Education and debate

Managing healthcare reform in : challenges and BMJ: first published as 10.1136/bmj.331.7510.231 on 21 July 2005. Downloaded from opportunities Miklós K Szócska, János M Réthelyi, Charles Normand

The reform of healthcare services is a priority in transitional Hungary, but managing these changes is fraught with difficulties due to the political climate and managerial inexperience

The past 15 years in Hungary have been characterised Health Services Management by unique changes. Apart from democratisation and Training Centre, managing the immediate crises caused by the collapse Semmelweis of the economy in the early 1990s, a strong part of the University, 1125 , reforms was a desire to build Western models of health Kútvölgyi út 2, care and the necessary social and economic infrastruc- Hungary ture. Hungary was forced to start substantial re- Miklós K Szócska engineering of health services that requires a recogni- acting director János M Réthelyi tion of the interdependency between policy making visiting research and implementation and the management of change.1 fellow Policy making and managing organisations are Faculty of Health generally viewed as fundamentally different. Even a Sciences, University of Dublin Trinity quick review of the reforms ongoing in Hungarian College, Dublin, ROGER FRILET/REX , however, challenges this perspective. Policy Ireland Now turn right and management are highly interrelated and the man- Charles Normand agement of change is critical to successful implementa- Edward Kennedy professor of health tion of policy. We examined some of the factors that legal compliance supported by loosely coupled economics facilitate or limit change and recommend action for training assistance. Using law and regulation to effect Correspondence to: improving the management of these processes. change is seen as coercive. This is a problem in an era M K Szócska when government is being democratised and can lead [email protected] to political crisis. Policy development BMJ 2005;331:231–3 These characteristics created an extraordinary per- To understand the interrelatedness of implementing verted policy cycle in Hungary. A new administration policy and managing change, first we looked at (government or minister of health) assumes office after http://www.bmj.com/ patterns of policy development that shape the scheduled elections or a crisis in government. It has to environment of change in healthcare organisations. respond to expectations to tackle serious problems The process of reform is part of a policy cycle (fig 1). involving the provision of health services, but it also Three key factors influenced the cycle in Hungary, and has to prove that it is better than the previous one. all are strongly linked to managerial constraints that The new administration brings new ideas, mostly affect change: based on party ideology or personal ideas of the min- x In the emerging democracy, the new administration ister, interest groups, or stakeholders with affiliation to

consisted of promising but administratively inexperi- the party. The new minister brings in new people with on 30 September 2021 by guest. Protected copyright. enced reformers. new ideas not just in political positions but also in x With the exception of one full mandate, health min- administrative positions, even at healthcare institu- isters were constantly changing (nine in office since tions. They are rarely well prepared in terms of 19902). But the magnitude of their planned planning and administrative capacities. Knowing that re-engineering of the healthcare system needed 4-6 their window of opportunity is narrow, ministers have years of steady effort for effective implementation. The to intervene at the start of their mandate. To tackle number of major reform programmes initiated by the serious problems they instigate far reaching interven- various administrations is also striking. Each change in tions that are codified in new regulations. But the proc- minister led to change in reform objectives. Frequent ess for approving the new rules rarely involves the changes in administration also brought change in people who are actually responsible for translating the management in many state owned or municipal regulations into developments, and communication is . generally one way. x The bureaucratic approach to health reform is Because of rapid interventions and inadequate culturally determined yet universal.3 The reforms were communication, policy makers and organisational mainly through new regulations, structural interven- managers have different perceptions of the ongoing tions, and normally the only instrument of change was process and its impact. Although senior Hungarian

Parallel key factors influencing the policy development cycle and organisational change

Policy cycle Organisational change Inexperience of reformers Inexperience of new generation of managers Frequent change in administration and reform objectives Exposed to change in the policy environment; frequent change in management or change objectives Dominance of bureaucratic approach to reform Inherited dominance of authoritarian management

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it can force the regular or the premature change in Box 1: Important managerial constraints the administration or the minister. These changes BMJ: first published as 10.1136/bmj.331.7510.231 on 21 July 2005. Downloaded from • The manager has no exact vision of the end state of organisational are mainly politically driven and do not help the changes development of sustainable health reforms. Indeed • The manager does not consider the risks during change and forgets to set they increase confusion and fuel the perverted policy up contingencies and alternative actions cycle. • The manager is bounded by their personal interests and leaves the Most of the time ministers have to leave office while previous system’s authoritarian and hierarchical relationships unchanged parts of their reform have been implemented and • The manager does not establish relevant administrative capacities before there is evidence of their effect or usefulness. (personnel, infrastructure, etc) to implement changes Vacuums and disturbances are left behind. People in • The manager sets unrealistic goals and objectives, so the half finished the system know that implementation of reform project has to be stopped programmes initiated by the previous ministers or • Without analysis, the manager forces changes that ignore present governments was often halted by their successors. As realities, the decisions are made ad hoc they do not want to waste energy and resources they • No plans and procedures are prepared for the change so the project is not immediately suspend implementation, even if continu- implemented systematically ing with it made more sense. They know that changing • The manager has no training and attitude relevant to the needs of the a minister also means changes in administrative change, and they do not have learning strategies positions. Discontinuity in management also generates • The managerial board or top management has no agreed strategy a power vacuum. The interrupted and fragmented • The manager does not take organisational resistance into consideration. health policy development in turn generates profes- Thus they repeatedly lose initiatives on resistance from employees or other stakeholders sional confusion. People lose faith in particular • Obstacles emerging in the project cause the manager to suddenly give up reforms, although the real problem is not what the the organisational vision administration wanted to do as a technical solution, but • No strategies exist in the organisation for ensuring that tasks are done; how they wanted to introduce it. The new administra- tasks are done in a casual way tions then have to struggle with the complex set of dis- • The manager does not clarify and does not make the change objectives trust, decreasing the chances to find feasible solutions, understandable for employees; communication is disturbed and noisy and the cycle continues. Again, a new minister steps in, • The manager has no personal credibility, or has not built up their with new ideas and an even stronger sense of urgency personal credibility; their words carry no weight for the employees to intervene. As the cycle continues, the tension gradu- • The manager does not take steps to clarify changing roles and ally increase and the phases of the cycle become more responsibilities characteristic. • The manager does not establish formal channels of communication in the organisation that could support the change project Organisational change

Throughout the policy cycle, health reform involves http://www.bmj.com/ health policy makers believe that changes in health organisations. Most of the reforms can be realised only care were frequent and fundamental between 1990 through the organised action of organisations exposed and 1998, top and middle managers in healthcare to the new legislations. These often require the restruc- organisations think that although reforms were turing of organisations or the entire ownership. In the frequent they were not fundamental and were often late 1980s and early 1990s, most top and many middle superficial.4 The gap in perception between policy managers in healthcare organisations in Hungary were makers and organisational managers shows the replaced by new enthusiastic but often inexperienced location of a special interface (a synaptic location) and untrained managers. So the complex task of on 30 September 2021 by guest. Protected copyright. between policy makers and organisational managers. coping with policy change and reforming organisa- The ignorance of the nature of exchange at this inter- tions was in the hands of a new managerial generation. face (synaptic junction) is one of the most important The three factors that influenced the development of causes of failed attempts to reform. Together with the perverted policy cycle show parallels at the organi- elections, exceptional elections, political crises, scan- sational level (table, previous page). dals, dissatisfaction with performance of government, The unprecedented reforms resulted in many projects to change healthcare organisations. As a con- sequence of the inexperience of managers, frequent change in management, and inadequate management Box 2: Causes of organisational resistance practice, many projects failed. A high failure rate in • Lack of information related to the actual change project change is a universal challenge for managers and • The people expected to implement the changes are not involved in policy makers. A recent study reports a 70% failure rate the decisions and the preparation of decisions in organisational change projects.5 In a vulnerable • Hectic, contradictory, and disturbed top-down communication leads society in transition, such as Hungary, however, to repeated misunderstandings; management loses its credibility among sustainable change has high stakes. This motivated us employees to understand the cause of failures. We analysed large 6 • Interest in the organisation is mainly dominated by private and group numbers of change projects that were planned and interests that are antagonistic to those of the organisation and the implemented in Hungarian healthcare organisations employees and came to the conclusion that failures can be attrib- uted to managerial failures of change managers and • Financial incentives supporting the changes are lacking organisational resistance that change managers gener- • General uncertainty about the future state; who will do what and how? ated through their actions. The most important failures and causes for resistance are listed in box 1 and box 2.

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Feasible change and reform BMJ: first published as 10.1136/bmj.331.7510.231 on 21 July 2005. Downloaded from Our findings outline a set of criteria that are critical to Summary points the feasibility and sustainability of change efforts (box 3). Given that health reforms generate a need In itself the dynamics (severity and frequency) of for adaptational change efforts in organisations so health reform have critical impact on the the criteria should also be taken into account when sustainability of reform efforts determining the feasibility of the reforms. Just as organisational managers have to consider The realities of organisational change are as whether they have appropriate administrative capaci- important for a policy maker as the testing of the ties to achieve their objectives, policy makers should environment of organisations for an judge organisational managerial capacities to assess organisational strategist overall feasibility. Failure to assess this capacity undermines the most worthwhile reform efforts and To be a reformer or a leader of change requires limits the ability of the countries of Hungary and simi- preparation for the challenges lar central and eastern European countries to meet the The lack of change related information is the challenges and opportunity that are presently available. most intensive trigger for organisational Leaders of the change project know where they are resistance going—Refers to the level of setting the vision of the future state, the goals and objectives is the area in The sharper contrasts of reform experiences in which most failure occurred. It is important to know Hungary help our understanding of reform the goals or to outline the roadmap of change. Accord- failures in less dramatically changing health ing to our findings, lack of information on the future services as well state of change is the most important cause of organi- sational resistance. Status quo defending routines only kick in when there is a lack of information on the future (end) state of the change. If people involved in Resistance to change is managed by involvement and the change can receive relevant information they are communication—Overcoming resistance is difficult so willing to consider cooperation. the best strategy is prevention. Setting clear engaging Incentives are well tailored towards the desired future goals, sharing them through communication, establish- state or a critical mass of people is involved, willing, ing involvement and ownership, and introducing the and capable of working towards change—The incentive future state in transparent terms seem to be the best system in Hungarian health care represents the strategies for managing resistance even in crisis most complex trap in change and reform efforts. situations. Management of resistance in authoritarian

Tuning the incentive system is the most complex http://www.bmj.com/ systems however means breaking resistance. According policy challenge even when the incentives are obvious to our experience it only contributes to the escalation and follow official channels. With the heritage of of the conflict. gratitude and informal payments it requires large Failing change projects and the frustration of the scale efforts to find a way forward even at an organisa- perverted policy cycle are familiar phenomena to tional level. However, leaving the incentive system many of us working in health services even outside the untouched meant a direct failure of change and boundaries of Hungary and central . Using the restoration. contrasted case study of Hungary might provoke on 30 September 2021 by guest. Protected copyright. rethinking of reform and organisational change efforts in a European context. Box 3: Critical factors in planning and managing feasible change and reform We thank Katalin Husser, Péter Gaál, and Arnold Kaluzny. • Leaders of the change project know where they Contributors and sources: All authors were involved in manag- are going ing change in healthcare in Hungary and shared their experiences. MKS is guarantor. • Communication; shared vision Funding: Health Services Management Training Centre. • Appropriate change infrastructure is available Competing interests: None declared. for implementation, or necessary developments Ethical approval: Not needed. are outlined if they are missing • Incentives are well tailored towards the desired 1 Healy J, McKee M. Reforming systems in turbulent times. Euro- future state and/or a critical mass of people is health Special Issue 2001 Autumn;7(3):2. involved, willing and capable to work towards 2 Szócska MK. Survey among central and eastern European and post-Soviet republics’ health managers on the changes in government change administrators in their health care sectors, 1999-2004. Budapest: • There is consistency in implementation Semmelweis University Health Services Management Training Centre, 2004. • The change manager has personal change 3 Lavis JN, Posada FB, Haines A, Osei E. Use of research to inform public policymaking. Lancet 2004;364:1615-21. management competencies, experience of 4 Szócska M. Survey among senior Hungarian policy makers and hospital implementing change and credibility among the managers on their perception of the frequency and severity of changes in the health care, 1998. Budapest: Semmelweis University Health Services employees, and this is maintained throughout the Management Training Centre, 1999. change process 5 Beer M, Nohria N. Cracking the code of change. Harv Bus Rev 2000;47: • 127-31. Resistance to change is managed by 6 Szócska M. Survey on the most frequent and most important managerial involvement and communication failures during organisational change and causes of organisational resist- ance towards change, 2000-2004. Budapest: Semmelweis University Health Services Management Training Centre, 2004.

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