Can CEOs survive in Health?


CEOs in health must provide leadership and direction to large complex organisations and manage responsibility for clinical quality, strategic planning, finance and resource management.

The problem

Within public health systems across Australia in recent years decisions about the strategic direction for each Area Health Service (AHS) or Region have been taken away by government and are now firmly in the grip of Ministers and their Departments. So, too, has much of the control of day-to-day management.

Many CEOs find themselves powerless in a system that dictates management processes centrally. Many CEOs are finding their staff being summoned to Health Departments to be told what is to be done on day-to-day management issues.

Yet it is only a short time ago that the Independent Pricing and Regulatory Tribunal (IPART) Review in NSW strongly advised the Government to allow greater delegation to occur in health, to allow the managers to manage and leave Head Office to provide a strategic role.

This advice has been ignored and the authority to make decisions on many operational responsibilities has been transferred from CEOs back to the Minister and NSW Health. CEOs, however, have been left with the accountability for outcomes regardless of not having been involved in those decisions.

The key driver for the approach taken is political fear of the media and an inherent belief that only the Minister and Head Office are capable of handling public relations issues to avoid negative publicity.

One of the serious flaws in this fear driven, paranoid model is that the central agency, with the responsibility to drive the strategic direction of the system, is weighed down or distracted with the minutiae of day-to-day issues.

NSW is not on its own. Events in Bundaberg have meant that in Queensland the existing highly controlled, centralised model has been reinforced to an extreme degree. Other States are moving down the same path.

The implications

In NSW, the failure to operate at a strategic level is reflected in the inability of the Government to make a decision regarding the future of the two hospitals on the Northern Peninsula in Sydney. Most clinicians, managers and planners believe that one larger hospital would better serve the community than two smaller hospitals at Manly and Mona Vale. But political considerations prevent the decision being taken despite the Peninsula being located in non-Labor territory.

The CEO is then left to defuse community resentment and mistrust as well as cynicism, particularly among clinical staff.

A similar situation occurred with the decision by the NSW Government to continue birthing services in Camden Hospital despite advice that it was clinically unsound and financially wasteful. This politically-motivated decision was reversed only when the safety of women and their babies demanded the service cease.

In this case there was a governance conflict — though not between corporate and clinical governance but between corporate governance and political governance.

Again, a CEO is left to manage the tension with clinicians for a protracted period while every politically acceptable option is explored. The recent announcement that the Camden birthing service would retain its name but be relocated to Campbelltown underscores the political nature of the solution. Are we that naïve as an electorate?

Such situations put a CEO in a difficult position — juggling between political demands and corporate and clinical imperatives to achieve budget and maintain clinical standards.

The Bundaberg crisis may be a blessing in disguise as it has alerted politicians to the need for less political control and ‘spin’ and more emphasis on the underlying clinical issues.

The increased involvement of clinicians in planning clinical services at a State level may lead to improved clinical outcomes but can often result in a CEO being disenfranchised from certain decision-making processes. Unfortunately good financial governance is often of little relevance to clinicians, further heightening tensions between those responsible for financial and clinical management.

Government priorities

As for governments and their ministers, there is little regard given to the expense of putting the right ‘spin’ on any situation. No cost is spared in public relations or buffering the top-level of the bureaucratic chain for crisis-management. These bureaucratic embellishments rarely appear to be the subject of serious scrutiny.

It is true that state Auditors General have a role to play in providing reports to Parliament designed to ensure that governments actually carry out their commitments. But only very weak governments are inconvenienced by a critical audit report.

In the field, it is a different story. With health budgets under extreme pressure, financial management remains one of the major challenges for any CEO. External review teams and forensic auditors have become part of life.

The recent experience of the Greater Southern AHS in NSW underscores the challenge. There in the glare of publicity regarding the alleged non-payment of creditors’ accounts outstanding for more than 45 days, the Minister walked away from his CEO, It was, according to the Minister, ‘a management problem not a funding problem’.

Thus, in NSW particularly, the true picture begins to emerge. The ‘Health team’ consists of those residing in Head Office and not a metre beyond. This ‘they’ and ‘we’ divide is underscored by the rare occasions services are visited by Head Office representatives other than for official openings or to attend CEO performance reviews.

It is deemed by Health Departments to be far more important to engage in the political ‘mantra’ of ‘managing up'; look after the Minister and make sure any problems are not seen as the fault of the Department. If CEOs don’t respect this mantra, they are seen as untrustworthy and are ignored.

‘Managing down’ has its place, too, but generally involves bullying and harassment as necessary.

Where can a CEO look for support in this type of environment? Legislation covering the employment of CEOs has become quite draconian. In NSW CEOs are paid high salaries so that the Minister can terminate the employment contract at will. Other states may well be following this lead.

CEOs know this and many do what they can to reduce the risk of being a casualty. High-level patronage or party membership often helps. Recent events in Queensland point to similar rough justice albeit with improved severance arrangements.

Solutions to the problem

The solutions to these disturbing features of our health system are unclear.

The community must claim back its health system from the politicians who never give the true picture, preferring instead to put the best ‘spin’ on the deteriorating situation.

Despite the existing tension between corporate and clinical governance the best opportunities may lie with the clinicians and their recently enhanced level of participation in decision-making. Like all people they are susceptible to the charms of those in power. But they do want a system that is less stressed, more functional and safer. Like managers, They understand the perils of inexperienced junior practitioners, politically-based service distribution and the lack of long-term vision.

No one group can successfully change the system alone. The tension between clinician and manager must be overcome. Harmony and unity of purpose at this level, together with community support, are necessary to challenge the ill-considered approaches to health of governments.

Perhaps the most progressive change will be at the funding level. Primary care services are provided under both State and Federal funding mechanisms with cost shifting accusations flowing both ways. The system needs to be simplified to stop the ‘blame game’.

Given the States’ appalling record in relation to wage increases in a low inflationary environment, it may be time for the management of the health system to be handed to the Federal Government as many have suggested. This would be viewed as a dramatic step and complicated to implement. However it is difficult to imagine anything more complicated than the present arrangements.

Alternatively, the operation of the health system could be placed fully under State control including all primary care services as in New Zealand. In this scenario, meaningful performance targets would be set federally, for implementation by the States. Only then would State governments be truly accountable for their performance.

Health should not be a plaything for State politicians to use and abuse as they wish. The time for their accountability (or abdication) has come and CEOs will have a better chance of survival.

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