The Israel National Institute for Health Policy Research GOVERNINGGOVERNING HOSPITALSHOSPITALS INTERNATIONAL WORKSHOP REPORT Editor: Shlomo Mor-Yosef MARCH 2011, HAIFA, ISRAEL Graphic design: Nava Moscko Production: Zisman, Shiber GOVERNING HOSPITALS Dear Colleagues, Increasing market and regulatory pressures impose on hospitals all over the world important strategic challenges to the scope and quality of services rendered, cost control, equity and resource acquisition and allocation, financial stability, and many others. The following questions often rise: Are the current forms of hospital governance suitable to face these challenges? Should "philanthropic" hospitals, with a volunteer board, adopt a more active and critical form of governance typically found in the "corporate" model? Who should man the Board of Directors? Should legal and economic considerations prevail over professional and ethical ones? Should the hospital CEO be a doctor or a "professional" manager? The comprehensive study on “Governing Public Hospitals in Europe” conducted by Richard Saltman, Antonio Duran, David Chinitz and others in the European Observatory on Health Systems served as an initiator to this workshop. In Israel we have 4 different major forms of hospital governance facing the same doubts and soul searching. In this workshop, the heads of Israel’s health system, hospital directors and academicians deliberated these basic questions regarding hospital governance in great depth. This book comes to summarize the principle methods and various models for managing hospitals. Prof. Shlomo Mor-Yosef Chairman, Board of Directors The Israel National Institute for Health Policy Research 3 INTERNATIONAL WORKSHOP Table of Contents Page 1. Abstracts 7 2. Presentations 17 a. Governing Public Hospitals - An International Perspective Richard B. Saltman 19 b. The Changing Role of Hospitals in Modern Healthcare Systems and its Effect on Governance - The Spanish Experience Antonio Durán 24 c. Hospital Governance - Experience in England Nigel Edwards 35 d. Creating Effective Governance Paul F. Levy 42 e. Hospital Governance in Israel David Chinitz and Avi Israeli 51 f. Who is Best Suited to Manage a Hospital, M.D’s or M.B.A’s? Avi Israeli 56 g. Corporate Governance in a Public Hospital Under Private Ownership: The HMO Experience Yossi Nitzani 68 h. What Makes Medical Doctors the Ideal Hospital Directors? Leonid A. Eidelman 77 i. Hospital CEO: Physician or Non Physician? Pros and Cons Ehud Kokia 84 4 GOVERNING HOSPITALS j. Managing a Government: Hospital Benny Davidson 90 k. Governance of Hadassah Hospitals Yair C. Birnbaum 94 3. Concluding Observations 113 4. Appendix I 117 Governing Public Hospitals: Recent Strategies and the Movement Toward Institutional Autonomy. European Observatory on Health Systems and Policies a. Introduction 119 b. Governing General Hospitals, The Israeli Case 128 c. Hospital Governance in the Spanish health system 142 d. Reinventing Autonomous Hospitals in the English NHS: Foundation Trusts 173 5. Appendix II 205 a. Workshop Program 207 b. List of Speakers, Chairpersons and Organizers 210 c. Biographies 211 d. Steering Committee 229 e. List of Participants 230 5 GOVERNING HOSPITALS Abstracts 7 GOVERNING HOSPITALS Israel: Different Governance Experience Alik Aviram Panelists represent the different modes of hospital governance prevailing in Israel: Governmental, Public (NGO), HMO owned and Private. Each will be asked to describe his own experience coping with issues raised in previous sessions of the workshops. Effort will be made to draw a common understanding as to how a hospital, in a certain setting, should be governed. The guests from abroad will be asked to comment on the Panelists' deliberations. 9 INTERNATIONAL WORKSHOP Governing General Hospitals: The Israeli Case David Chinitz and Avi Israeli In the context of the European Observatory Project on Hospital Governance, specific questions about the Israeli context were answered. The questions addressed overall mission, strategic decision making, financial accountability and incentive schemes, internal structure, operational governance, and monitoring. Four hospital types were examined on these dimensions: private not for profit, government owned, health plan owned, and private. The main source of information was interviews with hospital directors, supplemented by hospital documentation, laws and statutes, and expert information. The draft was circulated to hospital directors for comment and revised accordingly. The four hospital types differ substantially in governance arrangements and autonomy. The picture of governance that emerges reflects overall trends in the Israeli health system and overall political economy, in which considerable central control co –exists with substantial flexibility, and even autonomy. This situation, with its advantages and disadvantages, poses major challenges for regulation of the system. While management of health organizations in Israel has become more sophisticated over the last decades, governance is still nascent concept. 10 GOVERNING HOSPITALS The changing role of hospitals in the modern healthcare systems and its effect on governance - the Spanish experience Antonio Durán Hospitals have moved massively in important areas from waiting for death places to organ-transplantation networks. After World War II most publicly owned hospitals were run as administrative arms of government(s), focused on delivering inpatients and outpatient acute medical care. Reforms in the late 1980’s developed more flexible arrangements combining better service integration with increased institutional autonomy. Hospitals are now expected to provide services across boundaries (chronic-, elderly-, “integrated care”). Quality assurance programs, patient rights charters and quantitative, standardized information on performance (efficiency, waiting times, etc.) are widespread. Policy makers and managers face a radically different set of expectations. New Public Management frameworks are perhaps not robust enough to answer the many question marks posed. “Governance” models are rather needed. Evolving from a bureaucratic system funded by social insurance contributions, the tax-funded Spanish National Health System provides (almost) universal comprehensive coverage to all residents free at the point of use. Political transition to democracy in the 1970s devolved to regions (autonomous communities, ACs) powers to develop their own health policies. New public management schemes practices were developed, including health targets, framework-contracts, modern accounting tools, DRGs, etc. In this context, Spain has explored hospital self-governance arrangements over two decades. It has done so however via ad-hoc, politically-driven, last- minute legislation, resulting in a confusing regulatory framework, with national and regional norms superseding each other. Various self-governing hospitals with different ownership status, legal nature, degrees of autonomy and accountability arrangements now coexist with traditionally-managed public hospitals. The Spanish case includes two elements with applicability elsewhere. First, innovative features of hospital self-governance models have been eroded by 11 INTERNATIONAL WORKSHOP strong centralising forces at regional level. This shows that those models are not simple technical solutions but get embedded in powerful structures able to limit or enhance their capacity for change. In other words, context and politics matter. Second, command and control, public administration or even private-sector management styles are not useful anymore. “Governance” implies that new tools are needed in response to new state-society relationships transforming social structures, policy processes, political systems and institutions. 12 GOVERNING HOSPITALS Should The CEO of a Hospital Be a MD, or Not? Avi Israeli Mutual respect between managers and physicians is problematic to say the least. In recent decades there has been a trend, based on the assumption that physicians would benefit from having more managerial knowledge, to require physicians to study and even obtain degrees in management. After, or during, long years of medical studies, the addition of such requirements is not an insignificant burden l. Aside from the obvious fact that increasing numbers doctors are undergoing this process, little is known about its impact. Some say that for managing hospitals "professional" managers are needed and not necessarily physician managers. To discuss these issues, this panel will focus especially on the position of Hospital Director. In Israel, even though in recent years the requirement that the holder of this position be a physician has been rescinded, traditions die hard and they remain physicians, some with added management training. Moreover, in Israel there exists a unique situation pertinent to our discussion. Medical Management is looked upon as any other clinical specialty. A MD can therefore acquire, through defined further studies and on the job training, an official board certificate. Among the questions to be discussed are: What should physicians learn when they study management, and what they do? Does management training influence their performance, and how? Can physicians achieve managerial skills and even excel in performance without special training? Perhaps by natural selection the best doctors with managerial skills will surface among the clinicians without training imposed from the outside. What are the various stakeholder interests surrounding this issue?