indicators truly reflecting the levels of complexity
that the health system has reached over the years. To be used with judgment.
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Chapter 11
Myth #8: The Myth of Scale
11.1.1 Introduction
Elephants have bigger brains than humans, but less interconnected and, conse-
quently, less developed ones (adapted from Morgan 1986).
The quest for measurement in health care paved the way for the myth of scale,
which ultimately assumes that higher dimensions are associated with better orga-
nizational performance. Moreover, it pretends that organizational design is a simple
issue, which could be dealt with through reductionism (Gharajedaghi 1999).
Organizations are conceived as engines (Morgan 2016): human resources are easily
replaceable and performance is predictable (Thiétart and Forgues 1997). This
In line with these arguments, some empirical evidence invites us to go beyond the
myth of scale, and to support the role of complexity in health care. The case of
caesarean sections (C-sections) in Italy helps in making the point. The incidence of
C-sections is a widely accepted performance measure to assess the quality of
healthcare systems all over the world. In fact, the rate of C-sections is assumed to
imply poorer quality of care and higher inappropriateness in the access to health
services (Agenas 2008). Among other things, Italy shows a high risk of inappro-
priateness, disclosing an average rate of C-sections of 25.69%, which significantly
exceeds the 15% threshold suggested by the WHO (1994).
11 Myth #8: The Myth of Scale 213
A recent assessment (PNE 2015) pointed out that negative performance was
more common in small healthcare facilities, which performed less than 1000 births
per year. On the other hand, higher performances were consistently achieved by
larger facilities, which performed more than 1500 births per year. This data—at first
sight—seems to confirm that scale played a significant role in affecting organiza-
tional performance. However, a more insightful analysis of the national assessment
suggests that three small healthcare facilities performing less than 800 births per
year were found to report a C-section rate ranging from 6.06 to 7.7%, in line with
international standards.
There is a possible explanation for these diverging findings concerning the
relationship between organizational dimensions and performance: a more complex
reality lies behind the rising number of C-sections, which could not be affected by
the myth of scale.
Indeed, the adoption of a complex framework allows us to shed light on the
dynamics and the variables which compound the risk factors and the
socio-demographic determinants which are contemplated by traditional assessment
tools. In fact, health outcomes are deeply affected by contingency issues, as well as
by non-linear relationships between patients, carers and providers, both within and
outside the healthcare facilities, which pave the way for unexpected and unpre-
dictable effects. In specific social contexts the dominant thinking incites to perceive
the C-section as an elective choice for patients, due to either the clinical approach of
the childbirth process as promoted by providers or the insufficient information
affecting users, who are usually unaware of alternative options. At the moment,
medical dominance and patient psychological weakness are two important deter-
minants which affect the appropriate access to care and decrease health outcomes.
Non-conventional organizational models which encourage revisiting the tradi-
tional myth of scale in health care are desperately needed to enhance the sustain-
ability of the healthcare service system. Even though scale could produce positive
effects in terms of managerial and economic results, it neglects the role played by
several determinants of organizational performance, producing only a limited and
partial interpretation of the complex reality of healthcare organizations.
paves the way for the arrangement of innovative and effective answers to unpre-
dictable pressures, preserving a focus on everyday organizational practices.
Collaborative and co-participating task forces are established to deal with the
managerial issues which affect the different parts of the organization. Knowledge
sharing and continuous innovation are also steadily stimulated, with the eventual
purpose of enhancing the dynamic capabilities and the resilience of the organiza-
tion. ICT-mediated inter-professional relationships are encouraged to enhance the
weak collaborative ties between the healthcare professionals who participate in the
same project. As an illustrative example, both blogs and social networks are used as
catalysts for interpersonal relationships and information exchange, thus paving the
way for the establishment of a learning organization.
The role played by healthcare professionals in managing operational issues and,
at the same time, in participating in the organizational governance of the Mayo
Clinic in light of a patient-centred approach to care is an essential ingredient of the
recipe for the arrangement of a structural configuration which relies on
self-organization. In fact, the patterns which inspire the governance of the Mayo
Clinic are assumed to be the result of local interactions between smaller elementary
parts of a supposedly disordered system, that is to say the different teams operating
within the organization. These teams are designed as communities of practice,
where dynamic personal relationships and established ways of interacting between
the members allow knowledge creation, organizational commitment and value
co-creation. In other words, the Mayo Clinic sticks to a fluid and versatile orga-
nizational model, which is not top-down arranged, but is co-designed and
co-implemented by the different members of the organization. A horizontal struc-
tural pattern prevails on a vertical and hierarchical one: healthcare professionals are
encouraged to ask one another for advice and counselling in providing health
services, thus performing as actual team members in any organizational
circumstance.
216 11 Myth #8: The Myth of Scale
11.1.4 Conclusions
Until recently, the quest for control pervaded the healthcare service system, in an
attempt to destroy uncertainty through reductionism. The ambition to control
healthcare organizations was merged with the attempt to increase their dimensions,
to realize the full potential of scale. The scientific literature has emphasized that
11 Myth #8: The Myth of Scale 217
health care organizations are complex entities. Far away from stability, they operate
at the edge of chaos, where instability prevails and innovation emerges (Russ 1999).
To deal with complexity, healthcare organizations should not rely on norms and
procedures. Rather, they should behave as brains and operate as living organisms.
From this point of view, control and scale turn out to be a myth rather than a reality.
The complexity perspective incites to critically re-examine scale in the health-
care arena. On the one hand, economies of scale are valid strategies in the short
period, since they allow to meet the financial constraints of healthcare systems. On
the other hand, they prevent the differentiation of services and produce less flexible
ways of working, which are not suitable to take care of sick people that have
different and not standardized needs.
The complexity of coordination activities curtails the benefit of greater spe-
cialization. In general, the coordination and management of large units is more
complex as compared with small organizations. Moreover, it is likely that large
units are not able to reach the maximum of efficiency, due to problems related to the
management of relationships among people, greater supervision costs, waste of
resources and low employees’ motivation.
In other words, the myth of scale overlooks organizational interdependences,
which are emergent and non-linear. Interdependences make healthcare organiza-
tions cognitively developed. From this point of view, they improve the organiza-
tional ability to change and adapt. Small dimensions, even though sacrificing
efficiency, are able to absorb variety and to enhance sensemaking. Flexible mode of
operation allows organizations to adapt to the external environment and make them
working as a brain, developing the interdependencies among the different and
strongly connected components. In this way, the employees develop competences
that are polyvalent, making the system agile, not rigid and dependent on hierar-
chical management. Flexible healthcare organizations concentrate more on actions
that need to be avoided than on what they are supposed to do. Defining only what
the organizations need to avoid makes the working environment agile, dynamic and
capable of adapting within pre-established limits. Clearly, this is a radical structural
change, which would require the acceptance by the management of a lack of
influence and power in favour of a spread empowerment across the organization.
This study has also shown that quantitative variables provide a reductive
snapshot of the health care system, which overlooks its complexity. A more realistic
view should emphasize the natural co-evolution between healthcare organizations
and the external environment, leading to a managerial approach which is consistent
with a patient-centred philosophy and acknowledge the non-linearity of organiza-
tional relationships. A greater insight into the role of human resources, especially
healthcare professionals, the enhancement of organizational interdependencies and
the improvement of self-organization are critical to achieve greater efficiency and
effectiveness in health care. From this standpoint, ramification and boundaryless-
ness—rather than scale—should be the ideas inspiring the future shapes of
healthcare systems.
218 11 Myth #8: The Myth of Scale
“Small is beautiful” because it is flexible, and even “giants can dance”. As size
grows so too does complexity, but equally the reduction in complexity—for
example the processes of extreme division of work and the related segmentation—
helps to increase the corporate size. Research and development and innovation are
facilitated in large companies, so how can the proliferation of incredibly innovative
small start-ups be explained?
These are just some of the contradictions which can be found in scientific
literature with regard to the concept of size and they are intensified by the process of
the development of the actual scientific knowledge of organizational thinking.
Henry Mintzberg himself has underlined these difficulties: “Notice the term:
economies of scale. Not effectiveness of scale but economies of scale. Too much of
the management of health care has come about through using scale to reduce
measurable costs at the expense of difficult-to-measure benefits”.
Myth, used as the key to interpret reality, can assist the process of critically
re-assessing the subject of importance of size in the success of healthcare
organizations.
The first consideration refers to the fact that large sizes can lead to dangerous
illusions of superiority. Organizational literature, which has focused on the issue of
the importance of size as a factor in competitive advantage, has highlighted that, in
themselves, large volumes and a large share of the market do not always result in
competitive advantage, nor do they guarantee success in survival. Revisiting the
ancient legend of David’s battle against Goliath, as described in the Old Testament
book of Samuel, leads in a mythical way, to such considerations. Goliath, the
dreadful champion of the Philistines, is a big man, but his large size is not enough
for him to prevail and, in actual fact, it creates a dangerous air of superiority in
Goliath’s mind that persuades the giant to misjudge his adversary. The tiny David,
armed only with a simple sling, is victorious. The most interesting aspect is that
David’s victory, supported obviously by God, comes as a surprise and wrong foots
all those present, because it overturns the deep-rooted but erroneous conviction that
being big guarantees success.
The second consideration refers to the fact that, in certain circumstances, size
does not play a crucial role in competition, but rather that it is an additional factor
compared to others which are far more important: strategic vision; the ability to
predict the opponents’ moves; believable products; efficient and effective organi-
zation and so on. In this case too another legend, this time of Greek origin, might be
of help. In the war for the control of Olympus the giants, whose strong point is their
11 Myth #8: The Myth of Scale 219
“gigantic” size, succumb to the craftiness and unexpected blows of Zeus as well as
to his ability to form alliances. When Zeus is in trouble, his greatest help comes
from Cadmus who, as a mere mortal, lets Typhon fall asleep and then robs him,
surreptitiously, of the tendons of which Zeus had been deprived. As soon as Zeus
regained his strength he annihilates Typhon with his own bolts of lightning and
crushes him under the weight of an enormous boulder which was then to be
transformed into Mount Etna. Here too, therefore, the larger size is not a decisive
factor and does not determine the final outcome.
The third consideration refers to the possible seduction exerted by the growth in
size. Modern-day society is fiercely permeated by a capitalist style vision, in which
scientific and technical know-how is geared in every way towards the creation of
value. In this process of creating value and accumulation, size takes on a very
powerful meaning, because it symbolically represents an obvious element for
success and achievement, with respect to competition. In this case the seductions of
size, just like the song of the Sirens for Ulysses in the Odyssey, can represent a
dangerous distraction for healthcare organizations. In other words, pursuing the
path of growth in size as an element of achievement can lead to a collapse that is all
the more painful and unforeseen, as was the overpowering illusion of achieving
success through pursuing a strategy of growth in size.
The absence of certain absolute truths, which are now constant in the development
of organizational thinking, becomes apparent, even when one is confronted by or
comes face to face with the issue of “scale” and the optimum size.
The reasons for this loss of role, of these difficulties associated with size, can be
seen again on the one hand in the development of epistemological models and
organizational thinking in general and on the other, in the change in the level of
analysis and in the disappearance of organizational boundaries.
From the first point of view the issue of size has usually been tackled through
organizational studies primarily in the functionalist contributions and/or in those
which, with an “objective” and objectivizing approach, reify the organization itself.
Size and measurement in general are at the heart of rational logic, be it absolute or
limited. The first crisis of size, as an explicative element or one that conditions
organizational dynamics, comes with the change viewed through the lens of
organizational analysis: with the criticisms of the functionalism of the 1970s or the
more recent ones of economic organizational models (for example, the one for
transaction costs), with the subjective approach or interaction with cognitivism,
with postmodernism and the “fragmentation” of the organizational problem, with
the same symbolism that exaggerates the aspects of size in the analysis of the
“physical” aspect of the organizational artefacts. In all of these studies these
size-related aspects and their associated problems of quantification lose their
centrality.
220 11 Myth #8: The Myth of Scale
In this sense it is also possible to perceive a reduced effect from the size element
in the individual approaches to the theory of organization. The reassuring and
prescriptive formulations of the traditional approaches (that would, for example,
impose limits of scale to the span of control in a hierarchy, the ideal level of
production in order to guarantee the most efficient use of resources, the generic
reference to economies of scale to increase the company’s efficiency and so on) fade
in the contingency approaches (that examine, even if less prescriptively, the fit
between size levels and structures) and disappear altogether in more modern-day
approaches.
From a second perspective the problem of an organization’s size is directly
linked to a basic assumption that perhaps no longer applies in the current com-
petitive arena: the presence of clear and precise organizational boundaries. The
problem of the object being analysed and its boundaries has, on the other hand,
been intrinsically bound to the development of the company since the beginning of
the last century to the present day. In the classical studies of the first half of the
twentieth century the size and quantification of the same were not a problem: the
object of the analysis by scholars always or often corresponded with the physical
boundary of the individual unit: department, plant and factory. The individual
company corresponded to a clearly identifiable legal entity. But what sense is there
today in speaking of corporate size for businesses that have short-lived and
unsteady boundaries that change over time? From the vertically integrated and
impressively sized businesses to the hollow corporations that with a relatively small
nucleus have control over inter-organizational networks and size circumstances that
are even more impressive. What is the size of a business that manages a social
network with relatively few employees but that has hundreds of millions of clients
(take Facebook for example, that has around a billion or Tencent’s Qzone with its
620 million)? Is Apple, which is capable of influencing the technological per-
spectives of companies, larger than one of its major suppliers, Foxconn, with its one
million employees (more than 200,000 in one establishment alone)? Looked at in
these terms the wearing away of the clear and immovable organizational boundaries
have certainly prompted the discussion on the opportunity of continuing to use size
as a discriminatory variable and on its measurement.
Obviously, the methods used for adopting the different ICT technologies influences
the setup of the organizational models adopted, in as much as it is possible to
achieve different types of effects in terms of centralisation and development of the
organizational size.
Panopticon models: the standardization of the traditional mechanistic model is
reinforced, allowing greater efficiencies through a reduction of the organizational
structures responsible for internal coordination and control, but the concentration of
activities in individual structures of greater size with greater capacity and fewer
costs are maintained.
Joystick models: the responsibility for carrying out the activities is decentralized,
whereas the ex-ante and ex-post coordination and control of the execution of the
same is centralized and standardized (accreditation systems; quality; control based
on standard costs set by the regions or the ministry).
Hub & Spoke models: the responsibility for carrying out the activities as well as
their ex-ante operational coordination and control is decentralized, but the coor-
dination and control over the results (ex-post) remain centralized through flexible
and variable contractual systems (electronic auctions for procurement; centralized
pharmacy stores; specialist centres connected on the network but spread across the
territory).
11 Myth #8: The Myth of Scale 223
To round off the line of reasoning about the impact of ICT, it is considered
appropriate to present some of the major features that qualify the approach of the
critical management studies on the point.
In the light of the need for technology to be all pervasive, it is incorrect to
interpret this as an isolated topic of study with limited interconnections with
management research and management training. The ICT and IS tools are in fact
used within organizational contexts to rationalize and reorganize organizations,
starting from the supposition that IT systems come about and are planned in such a
way as to introduce best practice and to facilitate cost-cutting policies and increase
the level of profitability efficiency to help organizations operate on a global scale.
This assumption, based on a rationality of an instrumental nature, that, on the
other hand, legitimizes managerial ideology, is rarely discussed and challenged in
research on IS of a mainstream nature. The major outcome to which the
critical-based studies have attempted to respond is that some consequences coming
out of the introduction of the technological artefacts in organizations are by and
large overlooked and not closely scrutinized.
The focus on the development and implementation of IT systems in terms of
functions and processes brings with it the risk of totally losing sight of the issue of
fragmentation, of routine, the absence of discretion, the rise in the levels of control
and supervision. In contrast with the predominantly theoretical approach that is
conditioned by a technologically determinist vision, the scholars of IT systems of a
critical nature have pitted themselves against the idea that technological develop-
ment means a tout-court progress and that it can be achieved through an “objective”
science.
In conclusion, the adoption of a pluralist perspective to the study of IS makes it
possible to integrate the positive vision with those of an interpretive and critical
nature. One of the most promising lines of study on IS from a critical perspective in
particular implies their contextualisation within the wider organizational problem.
In actual fact, those phenomena of the adoption and institutionalization of the ICTs
cannot be understood in the absence of clear organizational and policy perspective.
In other words, the introduction of ICTs is not neutral compared to the internal
organizational dynamics both with respect to the structure and the organizational
size and the functioning of the control mechanisms. The empirical experience
confirms the assumption for which the introduction of ICT systems for sharing
information (for example an Intranet network) can generate fierce resistance.
Moreover, it produces an effect on the levels of organizational control. In fact, the
sharing of information does not represent a neutral element for the purposes of the
dynamics of control. One final aspect, necessary to emphasize, refers to the
dimension of the organizational macro-structure; in actual fact, the development of
ICT systems, and in this case too it is possible to obtain numerous confirmations of
the experience, can bring about a reduction of an intermediate hierarchical level.
224 11 Myth #8: The Myth of Scale
Over the last 70 years, and growing rapidly after the second World War, the
concept of scale as a primary competitive factor across any economic sector has
hardly been debated. Scholars, academics and management consultants have been
quite busy in reaffirming the idea that those who had the ambition of “ruling the
world” in their specific activities, necessarily had to pay tribute to scale in its
various forms, which might in turn take the name of size, extension, coverage, etc.
This flurry of studies was pivoting around a definitely strong point. In most
western countries, where modern industrial economies have been developing after
1950, scale was a simple and effective recipe for success. Managers and entre-
preneurs quickly realized that the bigger their estates, the easier it was to gain and
sustain a competitive advantage, typically in the form of lower per-unit production
costs, higher overall productivity and access to large R&D budgets.
Most industries which drove economic growth over the last century were clearly
proving this simple logic true. Think of businesses where competition is not pos-
sible unless very high entry barriers in technology or cost-effectiveness can be
overcome (Automotive, Chemicals, Oil & Gas) or where there is basically no room
for more than a fairly limited number of players, much less for the destruction of the
overall industry value (Telecoms, Aerospace & Defence).
associated with the champions of our digital age: in online advertising, Google has
managed to build a dominant position, which is constantly reinforced by the hefty
resources devoted to the optimization and improvement of its search engine, leaving
everyone else far behind; in e-commerce, the relentless ride of Amazon in multiple
product categories, which is based on a superior technology platform and customer
service (deliveries, returns, feedbacks, matching/suggestions), has left little to share
with its global competitors; also across social networks a new version of scale has
been introduced, where the “crowding in” to a few, more attractive sites (Facebook
+ Instagram, Linkedin, etc.) has hollowed out subscriptions to all other community
websites.
Rather than invalidating the importance of scale as a key success factor, tech-
nological innovation has changed the understanding of its meaning. Whereas in the
past gaining scale translated into the effort of piling up “hard stuff” like plants,
equipment, real estate and so on, in these new markets it is very likely that assets
such as competence, systems and knowledge would have a much bigger impact.
In this respect, when looking at some of the most remarkable tech-stories of the
recent years, it is easy to identify their secret sauce in a smart way to build
soft-infrastructures enabling innovative services, often deployed globally through
scale (and most times, not really denting or cannibalizing existing markets, but
rather creating new value pools). Airbnb, Uber, Stripe, Blablacar, Spotify, Zalando
and Thumbtack have grown out of unique service ideas combined with vision and
speed into greatly designed software packages, which indeed required huge
investments to be completed, again confirming that the notion of scale is still in
good shape, alive and kicking. Technological innovation will progressively make
old asset categories obsolete and capital will then be redeployed to consolidate new
sources of competitive advantage, which—again, there is no evidence to the con-
trary yet—will still have to abide by the rules of Scale.
everywhere in fashion, design and furniture that can survive despite their small size;
or the fact that very successful restaurants would not benefit much from tripling
their capacity, as well as it would happen to a cosy hotel-de-charme in Tuscany.
The main reason why many of these local businesses can comfortably prosper
without enjoying massive scale is that, given the unique nature of the products or
services offered, they can provide a premium value to customers, which is large
enough to compensate for the lack of scale advantage. In food, for example, large
brands have conquered the planet in many grocery categories, but there is always
room in your shopping basket for a tastier bar of chocolate crafted by a small
manufacturer, a vitamin-rich range of drinks produced out of fresh fruits gathered
locally, and special cookies with organically cultivated raisins and chestnuts.
Take for instance healthcare management, with its huge complexity, evident across
whichever dimension the reader might want to consider. In fact, healthcare orga-
nizations have to ensure access to care to extremely diversified groups of people,
each with their own lifestyles, habits, culture, education and expectations, and to
deal with a wide array of stakeholders, like policymakers, regulators, providers of
goods and services as well as payers, insurers, creditors, doctors and physicians.
These organizations have to deal with constant innovation and cutting-edge tech-
nology deployment (think of robot-based surgical procedures) but also to
acknowledge that they operate in a constrained budget environment; they need to
design management systems that work well both for very specialized competence
areas (rare diseases, cardio and neurosurgeries, transplants, etc.) applied to
tailor-made, target therapies as well as to mass, chronic diseases (diabetics,
hypertension, …), which need to be effective both when applied to large therapeutic
centres, home-based assistance or standard GP practices. Can scale be practically
applied in this context? Does it make any sense, for example, to merge GP practices
into larger, more standardized organizations? Would this have any impact on the
fairness and equality of access to care, and its quality?
To secure universal access to healthcare treatment, cost containment has always
been a major challenge for policymakers, and “scale” is often being regarded as a
viable solution to grant sustainability. Managers and healthcare systems’ experts
have been debating these issues for a long time, aware of being confronted with a
unique market characterized by, de facto, a never-ending demand to be served
“mandatorily”, and a profile which has worsened in the last decades due to an
ageing population. Moreover, new therapies have in some cases managed to obtain
extremely high reimbursement rates whose burden on the system was clearly not
sustainable (take for instance the Sofosbuvir case, where the cost of treating the
whole patient pool is higher than the yearly Italian drug budget).
11 Myth #8: The Myth of Scale 227
As in many other industrial sectors, scale can also be a practical method to reduce
costs in hospitals, and centralized procurement processes can definitely help in this
respect. For instance, the introduction of National and Regional procurement offices
in Italy increased transparency and competitiveness in a very fragmented market,
with the price index dropping by 20% in 5 years (2007–2012). Similar results were
achieved in facility management costs (energy, cleaning, laundry), and across cost
categories such as purchasing basic drugs or catering expenditures. However, more
important results are to be achieved only when a more structured, disciplined
sourcing approach is also extended to core expenditures such as high-preference
clinical supplies (like cardiac stents, surgical packs, orthopaedic implants, and other
items physicians typically hold strong opinions about). Clearly, this is not an easy
task for healthcare managers, as it requires dealing with physicians’ expectations
while ensuring at the same time that quality of care is not affected. The quest for
economies of scale cannot really help here; solid, modern management techniques
need to be applied to encompass sourcing excellence, ranging from organizational
solutions (deploying for example cross-functional working teams including pro-
curement experts, but also clinicians, pharmacists, to balance the pros and cons of
each alternative option), to a systematic demand management, progressive vendor
consolidation and adoption of generic equivalents.
Scale can be a success factor also to guarantee quality of treatment; more
specifically, for some clinical procedures a minimum critical mass to ensure quality
can be defined. It is well known for instance that obstetric units with less than 500
deliveries per year should no longer exist, as they cannot ensure proper clinician
competences and technologies and register worst clinical outcomes, the same
holding true for cardio surgery units with less than 500 procedures per year, or
breast units with less than 150 surgeries per year.
228 11 Myth #8: The Myth of Scale
Nonetheless, in the modern healthcare management time to treatment has turned out
to be the key success factor for many procedures. Let us think for example of the
door-to-balloon 90 min golden standard for the effective treatment of acute
ST-segment-elevation myocardial infarction (STEMI), or the “golden hour” for
poly-traumas, and the three hours for the tPA stroke intervention. Scale is almost
irrelevant here, while it is critical to guarantee a proper design of the healthcare
network, so as to ensure the proper time to treatment.
For other therapeutic areas, instead, individual knowledge makes the difference.
A clear example is the management of chronic patients, which constitutes the major
burden for modern healthcare systems. Data from the early 2000s in the United
States indicate that about 40% of all visits to physicians were for chronic diseases;
about 80% of these were scheduled for routine follow-ups. When considering
primary care physicians only, 46% of visits of previously known patients were
aimed at solving chronic illnesses, and 91% of these were for routine follow-ups
(Wolff et al. 2002). Chronic patients are often affected by multiple disease (in the
United States, about 80% of Medicare spending is devoted to patients with four or
more chronic conditions), with costs increasing exponentially as the number of
chronic conditions increases.
Policymakers and clinicians have been debating for years and, in the end, results
and reviews showed that the Chronic Care Model (or the Extended Chronic Care
Model) can indeed improve the management of chronic conditions and reduce
healthcare costs (Bodenheimer et al. 2002). At the basis of the CCM there is a
strong paradigm shift from a disease-based approach to a patient-focused one,
which envisages an informed patient interacting with an integrated, proactive
practice team. In all these cases, proactivity and personalization are the key tools,
again not scale.
Finally, being able to positively influence a specific cultural environment can
make a huge difference. Let us take for instance primary prevention. It is well
demonstrated that behaviour plays an important role in people’s health (for
example, smoking, poor diet, lack of exercise and sexual risk-taking can cause a
large number of diseases). Typically, however, different behavioural patterns are
deeply rooted into people’s social and material circumstances, and their cultural
context. Devising smart and effective ways to change people’s behaviour has an
enormous potential to alter current patterns of disease propagation, but this is
notoriously very hard to achieve. As a pioneer in this area, the Nice (National
Institute for health and Care Excellence, UK) developed a set of specific guidelines
and recognized that a combination of interventions addressing population, com-
munity and individual-level factors are needed to help people change their beha-
viour in the longer term. Again, scale is not a success factor.
So, we can say economy of scale is a key success factor for some back-office
processes like procurement, facility management, information system and for
standardized and consolidated healthcare procedures, while scale is irrelevant for
11 Myth #8: The Myth of Scale 229
procedures and healthcare treatments that are or should be innovative and per-
sonalized. Economy of scale and greater dimensions should be pursued whenever
organization complexity has no negative impact on health professionals (doctors,
nurses, other healthcare supplier) and patient relationships.
References
Evert Gummesson
12.1.1 Introduction
E. Gummesson (&)
School of Business, Stockolm University, Stockolm, Sweden
e-mail: eg@sbs.su.se
G. Doyle (&)
College of Business, University College Dublin, Belfield, Dublin 4, Ireland
e-mail: gerardine.doyle@ucd.ie
C. Annarumma A. Tommasetti M. Vesci (&)
Dipartimento di Scienze Aziendali – Management & Innovation Systems, Università degli
Studi di Salerno, Via Giovanni Paolo II, 132, 84084 Salerno, Italy
e-mail: mvesci@unisa.it
C. Annarumma
e-mail: cannarumma@unisa.it
G. Favretto
Dipartimento Di Economia Aziendale, Università Degli Studi Di Verona, Via Cantarane 24,
37129 Verona, Italy
e-mail: giuseppe.favretto@univr.it
A. Storlazzi
Università degli Studi Suor Orsola Benincasa - Facoltà di Scienze della Formazione, Corso
Vittorio Emanuele 292, Naples, Italy
e-mail: alessandra.storlazzi@unisob.na.it
zation theory, then strategy and now it is health care. I listened to him at the
University of Salerno and read his article Managing the Myths of Health care
(Henry Mintzberg 2012) finding that I agree with almost everything. I totally agree
with him that the solutions of the past rarely solved anything but despite this, they
are the same “panaceas,” such as reorganization, which are still suggested today.
However, his expose raised some questions in my mind and touched on some of
my own experiences and research. I have followed the healthcare sector since the
1970s. It started with my own health. For a period, my energy had been low and I
felt it a strain to keep up. I went to the local general practitioner who sent me for
some routine x-rays and prescribed a combination of vitamins. I did not feel any
commitment from him and after two months, there still were no improvements.
In the meantime, I had read about a doctor who had started a health spa based on
fasting with vegetarian drinks free from chemicals and pesticides. It was specifically
for people who did not find that their hospital had helped them. Not surprisingly,
the majority were elderly, but not all. Apparently, there was nothing wrong with
me, although in my 30s I felt like an elderly person and began to fear that my low
energy might be chronic. The fasting week together with lectures, exercise and a
relaxed atmosphere completely changed my perception of health and illness.
Fasting is not a cure-all but, together with other therapies and gradual change of
lifestyle, it can do wonders. It also led to an integration of the study of disorders and
health cases with my knowledge of management and scientific methodology. It was
a changing point in my life, and it was a point-of-no-return.
strategy and found that they were right in almost everything and the majority of US
textbook recommendations were irrelevant to them. The consulting firm did not sell
packaged and standardized consumer goods in supermarkets; they sold a complex
and costly service customized to the individual needs of their clients.
There is a direct analog in health care. Patients are not standardized “goods” but
their health is individual and formed by a complex combination of numerous
factors. The patient needs customized treatment, which means that there may be a
series of medical modules which can be combined to fit the individual, although
sometimes this is not enough. The therapy can only be defined when doctor and
patient meet and interact and the doctor adds his/her experience and insights.
This commentary is dedicated to Henry Mintzberg’s Myth #2 that the healthcare
system can be fixed by clever social engineering. The myth will be put into the
context of my own research and reflections.
I totally agree that doctors and nurses alone cannot solve the healthcare dilemma.
But who can? In the 1960s, it had become trendy among politicians, bureaucrats
and administrators in Sweden to claim that hospitals would be much more efficient
and economical if they were large. They were probably persuaded by accountants
who only looked at cost and not revenue and contribution to value.
But getting the whole solution defined by precise numbers seemed so “scientific”
to them. Too many courses in management, business, and economics pay homage
to mathematical and statistical research as the ultimate truth and science.
Steel mills became their role model. A steel mill can grow to any size and still
lower its cost per unit without reducing quality. Same with people, they concluded.
With the allegedly fast progress of medical research, anything can be cured by a
trained doctor.
Hence, get patients into the health factory, set a diagnosis and match it with the
proper therapy, and let a specialist implement it. Big hospitals can have specialists
in everything. The problem is that with almost 200 specialties in Western medicine,
all with sub-specialties, the diagnosed disorder is treated out of context. A doctor
rarely has enough general knowledge of the human being and the complex inter-
action between the patient’s physiological and mental state, different organs, bac-
teria, the patient’s food and drink intake, life style and other living conditions.
A special disorder is basically dealt with as a stand-alone.
This also thrived on the naive idea that health disorders are clearly defined—and
most still act as if this were the case. To use mathematical set theory, diseases are
sometimes crisp sets but health as such is a complex amalgamation of fuzzy sets.
A crisp set is an unambiguously defined box in which the disease is contained; a
fuzzy set has a core but then fades away gradually and overlaps with several other
sets. For example, if you cut your leg and it is not very deep, the cut can be treated
as a box using a standardized therapy, and it will heal quickly. I could actually do it
234 12 Health Myths and Service-Dominant Logic
myself. But if you contract a complex disease such as cancer, even the diagnosis
can be hard to establish. The standard cancer therapies of hospitals—radiation,
surgery, and medication—require judgment calls based on explicit knowledge as
well as the tacit knowledge of a doctor: experience, feeling, common sense, and so
on. In Western medicine, the cause of cancer is not well understood and therapies
may only remove symptoms. After a year or more, the cause of the cancer—which
was not removed—will catch up and cancer establishes itself in other parts of the
body (metastasis).
allowed to call themselves “läkemedel” (“means for cure”). My question was: How
many of these actually cure a disease as the term promises, and how many just
temporarily alleviate symptoms, such as pain or fever? Of the medicines in the
book, his estimate was that only 15–20% cured a disease. Hence, the designation
“means for cure” is false advertising. Having worked all my life with marketing, I
doubt there is any profession or sector that spends so much money on promotion
and advertising, and even more on covert ways of influencing the market and
society in general. It is advanced lobbying, press releases, and media reports on fast
progress and breakthroughs in cancer and other diseases, research grants to uni-
versity hospitals, branding and image-building, including fancy designations of
their products and science (“läkemedel,” evidence-based medicine, life science).
There are numerous groups of healthcare stakeholders and which group exerts the
highest influence may vary or is hard to establish. I have led numerous seminars on
healthcare quality with doctors, hospital managers, politicians, and other stake-
holders and they rarely, if ever, mentioned the patient who is of course the
No. 1 stakeholder. Unless the patient is cured or becomes better, the other stake-
holders are redundant.
Medical staff should of course have a high position in the stakeholder hierarchy,
but Henry Mintzberg finds them at the low end. They include doctors, nurses, lab
analysts, rehabilitation specialists, pharmacists, paramedics, and ambulance drivers.
Supportive stakeholders include the hospital CEO, hospital management,
accounting and financial staff, the maintenance of buildings, cleaning personnel,
food suppliers, computer and software specialists, receptionists, and others. On a
macro-level, we have governments, special government agencies, politicians,
bureaucrats and financiers. Especially in the US, insurance companies and lawyers
have considerable power with questionable added value to the mission of health
care. For the macro-groups, the focus is increasingly focused no more than on
reduced cost and maximum short-term shareholder profit.
A highly influential stakeholder group that is often not mentioned consists of
suppliers of drugs, medical equipment and disposable products. These are focused
on profit maximization. They direct medical research through funding and con-
sulting assignments to medical scientists and practicing doctors. University hos-
pitals around the world are highly dependent on them.
becoming no more than a residual. A politician needs to stay popular and get votes,
please the media to get publicity, and pursue his party’s ideological advocacy such
as “equality.” Every citizen should have access to health care; it should not be just
for the rich. This is a sound principle because if people stay healthy they also handle
their lives better and contribute more to the whole of a nation and its wealth.
However, there are also irrational political and ideological influences. For
instance, in Sweden it meant that if you got some irritant in your eye that prevented
you from working, you should wait with everybody else at an emergency clinic
even if all the doctors were doing trauma surgery on victims of a car crash, an
operation that could take 5 or 10 h. The eye problem could be cured very quickly
by a doctor or a nurse removing the irritant.
But is it “democratic” to wait for your turn without considering the circum-
stances? When two doctors in Stockholm wanted to open an emergency clinic for
the most frequent but light disorders that could be quickly fixed so that patients
could get back to normal, the Social-Democratic party and the Communists started
to shout about inequality. The reaction was not true socialism but a Soviet
Bolshevik application introduced by Lenin right after the 1917 communist revo-
lution and followed up by Stalin and others, and since then proven inefficient and
inhuman in practice. Strangely enough, it still lives on in Europe today.
As luck would have it, the two doctors were smart and entrepreneurial and
negotiated a temporary permission to open the clinic. It was an immediate success
among patients and still is after 35 years—despite the fact that authorities kept
harassing them, fortunately with limited success. In the “light” clinic, the patient
should wait a maximum of 20 min. I have been there a couple of times and learnt
that if for some reason—a doctor had suddenly become sick or more patients than
normal came—the waiting time could not be kept, they informed me that they were
sorry that it will take, say, 1 h and 30 min. I could wait or come back at that time
still keeping my place in the waiting line.
Health care in Sweden is a huge problem in many ways, but during the past
20 years the Social-Democrats have become less dogmatic. Communists have
changed their name for public relations reasons and now call themselves The Left
Party but are still as dogmatic as before. The liberal government we had from 2006
to 2014 speeded up the process toward practical solutions based on the mixed
economy ideology: some things have to be run by the government but there should
also be alternatives for patients. These can be managed by private clinics in
competition. It has opened up a combination of government-run hospitals and
private hospitals. The government has outsourced certain types of health service to
private clinics, meaning that patients can use tax-paid health insurance even at the
private clinic, which is reimbursed by the state or the region. This is common in
Europe and in Canada.
Still, it is absolutely necessary to keep the power over health care within the
public sector. Health care is not the same as selling soda drinks. In service man-
agement, patients have been called customers to stress that they are there to be
served. Stretched too far, this concept will go wrong; health is in the interest of a
nation. Being a citizen is more than being a consumer.
12 Health Myths and Service-Dominant Logic 237
Like Henry Mintzberg says, initiatives and solutions do not come from the top
but from the ground. Nevertheless, traditional Western-trained doctors can be very
conservative and their knowledge limited. For example, in the 1980s the
waiting-time for hernia operations was 6 years in Stockholm! On average, the
operation takes 45 min. Why then such waiting times? Because the hospitals used
the same system as when my father had hernia surgery in the 1950s: diagnose
hernia, hospitalize the patient on a Friday, let him (it is almost exclusively a male)
stay in bed until a surgeon checks him on Monday, schedule an operation for
Wednesday and then let him stay in the hospital bed for another week. A new
procedure, day surgery, has been designed internationally to speed up the process
and lower the costs, at the same time as the quality of the operation has improved.
The new process too has its weaknesses, but they are less than before and can be
prevented—if the doctors are knowledgeable enough and the patient does his part.
Younger doctors learnt about it and when they were finally allowed (with
opposition from the Social-Democrats, the Communists and conservative doctors)
to do day surgery, a couple of doctors were allocated to get rid of the waiting times
in Stockholm. They did so in one year. When I had my hernia operation about
10 years ago, I only waited a few days. I arrived in the morning at 8:30 and left at
2:00 pm. Two days after the operation I was back at work after resting at home for
one day and with the instruction not to carry heavy objects for the next two months.
something but one who the expert does something with. Patients know a lot about
themselves that the doctors do not, but they know different things. These days more
and more people read up on symptoms and illnesses on Google and are better
prepared to meet the doctor than before. This makes some doctors insecure; they
still like to demonstrate superiority. Instead they should see it as productive
resource integration. The doctor offers a value proposition. The traditional idea of
doctor’s orders—the sick person comes, the doctor sets a diagnosis, prescribes a
remedy and the patient becomes healthy—exists but is the exception rather than the
rule.
On the practitioner side, IBM, today the world’s largest management consulting
firm with 360,000 employees globally, has set the 20 year Service Science Program
is in progress (Maglio and Spohrer 2008). The program is half way and IBM is
collaborating with 500 universities around the world. Its purpose is to transfer
IBM’s business mission from computer science, which is product- and
supplier-centric, to service science, which is centered on creating smarter service
systems for users, striving to improve the understanding of service systems that
create value for its users and contributors.
This is highly relevant in medicine. A patient confronted with a hospital easily
gets lost in its fragmented activities and does not understand where to turn and what
to get out of it. The service science program has adopted S-D logic as its grand
theory helping them to see the overriding principles for successful value cocreation
in a complex world of numerous stakeholders. Through these insights, the service
system can become better and we can leave the pile of fragmented and non-coherent
activities behind.
Social engineering is what the word says: manipulation of people, rules, and reg-
ulations to exert bureaucratic control of their thinking and behavior, and stan-
dardization. It is useful but only up to a degree; it is doing things to people. In new
service theory, the emphasis is on doing things with people through cocreation and
resource integration. This applies very well to health care.
It is now 40 years since I began to see that the overriding aspect of service was
relationships, networks, and interaction. I have stayed with it ever since and the new
service theory corroborates my conclusions. I will continue to work on the reju-
venation of health care but will also bring in thoughts that are beyond Henry
Mintzberg’s current agenda and the new service theory.
12 Health Myths and Service-Dominant Logic 239
12.2.1 Introduction
Numerous attempts have been made to define the term “health literacy” (Sørensen et al.
2012). The continued and global expansion of the field suggests that both academics
and practitioners consider health literacy a concept worth pursuing (Fullam 2014, p. 4).
In the first instance, health literacy focused on “reading” and “numeracy” skills
(Simonds 1974; Baker et al. 1998; Parker et al. 1999) and took into account level of
education, communication, information, and health skills (Simonds 1974). Even con-
sidering the fundamental importance of health education (Yost et al. 2009; Adams et al.
2009), the academic debate around “health literacy” has been enriched by the inclusion
of other factors such as cognitive, social, and behavioral factors that affect the level of
health literacy (Nutbeam 1998) and influence an individual’s ability to collect and
process health information (Nielson-Bohlman et al. 2004).
Consensus among scholars and practitioners has emerged in a way such that health
literacy is a strategic determinant of an individual’s health empowerment to interact
with the social environment offering an innovative approach in promoting health
(Kickbusch and Maag 2008). Appropriate health choices affect the healthcare system,
fostering outcomes (Baker et al. 2007; DeWalt et al. 2004), influencing the costs of
health service provision (Eichler et al. 2009; Vernon et al. 2007) and limiting inequity
of access to health care (von Vagner et al. 2007; Volandes and Paasche-Orlow 2007;
Nutbeam and Kickbusch 2000). As a consequence, an irreversible virtuous cycle
emerges. It is moved by the individual level of empowerment, and produces
improved public health (Koh et al. 2012; Levy and Royne 2009).
From this standpoint, health literacy arises as a tool for health promotion, to be
managed by policy makers (Parker et al. 2003), which can produce both health and
social outcomes (Nutbeam 2001). Recent literature views health literacy as a
dynamic and variable process which affects the life course of each individual
(Rootman and Gordon-El-Bihbety 2008; Mancuso 2008) and his/her quality of life
(HLS-EU Project 2008; U.S. Department of Health and Human Services 2010), in
addition to overall levels of well-being (Freedman et al. 2009). The interaction of
both the environment and the people who produce health care feeds this process
(Ishikawa et al. 2008). Health literacy may also play a strategic role in pursuing fair
and appropriate health policies, centered on patient’s needs (European Patients’
Forum Spring Conference 2008).
Following these evolving trajectories, the concept of health literacy goes beyond
the scope of education and involves the community, through a continuous and
dynamic interaction with the social environment, paving the way for a strong
guarantee of quality of life and ultimately acting as a decisive strategic determinant
for public health.
12 Health Myths and Service-Dominant Logic 241
Since the 1970s, research on service marketing has shown that a service context
enables companies to approach customers in fundamentally different ways com-
pared with conventional marketing models that reflect a goods logic and stem from
a manufacturing context (Grönroos and Gummerus 2014). A different model has
emerged in the service-dominant (S-D) logic. In S-D logic (Vargo and Lusch 2004,
2008), value cocreation is accomplished through resource integration. Building on
the emerging model of cocreation of value (Lusch et al. 2007; Schau et al. 2009;
Vargo and Lusch 2008), in which value is determined “in use” through activities
and interactions of customers “with” the service provider, customer value cocre-
ation can be defined as the “benefit realized from integration of resources through
activities and interactions with collaborators in the customer’s service network”
(McColl-Kennedy et al. 2012, p. 1). “This new definition breaks free from the
previous two party (firm-customer) conceptualization of value creation, extending it
to the customer’s service network” (McColl-Kennedy et al. 2012, p. 2).
This new understanding views customers as active, rather than passive
(McColl-Kennedy et al. 2012). “While it is recognized that some styles of value
cocreation are important from an organization’s perspective, insofar as they
increase ‘productivity’ (Chase 1978), little empirical research has addressed the
customer’s role in value cocreation and its subsequent effect on important customer
outcomes, such as quality of life” (McColl-Kennedy et al. 2012, p. 6). “There is a
link between customer value cocreation practice styles (CVCPS) and quality of life”
(McColl-Kennedy et al. 2012, p. 1).
Focusing on health care as stated by Gummesson (2014) “S-D logic uses the
concept of co-creation which recognizes the patient as an active resource.”
“Furthermore, there is growing acknowledgment within health care that treatment
plans and related activities can extend beyond interactions with doctors to include
broader aspects of the individual’s life such as lifestyle and beliefs” (Michie et al.
2003). For example, “customers may co-create value with others outside the tra-
ditional health care setting, such as complementary therapies, and/or with the
customer’s private sources such as peers, family, friends. Furthermore, customers
may cocreate value through self-activities. These activities may be self-generated
(such as activities engaged in by the self that ultimately contribute to the cocreation
of value, such as cerebral activities—positive thinking, reframing and
sense-making, emotional labor, and ‘psyching oneself up”)” (McColl-Kennedy
et al. 2012, p. 2). Within health care there is now recognition that the “successful
management of chronic diseases, such as cancer, is related to the collaborative
interactions between the individual and the health provider and the active
involvement of the individual (Holman and Lorig 2000) (McColl-Kennedy et al.
2012, p. 7). The healthcare customer value cocreation approach includes a range of
activities, behavioral and cognitive, and interactions (McColl-Kennedy et al. 2012).
Patients cocreate health with the medical staff and administrators. The patient is the
primary resource integrator in the cocreation of his/her own healthcare
242 12 Health Myths and Service-Dominant Logic
12.2.4 Conclusions
Health literacy combines personal, social, and environmental factors which affect
the individual level of health literacy, together with the determinants which affect
population level of health literacy. In such a context, skills related to accessing,
understanding, appraising, and applying health information are crucial. These skills
require not only cognitive effort, but also behavioral effort. Simultaneously, as
stated by Gummesson (2014) “S-D logic uses the concept of cocreation which
permits the recognition of the patient as an active resource.” Within this perspec-
tive, patients are called upon to play an active role in the care process. They
cocreate health with the medical staff and administrators.
For both S-D logic and health literacy perspectives, patient empowerment in the
production of health is essential to generate better outcomes in care services and to
reduce the risk of inappropriate access to care. Furthermore, fostering the process of
patient empowerment becomes a crucial action to gain more “engaged clinicians” in
the design of the organizational strategy (Henry Mintzberg 2012, p. 4).
Indeed, with the eventual purpose of effectively reframing the strategy of
healthcare organizations, the higher the level of patient empowerment, the greater
the ability of professionals in activating strategic initiatives. Involving the patient in
the provision of care undoubtedly favors professionals in making effective “hospital
decisions” (Henry Mintzberg 2012, p. 6).
Going beyond its entailments in improving logical participation and fostering
individual ability to handle health-related issues, the development of a new theory
of society coherent with S-D logic and health literacy promotes new management
trajectories. As stated before, S-D logic and health literacy turn out to be crucial in
enhancing the involvement of the patient in the provision of care. In this way,
patients may cocreate partnerships and healthcare value with the professional staff.
The latter could have a more appropriate perception of the need for care, and their
“venturing activities” (Henry Mintzberg 2012, p. 6) would be strongly facilitated.
Hence, a managerial approach which pays attention to both health literacy and S-D
logic ultimately performs as a strategy aimed at closing that “administrative gap”
mentioned by Henry Mintzberg (2012, p. 6) which divides “those who administer and
those who deliver the basic services” (Henry Mintzberg 2009, p. 171).
It could be argued that the confusion and frustration of people (namely, the
professionals) who are below such a “gaping hole” (Henry Mintzberg 2009, p. 171)
12 Health Myths and Service-Dominant Logic 243
are intensified by the efforts to cope with patients who are not health-literate and are
not empowered.
Consequently, the integration of health literacy and S-D logic approaches within
the functioning of healthcare organizations could be considered also as a means to
overcome professionals’ distress, paving the way for their fully fledged participa-
tion in the process of reframing the organizational strategy.
12.3.1 Introduction
Some of the most interesting cues deriving from Gummesson’s (2010) and Henry
Mintzberg’s (2012) contributions seem to be particularly appropriate to describe the
Italian context. Furthermore, the views of these two authors mark a breaking point
in the literature and represent a first step in building a new theoretical and inter-
disciplinary framework allowing us to analyze the issue of healthcare management.
In particular, Gummesson introduces three frameworks: Network and System
Thinking (ST), Service-Dominant Logic (SDL), and Service Science (SS). These
perspectives seem to be very helpful in approaching the issues of health, being at
the same time perfectly complementary to each other and above all completely
integrated with the overcoming of the healthcare management myths mentioned by
Henry Mintzberg. Moreover, the Gummesson and Henry Mintzberg indications
appear to represent altogether a perfect theoretical framework for a new approach to
health care in general and to Italian health care in particular.
Actually, exactly in the same way as Henry Mintzberg, in the aforementioned work,
Butera et al. (2004) highlighted some of the limitations involved in the traditional
studies on management, namely in the so-called mainstream of management
studies. In particular, the authors notice that the process of privatization charac-
terizing Italian healthcare systems determines substantial alterations, not only in the
modalities of individuals’ health management but also in system operators’ con-
duct. The most important aspect is that these effects are not always positive,
especially with reference to subjects’ behaviors and perceptions of their role.
244 12 Health Myths and Service-Dominant Logic
Fig. 12.1 Three theoretical pillars to overcome managerial myths in Italian Health care
246 12 Health Myths and Service-Dominant Logic
accounting: now, it is time to overcome the model that led to the construction of
“health factories” (see Gummesson contribution in this same book)!
The overcoming of the Myths of health care, and in particular of the Myth #2,
can be pursued, recognizing the fundamental role of the two most important
stakeholder of the system: the patient and the physician. Only their concrete
interaction and a contextual reduction of the actual complexity and bureaucracy can
lead to the introduction of self-learning practice to better cocreate the healthcare
service. It is not a case that McColl-Kennedy et al. (2012, p. 375), studying
healthcare customer value cocreation practice styles, remarked the relevance of
interaction assuming that “Interactions are the ways individuals engage with others
in their service network to integrate resources”.
The theoretical pillars discussed in the previous paragraph and elaborated from
Gummesson’s and Henry Mintzberg’s contributions represent an adequate con-
ceptual framework in analyzing the Italian context.
The Italian healthcare system is based on a mixed approach: on the one hand, it
is mainly public in nature, and on the other hand it is characterized by a series of
individualistic features that Henry Mintzberg (2012) attributes to the private
approach, closely related to business organization. The reasons of this individual-
ism are associated with the typical liberalism-statism deviation of the Italian con-
text, based on the application of the liberistic logic to a statist system.
Consequently, if on the one hand the guarantees of statism are respected, on the
other hand the corresponding adhesion to economic risks is lacking.
A typical example of this Italian deviation could be found in the role of general
managers, whose salaries should be reduced, thus erasing the Italian idolizing of
senior positions. These figures are, in fact, the symbol of an excessively hierarchical
vision of healthcare organizations, completely exemplifying the false myths of
social engineering and of leadership introduced by Henry Mintzberg (2012).
In this way, general managers become expert supervisors controlling, com-
manding and solving problems through a top-down approach. In truth, rather than
being efficient “dei ex machina”, generally they are only the emblem of a kind of
administration that, instead of supporting, tends to criticize and supervise, thus
encouraging an onerous culture of control which fosters hypertrophic administrative
systems. In so doing, these apparatus are incapable of understanding the concept of
internal client and the improvements required in terms of compatibility among the
various system departments and in terms of service and process quality.
248 12 Health Myths and Service-Dominant Logic
In an attempt to remove the old rational culture focused on control in favor of the
establishment of organizational models based on personal and professional
responsibility, the reorganization of national healthcare system should be centered
on the containment and on the reduction of verticalism and on the rediscovery of
the polycentric logic associated with the diffusion of collaborative horizontal
networks.
As Henry Mintzberg (2012) suggests, management should be redistributed
beyond the top, empowering those organizational members who concretely deal
with everyday challenges in the healthcare environment and are able to fully
understand the characteristics of such challenges. For this purpose, general man-
agers should not be involved in those tasks and roles that can be decentralized. The
role of the middle line and of integrating managers should be emphasized, to
promote a sensitivity for the engagement of all the specialists involved in the
process of value creation in the healthcare ecosystem. As well, it is crucial to reduce
the hypertrophic number of medical specialties, insisting on the general ones. The
possibility of redistributing the initiative in a polycentric organization which sticks
to a hub & spoke model requires a training which contemplates also managerial and
organizational skills and enables physicians to manage groups, departments, and
funds. In this way, homogeneous teams, which are able to achieve systemic effi-
ciency on a large scale, can be created.
As Henry Mintzberg (2012) observes, health care, intended as a vocation, works
better in units as small as technology allows. The ideal and natural scale of these
units should depend on the efficiency of organizational systems, which basically
consists of a network of services, physicians and patients. Lastly, all the reframes
proposed by Henry Mintzberg, as underlined through the aforementioned examples,
should be centered on a network logic and on SDL in which patients cocreate value,
as highlighted by Gummesson (2010).
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Part III
Lessons Learnt
Chapter 13
Looking Through the Lens
of the Complexity Paradigm
The contributions in this volume have offered separate insights and frameworks
and, around these, a mosaic of specific indications and applications which remain
irreducibly various. There are indeed some common points, which deserve to be
highlighted.
The authors unanimously agree on the need for overcoming healthcare myths,
which together constituted the intellectual framework of scientific management
orthodoxy applied to health care. This was not obvious, since we stimulated a
collective reflection polarized between equally passionate critics and supporters of
Henry Mintzberg’s theses.
Complexity is one of the major ideas that undermine the hegemony of health
myths. Combined, the various contributions present a picture of health care as a
complex system, where the main challenge is to inform, train and educate people to
live and behave in an increasingly complex healthcare environment, rather than to
try to reduce complexity or to manage it with tools and techniques.
As it is evident on consideration of the chapters of this volume, there is not an
agreed definition of complexity or a single useful taxonomical classification. We
underline in these few pages the different dimensions of complexity discussed by
the contributors, as well as the related challenges and opportunities.
(1) The first dimension of complexity has to do with the model of medicine. The
“scientific biomedical model,” based on the application of the laws of physics,
mechanics and chemistry to physiological processes, has traditionally domi-
nated medicine and set the research agenda, leading to a spectacular progress in
P. Adinolfi (&)
CIRPA (Interdepartmental Centre for Research in Economics, Law and Management of
Public Administrations), University of Salerno, Fisciano, Salerno, Italy
e-mail: padinolfi@unisa.it
E. Borgonovi
Public Administration and Health Institute “Carlo Masini”, University “Luigi Bocconi” of
Milan, Milano, Italy
e-mail: elio.borgonovi@unibocconi.it
the last century and‚ particularly‚ in the last decade‚ to a huge increase in
knowledge and competencies on anatomy, physiology, pathology. Currently,
the scientific evolution, far from being completed and stabilized, is undergoing
a process of “disruptive innovation,” because traditional specialization of
knowledge for diseases, organs, and diagnosis, cure and rehabilitation proce-
dures‚ tends to be destroyed, notwithstanding professionals’ or lobbies’ defence
of roles, organizational power and privileges. At the same time new, creative
approaches for prevention, diagnosis and treatment based on new paradigms are
required, allowing for the shift from cure to care.
The challenge of the emerging paradigm of medicine, which is highlighted in
Chap. 4 (preventive‚ predictive‚ proactive‚ customized‚ participatory‚ specific) is to
devise the development of anthropological-social reasoning on a par with the pro-
gress of technical-scientific reasoning. At a macro-level, this means‚ on the one hand‚
keeping the conquests of scientific progress, while on the other contrasting the
“consumeristic” elements of hyper-medication, as well as‚ on the one hand‚ taking
the new potential capacities of medicine while‚ on the other‚ redefining its limits, in
the awareness that health determinants depend less and less upon the provision of
Health Services and more and more on a mix of policies/trends/social behaviours, and
that any intervention has to combine the resources of the State Health Services with
the other resources available in society (as discussed in Chap. 9). It is useful to study
and experiment health assistance models (public–private–third sector), in which
public resources could become multipliers of the informal care resources which are
present in community contexts, thus realizing the passage from an assistance model in
which the State is exclusively entitled to produce health care, to a model in which the
civil society is entitled to produce health, within a system of relationships which links
together the various determinants of health.
(2) The second dimension of complexity is related to the evolution of health
operating systems and professional responsibility. The traditional “biomedical
model” defines professional responsibility for early diagnosis, diagnosis, cure
and rehabilitation; so, according to his/her specific training and education, each
professional has the autonomy to decide on the medical or nursing procedure in
the context of the organizational model: ambulatory, hospital, medical lab,
imaging unit, surgery unit, etc.
The new health conditions generate the need for coordination of medical,
nursing and other professional activities in different settings, for example hospitals
(inpatient, day-hospital and outpatient treatment), general practitioners and other
nonhospital health delivery organizations. Multi-trauma, intensive care, chronicity,
long-term care, homecare, gene and cell therapies, regenerative medicine and other
advanced therapies, require approaches which are multidisciplinary (biomedicine,
physics, engineering, informatics, etc.) and multi-professional or, better, interdis-
ciplinary and inter-professional: different professionals must learn how to under-
stand, interact and complement each other.
Two questions arise. Who is entitled to coordinate different people, respecting
their own responsibility for medical or nursing procedures? What are the
13 Looking Through the Lens of the Complexity Paradigm 257
knowledge, the competencies and the skills he/she needs? No single discipline or
profession is by itself entitled to coordinate multidisciplinary and multi-professional
procedures. Any solution should guarantee the empowerment of the users and their
families within the health value chain, as clarified in Chap. 12, in an organizational
context in which hospital care does not serve chronic conditions (but only acute
conditions), and residential care does not serve patients who could apply to home
care.
The models to cope with the novel challenges cannot be designed by clever
people‚ but should derive from rationality, intuition and adaptation suggested by
day-to-day field experience, so as to conciliate the process of “disruptive innova-
tion” of traditional medical specializations with the new emerging approaches,
balancing the two opposite tendencies of specialization/integration.
(3) Such a balance can only be achieved if a coherent change takes place in the
organizational structures and processes by which medical-health aims are
accomplished, thus leading to the third dimension of complexity. At the
organizational level, the challenge is to design structures which are able to
balance a number of paradoxical tensions: not only specialization versus inte-
gration, but also economies of scale/specialization versus economies of prox-
imity, automation versus innovation, stability versus change.
As regards the tension specialization/integration, on the one hand, the renewed
attention to patient satisfaction calls for delayering and downsizing interventions;
on the other hand, because of the disruptive innovation challenge related to the
scientific progress, hospitals and other healthcare delivery organizations tend to be
based, more and more, on big platforms‚ which connect doctors, nurses and many
other professionals. Logistic platforms within and among hospitals and other
delivery organizations can provide (in a short time and at lower costs) drugs,
devices, other medical supplies and nonmedical goods and services. Centralized
surgical platforms tend to be used by general surgeons, cardio-surgeons,
neuro-surgeons, ophthalmologist surgeons and others, to guarantee better patient
safety, higher productivity and lower costs. Technological platforms tend to be used
to improve procurement, maintenance, substitution, updating of health equipment
and other technologies. Facility management platforms can guarantee the quality of
buildings and their adaptation to new environmental patterns. Integrated and
interactive information systems, to which different professionals have access in real
time, tend to be the common platforms for integrated care approaches.
This brings about the need to simultaneously accomplish economies of prox-
imity and economies of scale/specialization, in relation to the trade-off between
quality of services, patient satisfaction and costs, as discussed in Chap. 11. The
balance can be found through internal differentiation: for subsystems where there is
a high level of agreement among agents and certainty about what is required (for
example, the functioning of a surgical theatre for routine operations, or the paths of
258 13 Looking Through the Lens of the Complexity Paradigm
standardized cycles of care), and for subsystems that can, for practical/political
purposes, be treated in this way, a mechanistic model can be adopted, which applies
economies of scale and work specialization based on pre-agreed roles. Also‚ this is
true for back-office services (administration, accounting, procurement, information
systems, logistics, technology maintenance, facility management, etc.)‚ which
could well be organized through centralized platforms. On the contrary, for issues
characterized by a high degree of complexity—such as the development of clinical
guidelines, the care of a patient with multiple clinical and social needs, or the
coordination of educational and development initiatives throughout a department—
organizational solutions could be explored by experimenting and working at the
edge of knowledge and experience. The industrial districts celebrated by Marshall
(1920) are an interesting model: the standardization takes place at the level of single
components rather than whole structures, and the coordination of flexible networks
of small specialized autonomous blocks organized according to a “hub & spoke”
configuration is automatic, and in any case less costly than the one occurring
between the big building blocks of a big organization. The latter entails the risk of
managers being overwhelmed by coordination tasks, or, in other words, “of man-
agers lying distracted in ditches considering how to manage,” as from the following
quotation reported by Henry Mintzberg (2009, p.157):
The centipede was happy quite
Until a toad in a fun
Said: “pray, which legs goes after which?”
That worked her mind to such a pitch,
She lay distracted in a ditch
Considering how to run.
This leads to further tensions‚ strictly intertwined with the previous one:
automation versus innovation, stability versus change.
The two opposite drivers of automation and innovation could be dynamically
framed and connected in a virtuous circle, by creating a learning organization where
experiential learning allows for the construction of automatisms, which simplifies
behaviours by offering a set of predefined possibilities, thus releasing time and
energy for innovation and adaptation to the external environment. Also the
stability/change dilemma could be conciliated within a time frame: the conflicting
needs for stability and for change could be addressed by first attending to one and
then attending to the other, back and forth in cycles of some kind. As observes
Henry Mintzberg (2009, p.191), “in managing, as in the Bible, there can be a time
to sow and a time to reap.”
In any case, an important challenge is to design organizational solutions flexibly
enough to spread the possibility/capability to care and to produce innovation
throughout the whole healthcare system. In this perspective, it is not necessary to
clearly separate knowledge innovation (limited mainly to universities and research
hospitals or centres), knowledge and competencies diffusion (limited mainly to
universities and other education institutions) and production and delivery of
13 Looking Through the Lens of the Complexity Paradigm 259
healthcare services. Nobody denies that in the future there will be the need to
concentrate financial resources, teams of researchers and innovation efforts in some
high level research-oriented institutions (public or private), but the mere transfer of
standardized health approaches should be tackled and rejected.
More broadly, organizational solutions should go beyond the traditional vision
of the value chain, which is typical of the industrial economy, by which healthcare
providers deliver health services, suppliers produce products or services for the
healthcare providers, university professors provide training and knowledge diffu-
sion, researchers produce research, patients receive health assistance‚ and so on.
A more complex approach could be adopted, according to which all the parts
involved form a value-generating system, and ultimately a health-generating sys-
tem: users and their families, suppliers, competitors, regulators, research institu-
tions, universities. These apparently disconnected agents could be regarded as if
they are part of a relational system (no matter which organization they belong to),
albeit maintaining their specific assets and competences. Consequently, their assets
acquire a specific positional value (which is different from the intrinsic value) in
relation to their position in the time and space of the value chain.
As an example, the inclusion of pharmaceutical companies in the health value
chain by favouring the possibility of experimenting clinical trials within hospitals,
allows for adding value to the productive processes of healthcare organizations and
to the informative fluxes on pathologies and therapies. In some countries, like Italy,
there are few trials because of delays and complicated bureaucratic procedures, with
consequent loss of resources and opportunities for innovation.
In a broader perspective, all the territorial actors linked to the idea of health
could be regarded as nodes of the health value chain, so as to create health districts
which, beyond the activities related to medical assistance, could integrate the
process of creation of health with the infrastructures and the other productive
sectors which concur to that process.
(4) The fourth dimension of complexity concerns the decision-making process. In
the past, individual professionals (doctors, nurses, others) were the critical
decision-makers, also on behalf of the patient‚ who had not the knowledge
about his/her health or illness and was in a condition of psychological subor-
dination. The evolution towards an équipe approach to the patient, discussed
above, creates the paradoxical challenge of guaranteeing an acceptable balance
between the joint decision-making process and the personal responsibility of
each professional for his/her medical, nursing and other procedures. In addition,
even when the multi/interdisciplinary and multi/inter-professional approach is
the best way to provide high quality care, the patient needs a personal rela-
tionship with somebody. If the binomials joint decision-making/individual
responsibility, as well as joint decision-making/individualized relationships are
not conciliated, even high quality care can create a low level of satisfaction.
A further challenge is related to the introduction of “clinical decision support
systems” and the evolution towards “clinical artificial intelligence.” It means that
260 13 Looking Through the Lens of the Complexity Paradigm
between antagonistic demands. Research could also benefit from broader units of
analysis that go beyond organizational boundaries, adopting techniques such as
network analysis, and from narrower units of analysis than the organizational level
(for example, a “practice- or process-centred approach”), which could provide the
micro-foundations of successful organizational ambidexterity. Longitudinal studies
could also be useful, focusing on how organizations coevolve dynamically over
time with environmental changes.
Once the complexity of health care is understood, the possible reaction is
twofold. One possibility is the case of the health myths commented in this book,
which we would instinctively follow on the basis of our reductionist thinking: to
neglect the real nature of complexity, break down the ambiguity, resolve any
paradox and propose simple solutions to fix things. An evolution, embedded in the
rational choice culture, is to govern complexity with more and more complicated
measurement and decision-making systems. This is the stream of thoughts that
connects the biomedical approach and the traditional Weberian bureaucracy to
scientific managerialism and to the neo-Weberian models, to decision support
information systems, to artificial intelligence.
There is indeed another possibility. Without refusing the scientific knowledge,
this option entails accepting the challenge to be part of the complexity and adopting
complex solutions. It implies going beyond medical and managerial reductionism,
to enact a New Healthcare Governance which pursues a dynamic balance of the
fundamental conundrums and paradoxes built into medical and managerial work:
specialization/integration; automation/integration; stability/change; joint
decision-making/individual responsibility; joint decision-making/individualized
relationships; control/development of human resources. As Henry Mintzberg
(2009, p. 192) points out, although the term “paradox” entered management liter-
ature in a way that indicates that it can be managed—and this is emblematic of the
sense of omnipotence that characterizes traditional scientific management—these
tensions could indeed be alleviated but never resolved: to try and escape them is to
fall back into the medical and managerial reductionism.
The “anthropo-ecological” route to change, we have called New Healthcare
Governance, could be framed philosophically as an Aufhebung, a concept of
Hegelian inspiration—broadly translated in the handbooks as “all-inclusive over-
coming,” found on the post-modern capacity to accept ambivalence: overcoming
while preserving the positive aspects of what has been overcome. How this could be
operated in practical terms should be the object of future research, focusing on the
declension of models of New Healthcare Governance applied to the various con-
temporary health contexts. All the research and experimentation initiatives should
be framed as a system, and a choral effort on the part of all components of the health
creation system should be made, with no supremacy of one over another and the
availability of each of them to learn, unlearn and re-learn.
Our trip into healthcare complexity ends with no definitive answers, but many
questions and ideas for research. We do share Minzberg’s hope (expressed in his
forward) that “we can continue to share our ideas in the future”.
264 13 Looking Through the Lens of the Complexity Paradigm
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Index
A Barretta, A., 98
Accountability, 30, 113–114 Bass, B.M., 94
Accounting, 260 Behavioural Insights Team (BIT), 182
Achievements of health care system, 53–54 Behavioural sciences, 179–185
Active Citizenship, 143 Belgium, public–private partnerships in, 150
Activity-based costing method, 35, 203 Berenson, R.A., 194
Adinolfi, P., 13, 25, 36, 179, 204, 257 Bernasek, 163
Administration, 38, 260 Bertelè, V., 34, 157, 166
Administrative gap, 7, 244 Bevere, F., 36, 179, 204
Administrative system, 262–263 Bill & Melinda Gates Foundation, 141
Agency/property rights theory, 31, 126–127 Biomechanical approach, 18
Alzheimer’s disease, 50, 145 Bishop, S., 101
Amazon, 38 Bismarck, Otto von, 20–21
Ambidexterity, 30, 111–112 Borgonovi, E., 13, 25, 257
Amico dentist, 174 Botti, A., 29, 89, 94
Anderson, P.W., 214 Botti, R., 35, 37, 179, 189
Annarumma, C., 39, 233, 241 Bouckaert, G., 187
“Anthropo-ecological” route to change, 265 British National Health Service, 140
AOU Riuniti di Trieste Independent Hospital, Budgeting, 36
135 Burns, J.M., 94
Archaic societies Business-driven health systems, 4–5, 21–22,
healers, as heroic leaders, 14–15 29–30, 105–120
Armeni, P., 26, 43, 54 Business suit, for healthcare organizations, 110
ASL, 146 Business versus health organizations, 108–110
Assolowcost Association, 174 Butera, N., 245
Assolowcost Report, 173–174
Atlantic Charter, 21 C
Aufhebung, 265 Calciolari, S., 33, 157, 162
Australia, public–private partnerships in, 147 Calvo, A., 37, 38, 213, 226
Austria Canada
choice architecture, 181 health system thinking approach, 159
Automation, 259, 260 single-payer health system, 163
Autonomy, 48, 63, 76–77, 92, 97, 98, 101, Canepa, C., 34, 179
109, 112, 114, 140, 148, 248, 258, 262 “Canvas cleaning” approach, 71
Career path development, 112
B Carroll, A., 194
Bacon, Francis, 17 Cartesian idea of Man, 18
Balk, W., 187 Causal certainty, 19
Barnes, L.B., 94–95 Censis, 52
Emotional intelligence, 83 G
Empowerment, 28 Galen, 16
Engaged managers, 263 Garattini, S., 34, 157, 166
Engagement, 28 Gawande, A., 8
Equality, 158, 160–161, 166–170, 238 Germany
Equity, 20, 158, 159 choice architecture, 181
Esposito, V., 26, 43, 59 Giancotti, F., 27, 28, 69, 81
Essential Levels of Care (LEA), 35 Gilmartin, R., 6
Ethic of care, 262 Giovanni XXIII Independent Hospital, 134,
Ethic of cure, 262 135
European Commission Glaser, B.G., 234
Expert Panel on Effective Ways of Good-Dominant Logic (GDL), 246, 247
Investing in Health, 159 Google, 38, 240
Green Paper on PPPs and Community Law Governance of health care, economic and
on Public Contracts and Concessions, business perspective in, 115–118
148 Great Britain. See United Kingdom (UK)
European Institute of Oncology (IEO), 31, 133 Greenhalgh, T., 189–190
European Parliament, 171 Gummesson, E., 38, 233, 241, 243–246, 250
European Social Innovation Initiative, 34
Evidence-based health care, 179–185 H
Evidence-based management, 186 Haas, D.A., 205
Evidence-based medicine, 139 Harari, Y., 81
Evidence-based nudges, 181–182 Harvard University, 203
Experience-based management, 186 Healers, as heroic leaders, 14–15
Explicit knowledge, 236 Health 2.0, 172
Extended enterprise, 172 Health care, 50–51. See also individual entries
External perceptions, 112 as business-like approach, treating,
106–108
F business versus nonbusiness model in,
Facebook, 38 111–114
Facility management, 32, 38, 151, 229, 230, as complex/peculiar environment, 228–229
259, 260 corporatization and humanization in,
Failing of healthcare system, 3–4, 22–26, synthesizing, 118–119, 120
43–65 defined, 114
Fairness, 83, 84, 118, 228 economic and business perspective in
Faith, 99 governance and management of,
Family Health Service Authorities, 98 115–118
Family Practitioner Committees, 98 as every citizens’ right, 237–239
Favretto, G., 233, 245 innovative trends in, 43–46
Festa, G., 30, 105, 114 management, 245–250
Fight against smoking, 182–183 myths of, 3–6, 14, 25–39, 81–82
Financing new paradigm in, 46–48
private, 136–137 as private profession, 15–16
public, 137–138 Healthcare Organizations (HCOs), 22, 74–75,
Finlombarda, 150 241
Fondazione Censis, 140 business suit for, 110
Foxconn, 222 Healthcare sector
Fractal leadership, 86 as driver of economic growth, role of,
France 57–58
health system thinking approach, 159 Healthcare services, public versus private
Freedom, 112 provision of, 125–130
Friendly consulting, 10 Healthcare System (HCS), 84–85, 96. See also
Funding, 20, 31, 47–49, 54, 57, 90, 129, 131, individual entries
136, 138, 142, 147, 149, 158, 159, 237 achievements of, 53–54
268 Index