Applying the Decision Rights to a Case of Hospital Institutional Design
Corporatization, a hybrid between public sector ownership and privatization, is an organizational form that is increasingly being adopted in the social sectors. In the health sector, the high costs of public hospitals, new technological development...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2001/11/1643371/applying-decision-rights-case-hospital-institutional-design http://hdl.handle.net/10986/19422 |
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okr-10986-19422 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
SERVICE DELIVERY HOSPITAL MANAGEMENT CORPORATIZATION INCENTIVES RISK SHARING LEGAL FRAMEWORK REGULATORY FRAMEWORK SERVICE FEES ACCOUNTABILITY ACCOUNTING AUDITS AUTHORITY BEDS BENCHMARKS BUDGET DEFICITS BUDGETARY ALLOCATIONS CENTRALIZATION CIVIL SERVANTS COMPARATIVE STUDIES CONSTITUTIONS CORRUPTION COUNCIL OF MINISTERS DECENTRALIZATION DECISION- MAKING DECISION-MAKING DECREE DECREES DOCTORS DONATIONS DRUGS EMPLOYMENT EQUILIBRIUM EXPENDITURE EXPENDITURES FAMILIES FINANCIAL ANALYSIS FISCAL GOVERNMENT AGENCIES HARD BUDGET CONSTRAINTS HEALTH CARE HEALTH DELIVERY HEALTH SECTOR HEALTH SERVICES HOME CARE HOSPITAL AUTONOMY HOSPITAL FINANCE HOSPITAL MANAGEMENT HOSPITALS HUMAN RESOURCE HUMAN RESOURCE MANAGEMENT INCENTIVE SCHEMES INDUSTRIAL ORGANIZATIONS INFORMAL SECTOR INTERNATIONAL ORGANIZATIONS INTERVENTION LAWS LAWYER LEGAL STRUCTURE LEGISLATION MANAGERIAL AUTONOMY MANAGERS MEDICAL CARE MEDICAL EQUIPMENT MEDICAL TECHNOLOGY MEDICAL TREATMENT MEDICINE MINISTERS MINISTRY OF FINANCE NURSES PATIENT ADMISSIONS PATIENTS PERSONALITY PHYSIOTHERAPY PLASTIC SURGERY POLITICAL INFLUENCE POLITICAL LEADERS POLITICAL PRESSURE POLITICIANS PRESSURE GROUPS PRIVATE SECTOR PROCUREMENT PUBLIC ADMINISTRATION PUBLIC AGENCY PUBLIC HEALTH PUBLIC HOSPITALS PUBLIC SECTOR PUBLIC SERVICE QUALITATIVE DATA QUALITATIVE RESEARCH RETIREMENT RIGHTS APPROACH SERVICE DELIVERY SOCIAL SECTORS SURGERY SURGICAL EQUIPMENT TAXATION TERMINATION OF EMPLOYMENT USER FEES WORKERS SERVICE FEES ACCOUNTABILITY |
| spellingShingle |
SERVICE DELIVERY HOSPITAL MANAGEMENT CORPORATIZATION INCENTIVES RISK SHARING LEGAL FRAMEWORK REGULATORY FRAMEWORK SERVICE FEES ACCOUNTABILITY ACCOUNTING AUDITS AUTHORITY BEDS BENCHMARKS BUDGET DEFICITS BUDGETARY ALLOCATIONS CENTRALIZATION CIVIL SERVANTS COMPARATIVE STUDIES CONSTITUTIONS CORRUPTION COUNCIL OF MINISTERS DECENTRALIZATION DECISION- MAKING DECISION-MAKING DECREE DECREES DOCTORS DONATIONS DRUGS EMPLOYMENT EQUILIBRIUM EXPENDITURE EXPENDITURES FAMILIES FINANCIAL ANALYSIS FISCAL GOVERNMENT AGENCIES HARD BUDGET CONSTRAINTS HEALTH CARE HEALTH DELIVERY HEALTH SECTOR HEALTH SERVICES HOME CARE HOSPITAL AUTONOMY HOSPITAL FINANCE HOSPITAL MANAGEMENT HOSPITALS HUMAN RESOURCE HUMAN RESOURCE MANAGEMENT INCENTIVE SCHEMES INDUSTRIAL ORGANIZATIONS INFORMAL SECTOR INTERNATIONAL ORGANIZATIONS INTERVENTION LAWS LAWYER LEGAL STRUCTURE LEGISLATION MANAGERIAL AUTONOMY MANAGERS MEDICAL CARE MEDICAL EQUIPMENT MEDICAL TECHNOLOGY MEDICAL TREATMENT MEDICINE MINISTERS MINISTRY OF FINANCE NURSES PATIENT ADMISSIONS PATIENTS PERSONALITY PHYSIOTHERAPY PLASTIC SURGERY POLITICAL INFLUENCE POLITICAL LEADERS POLITICAL PRESSURE POLITICIANS PRESSURE GROUPS PRIVATE SECTOR PROCUREMENT PUBLIC ADMINISTRATION PUBLIC AGENCY PUBLIC HEALTH PUBLIC HOSPITALS PUBLIC SECTOR PUBLIC SERVICE QUALITATIVE DATA QUALITATIVE RESEARCH RETIREMENT RIGHTS APPROACH SERVICE DELIVERY SOCIAL SECTORS SURGERY SURGICAL EQUIPMENT TAXATION TERMINATION OF EMPLOYMENT USER FEES WORKERS SERVICE FEES ACCOUNTABILITY Eid, Florence Applying the Decision Rights to a Case of Hospital Institutional Design |
| geographic_facet |
Middle East and North Africa Lebanon |
| relation |
Policy Research Working Paper;No. 2726 |
| description |
Corporatization, a hybrid between public
sector ownership and privatization, is an organizational
form that is increasingly being adopted in the social
sectors. In the health sector, the high costs of public
hospitals, new technological developments, changes in demand
for primary and secondary health care, and efficiency
considerations have necessitated shifts in organizational
boundaries, leading to conversions in hospital ownership. In
the past decade hospitals have been converted from public to
nonprofit and from nonprofit to for-profit in industrial and
developing countries alike. The debate around these
conversions has centered mostly on the tradeoff between
equity and efficiency involved in the shift from public to
private provision of services. Eid argues that more
important than this dichotomy is creating appropriate
incentives and matching incentives with goals through
institutional design. Because corporatization combines
elements of both private and public ownership, it is
difficult to design. Among the challenges is deciding where
on the spectrum from a budgetary unit to a privatized
enterprise a hospital should lie. Another challenge is
aligning incentives-not just within the hospital but also
between the hospital and the ministry of health. Eid draws
on the decision rights approach to analyze how an innovative
hospital in Lebanon, H�ital Dahr El-Bachek (HDB),
corporatized itself and became the best in the public sector
over a period of seven years. To study HDB's
experience, she develops a decision rights analysis
framework that tracks the formation, evolution, and dilution
of decision rights. She finds that: There are important
lessons from bottom-up, demand-driven institutional design
that can inform the design of top-down, supply-driven
institutions, such as laws and regulations. An understanding
of mechanisms of risk sharing and high-powered incentives
created from the bottom up can inform the design of
corporatized organizations. Key to good design are decision
rights complementarities that provide the most complete (and
flexible) contract possible, regardless of where ownership
lies. In designing systemwide institutions for
corporatization, Eid argues, risk transfer is important in
satisfying the two most important objectives of the reform.
The first objective is establishing hard budget constraints
to control sectoral costs. At HDB, the decision right to
raise revenue through user fees was complemented by decision
rights that created accountability and legal liability.
Together, these decision rights kept spending within
HDB's means-in contrast with international experience
with corporatization, where budget deficits have been a
perennial problem. However, the informality of the decision
rights precluded the exercising of those created to design
long-term financial policy, resulting in timid capital
expenditure plans. The second important objective of
corporatization is improving hospital performance, including
providing better service at a low cost for the patient. Eid
argues that high-powered incentives are key. Among the most
interesting of HDB's decision rights allocations was
the pairing of claimant and control rights to produce
high-powered incentives for the director. Not surprisingly,
the most successful examples of corporatization worldwide
have experimented with incentive schemes for hospital
managers that seek to provide high-powered incentives in
this way. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Eid, Florence |
| author_facet |
Eid, Florence |
| author_sort |
Eid, Florence |
| title |
Applying the Decision Rights to a Case of Hospital Institutional Design |
| title_short |
Applying the Decision Rights to a Case of Hospital Institutional Design |
| title_full |
Applying the Decision Rights to a Case of Hospital Institutional Design |
| title_fullStr |
Applying the Decision Rights to a Case of Hospital Institutional Design |
| title_full_unstemmed |
Applying the Decision Rights to a Case of Hospital Institutional Design |
| title_sort |
applying the decision rights to a case of hospital institutional design |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2001/11/1643371/applying-decision-rights-case-hospital-institutional-design http://hdl.handle.net/10986/19422 |
| _version_ |
1764439823944253440 |
| spelling |
okr-10986-194222021-04-23T14:03:43Z Applying the Decision Rights to a Case of Hospital Institutional Design Eid, Florence SERVICE DELIVERY HOSPITAL MANAGEMENT CORPORATIZATION INCENTIVES RISK SHARING LEGAL FRAMEWORK REGULATORY FRAMEWORK SERVICE FEES ACCOUNTABILITY ACCOUNTING AUDITS AUTHORITY BEDS BENCHMARKS BUDGET DEFICITS BUDGETARY ALLOCATIONS CENTRALIZATION CIVIL SERVANTS COMPARATIVE STUDIES CONSTITUTIONS CORRUPTION COUNCIL OF MINISTERS DECENTRALIZATION DECISION- MAKING DECISION-MAKING DECREE DECREES DOCTORS DONATIONS DRUGS EMPLOYMENT EQUILIBRIUM EXPENDITURE EXPENDITURES FAMILIES FINANCIAL ANALYSIS FISCAL GOVERNMENT AGENCIES HARD BUDGET CONSTRAINTS HEALTH CARE HEALTH DELIVERY HEALTH SECTOR HEALTH SERVICES HOME CARE HOSPITAL AUTONOMY HOSPITAL FINANCE HOSPITAL MANAGEMENT HOSPITALS HUMAN RESOURCE HUMAN RESOURCE MANAGEMENT INCENTIVE SCHEMES INDUSTRIAL ORGANIZATIONS INFORMAL SECTOR INTERNATIONAL ORGANIZATIONS INTERVENTION LAWS LAWYER LEGAL STRUCTURE LEGISLATION MANAGERIAL AUTONOMY MANAGERS MEDICAL CARE MEDICAL EQUIPMENT MEDICAL TECHNOLOGY MEDICAL TREATMENT MEDICINE MINISTERS MINISTRY OF FINANCE NURSES PATIENT ADMISSIONS PATIENTS PERSONALITY PHYSIOTHERAPY PLASTIC SURGERY POLITICAL INFLUENCE POLITICAL LEADERS POLITICAL PRESSURE POLITICIANS PRESSURE GROUPS PRIVATE SECTOR PROCUREMENT PUBLIC ADMINISTRATION PUBLIC AGENCY PUBLIC HEALTH PUBLIC HOSPITALS PUBLIC SECTOR PUBLIC SERVICE QUALITATIVE DATA QUALITATIVE RESEARCH RETIREMENT RIGHTS APPROACH SERVICE DELIVERY SOCIAL SECTORS SURGERY SURGICAL EQUIPMENT TAXATION TERMINATION OF EMPLOYMENT USER FEES WORKERS SERVICE FEES ACCOUNTABILITY Corporatization, a hybrid between public sector ownership and privatization, is an organizational form that is increasingly being adopted in the social sectors. In the health sector, the high costs of public hospitals, new technological developments, changes in demand for primary and secondary health care, and efficiency considerations have necessitated shifts in organizational boundaries, leading to conversions in hospital ownership. In the past decade hospitals have been converted from public to nonprofit and from nonprofit to for-profit in industrial and developing countries alike. The debate around these conversions has centered mostly on the tradeoff between equity and efficiency involved in the shift from public to private provision of services. Eid argues that more important than this dichotomy is creating appropriate incentives and matching incentives with goals through institutional design. Because corporatization combines elements of both private and public ownership, it is difficult to design. Among the challenges is deciding where on the spectrum from a budgetary unit to a privatized enterprise a hospital should lie. Another challenge is aligning incentives-not just within the hospital but also between the hospital and the ministry of health. Eid draws on the decision rights approach to analyze how an innovative hospital in Lebanon, H�ital Dahr El-Bachek (HDB), corporatized itself and became the best in the public sector over a period of seven years. To study HDB's experience, she develops a decision rights analysis framework that tracks the formation, evolution, and dilution of decision rights. She finds that: There are important lessons from bottom-up, demand-driven institutional design that can inform the design of top-down, supply-driven institutions, such as laws and regulations. An understanding of mechanisms of risk sharing and high-powered incentives created from the bottom up can inform the design of corporatized organizations. Key to good design are decision rights complementarities that provide the most complete (and flexible) contract possible, regardless of where ownership lies. In designing systemwide institutions for corporatization, Eid argues, risk transfer is important in satisfying the two most important objectives of the reform. The first objective is establishing hard budget constraints to control sectoral costs. At HDB, the decision right to raise revenue through user fees was complemented by decision rights that created accountability and legal liability. Together, these decision rights kept spending within HDB's means-in contrast with international experience with corporatization, where budget deficits have been a perennial problem. However, the informality of the decision rights precluded the exercising of those created to design long-term financial policy, resulting in timid capital expenditure plans. The second important objective of corporatization is improving hospital performance, including providing better service at a low cost for the patient. Eid argues that high-powered incentives are key. Among the most interesting of HDB's decision rights allocations was the pairing of claimant and control rights to produce high-powered incentives for the director. Not surprisingly, the most successful examples of corporatization worldwide have experimented with incentive schemes for hospital managers that seek to provide high-powered incentives in this way. 2014-08-19T16:50:18Z 2014-08-19T16:50:18Z 2001-11 http://documents.worldbank.org/curated/en/2001/11/1643371/applying-decision-rights-case-hospital-institutional-design http://hdl.handle.net/10986/19422 English en_US Policy Research Working Paper;No. 2726 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Middle East and North Africa Lebanon |