Introduction
Since the beginning of the 1990s, health policy in Italy has been characterised by continuous reform as reflected by the frequency of new measures introduced each year, although the most important were those introduced in 1992–93 and in 1999. Importantly, the reforms have changed considerably many aspects of the health-care system, including the governance of medical performance. However, it is characteristic of the Italian case that governance change in relation to medical performance occurs as a ‘side effect’ of more general reforms of health governance. More specifically, most of the new measures fall into two types of change (Maino Reference Maino2001): regionalisation in the form of decentralisation of public functions from the central state to the regions, and aziendalizzazione, which involves the transformation of local providers into ‘health-care enterprises’ (aziende sanitarie), formally endowed with legal, administrative and financial autonomy (1). In relation to the governance of medical performance, these changes entail the introduction of important elements of the business logic, such as budgeting and quality assurance, the creation of new managerial roles and transformation of existing roles, as well as the introduction of new mechanisms for evaluating medical performance. In terms of the specific forms of governance, this has involved reinforcing hierarchy-based forms of governing intermeshed with party governance and redefining professional self-regulation by strengthening collective forms of professional self-regulation vis-à-vis individual self-regulation.
This article begins by examining the broader institutional context of health policy and associated developmental pathways of Italian health-care reforms. It then looks at the introduction of the ‘Management by Objectives’, one of the main new mechanisms for governing medical performance. The design and implementation of this measure and other related new managerial mechanisms is subject to a complex process of negotiation among many actors and spans national, regional and local levels. The article disentangles these processes of negotiation and illustrates how the institutional features of both the health system and the political system shape these processes. The negotiations take place in relation to all aspects of the governance of medical performance and, in the absence of an overall reform project, tend to be frequent and include many rounds. The nature of the negotiations reflects an insecure health-care state where party politics (as opposed to formal hierarchy) is key and is characterised by considerable fragmentation between different levels of governance. More generally, the prominent role of party politics in the Italian case highlights the importance of broader political factors for shaping change in medical governance.
The analysis here draws on a variety of sources, including national and regional legislation, grey documentation and research literature, and a systematic review of the major financial newspaper (Il Sole 24 Ore) and of its specialised weekly magazine Sanità (Health Care) for the period 2005–2006, when the difficulties regarding the implementation of the reform came to the fore. In order to understand how local actors interact as part of the implementation of the legislative changes at national level, a case study of the Piedmont region in northwest Italy is included. This study also uses material on the objectives set by three local health providers and the results of six in-depth interviews with four senior health managers and two leaders of the largest trade unions for GPs and hospital doctors who were also members of the board of the regional statutory regulatory body (Ordine dei Medici).
The institutional and policy context of the governance of medical performance
Italy industrialised relatively late and partly as a result experienced a substantial development in health services only after the Second World War. A national health service (Servizio Sanitario Nazionale hereafter referred to as SSN) was established in 1978 when the labour movement was at the height of its power. Setting up the SSN was a slow process and was strongly influenced by the so-called partitocrazia (Ferrera, Reference Ferrera, Cotta and Isernia1996; Krause, Reference Krause1996). This term refers to the central role played by party politics and to the fact that party politics is omnipresent in the health system, penetrating not only health policy making but also the delivery of health services. This leads to a malfunctioning of the national health service in a variety of ways, for example, blurred definition of the responsibilities of the various levels of government (state, region, municipality) and uncertainty regarding the legal status of the local health-care authorities (Unità sanitarie locali) (Vicarelli, Reference Vicarelli2004).
The central role played by party politics, together with the importance of both private practice and payments (discussed in more detail below) (2), means that governing arrangements in health care in Italy can be best characterised as an ‘insecure health-care state’, precisely because these two elements undermine the public nature of health governance. This is further exacerbated by the high degree of decentralisation mentioned above, whereby the relationships among different levels of health-care governance are unclear. Also, in terms of the normative institutions of medical authority, private practice plays an important role. This reflects the hybrid form of organising medical practice, wherein the public and private sectors closely overlap. This is especially the case for hospital specialists. Dating back to the fascist organisation of health care (Preti, Reference Preti and Peruta1984), regulatory arrangements continued after the Second World War (Piperno, Reference Piperno1982), including allowing private practice in public hospitals. Private practice is also important for general practitioners. Until 1978, GPs providing care under the social health insurance funds (mutue) were allowed to practice privately. Under the SSN, GPs are contracted independent practitioners even although their contracts contain rights similar to those enjoyed by SSN medical staff (Vicarelli, Reference Vicarelli, Cipolla, Corposanto and Tousijn2006).
The tensions underlying the institutional context of governing health care are the background for the health reforms since the early 1990s. According to Maino (2001), health policy in Italy in the 1990s can be seen as a series of changes (and underpinning conflicts) along two main and closely related axes: vertically, among different levels of government (central, regional and local), and horizontally, between public and private health care.
Health policy seems to have contributed to the transformation of Italy into a strongly decentralised state. In this region-building process, health policy has had a role similar to that of the centralised welfare state in the process of nation-building. As in other countries, the welfare state crisis following the 1970s economic crisis is a good point of departure for analysing the contextual factors of change. However, in Italy this was followed by the dramatic collapse of traditional political parties, triggered by corruption charges (and trials) against local party members in 1992, and rapidly escalated into a political scandal known as Tangentopoli. This scandal caused many parties to vanish, including the Christian Democrats and their allies, which had ruled the country for nearly 50 years, and transformed others significantly, including the powerful Communist Party.
In 1993, the Minister of Health and some senior civil servants were involved in scandals. This had a somewhat paradoxical effect on the design of health-care reforms: because much of the malfunctioning of the health service was attributed to interference by political parties, the introduction of overt financial and managerial logic seemed to be a good way to save the public health service. This helps to explain why what used to be a right wing slogan, ‘more market, less state’, came to represent a widely accepted blueprint for reforming the SSN.
In this situation, the central government, where the Treasury, backed up by European Union budgetary constraints and wielding a growing influence, found it attractive to delegate greater responsibility for health care to the regions. Over time, as a result of regional governors becoming popularly elected and as fiscal devolution led to increased financial autonomy, the regional governments enjoyed growing political legitimacy. The range of responsibilities in health care delegated to the 20 regions was broad and included fixing the number and size of local health authorities, defining the criteria for accrediting private providers, preparing the regional health-care plan (Piano Sanitario Regionale), setting targets for local health authorities, and establishing procedures for monitoring and assessing the quality of services and medical performance. In 1994, further responsibilities were delegated, which included the adoption of diagnosis-related groups (DRGs) as the basis for hospital financing and the introduction of elements of quasi markets to encourage competition between public providers and accredited private providers.
Private providers supported both managed competition and regionalisation as a means to fostering the growth of the private sector. Particularly in the late 1990s, regionalisation gave right-wing regional governments the freedom to proceed with privatisation, thus entering into direct conflict with the national centre left government. This was especially the case with one region, Lombardy, whose governor clashed several times with the Minister of Health (3). Other regional governors adopted a more cautious stance, in part because of the strong public support for the SSN. As part of a package of reforms introduced between 1999 and 2000, the centre left Minister of Health began a shift in health governance away from ‘managed competition’ to ‘managed cooperation’. This reflected a need to secure renewed social and political legitimacy for the health system, notably through a closer cooperation between the public and private sectors. Yet, some of the more extensive forms of cooperation were adopted only in regions with centre left governments (Emilia-Romagna, Toscana, Umbria, Marche), while the centre right regions tended to continue to place more emphasis on competition and patient choice (Vicarelli, Reference Vicarelli2004, Reference Vicarelli2005).
At the same time, the Minister of Health tried, although only with partial success, to limit the power of regional governments and to preserve the influence of the Ministry of Health over a range of health policy issues. For example, some very general quality objectives, such as promoting an integrated network of health care and social services, or reducing waiting lists, are now indicated by the Ministry of Health in the National Health Care Plan, although after consultation with the Standing Conference of the State and Regions (a formal body intended to promote state-regional negotiation and cooperation), and with the scientific bodies of the medical and other health-care professions. More specifically, the national legislation requires that health services provided under the SSN conform with the standards of evidence-based medicine and with the principles of effectiveness, appropriateness and efficiency. This has greatly encouraged the preparation and dissemination of clinical guidelines. Guidelines, coming both from international (largely American and British) literature and from scientific societies, are seen as “recommendations”: formally, they are not meant to undermine medical autonomy. Nevertheless, pressures to stick to guidelines are becoming stronger and stronger. In case of malpractice trials, judges and experts would investigate the compliance to existing guidelines. Many ASO and ASL transform guidelines into protocols, i.e. procedures that adapt guidelines to their specific organisational processes. This has repercussions for the management by objectives: preparing and implementing a protocol is often considered as an ‘achieved objective’ for a Unit or a Department.
The governance of medical performance has traditionally been characterised by professional self-regulation, although the strong hybrid character has led the collective aspects of self-regulation to tend to be rather weak. This is reflected in the co-existence of three types of professional organisation with overlapping responsibilities: the Ordini acting as the statutory regulatory bodies, medical trade unions and specialist medical societies. This hybrid nature of professional self-regulation has historical roots.
The Ordini dei Medici were established as statutory regulatory bodies in 1910 and gave private practitioners formal and statutory recognition of their monopoly over health-care delivery. Specifically, the Ordini are public bodies (ente pubblico) and, as such, they are not supposed to act as professional associations representing the interests of practitioners, but rather as bodies representing the public interest (Piperno, Reference Piperno1981: 155; Tousijn, Reference Tousijn2000: 115–116; Soresina, Reference Soresina2003: 13). As regulatory bodies, the Ordini seem to be a sociological hybrid with a plurality of conflicting responsibilities. As well as verifying credentials, setting ethical standards, defending professional dignity and reputation, and sanctioning malpractice, they are also meant to represent the interests of the medical profession and act as the patient’s advocate. Just recently an inquiry into the organisation of medical regulation highlighted the importance of regulatory bodies serving the collective interest. The results of this inquiry were included in the Annual Reports of the Authority for Competition and the Market (Autorità Garante per la Concorrenza ed il Mercato). This agency has intervened in several cases of monopolistic group behaviour and, in a few cases, has applied administrative sanctions (Malatesta, Reference Malatesta2004).
Furthermore, these responsibilities partly overlap with those of the trade unions and the specialist medical societies. There are more than 40 trade unions (Vicarelli, Reference Vicarelli2005), which differ from each other in terms of specialisation, type of practice and political orientation. Importantly, only a few responsibilities are exclusive to Ordini. They include regulation of fees, setting minimum fees for individual services and disciplinary powers. There are also close links between the Ordini and the medical trade unions. Union leaders, both from hospital unions and from GP unions, are often elected to the Consigli of the Ordini (the governing boards) although this does not prevent frequent conflict between the single unions and some Ordini over overlapping function. As such, the Ordini operate as a kind of trade union of trade unions. They seem to be a box in which the multiple and conflicting components of the medical profession try to find a minimum of consensus for issues mainly related to social status (Malatesta, Reference Malatesta2004).
Governance change through ‘Management by Objectives’
In this section we focus on the main new mechanism for governing medical performance, Management by Objectives (4). This reform measure is a major lead in the managerialisation of health governance in Italy. In terms of the governance of medical performance, it signals a strengthening of hierarchy-based forms of governance through external control by managers and politicians and of collective forms of professional self-regulation (and thereby marks a re-definition of professional self-regulation). Specifically, Management by Objectives is a four-step mechanism that includes target setting, monitoring, evaluating and sanctioning (both positive and negative).
First, annually each region approves a report containing the targets for individual local providers (AS) for the following year. The targets are then transmitted to the General Managers (Direttori Generali), who are the chief executives of the local health-care enterprises (a newly created position discussed in more detail below). The setting of targets is a political decision taken by the regional government. Proposals for targets are formulated by the regional Ministry of Health with the support of the Planning and Control Department and, in some regions, the regional Health Care Agency (5). The General Managers ‘translate’ these targets into objectives for each organisational unit, which include departments, Complex Units (Struttura Organizzativa Complessa) and Simple Units (Struttura Organizzativa Semplice).
Second, performance is monitored at all levels, although this works differently for hospital specialists than for GPs. For the former, there are designated staff within each hospital enterprise responsible for collecting data for each unit, mainly taken from the Scheda di Dimissione Ospedaliera, which is a discharge form compiled by doctors for each patient. The data are processed and presented in regular reports (every 1–3–6 months), which are transmitted to the General Manager. For GPs, there are comparable staff in each local health-care enterprise, but the reports are based on information taken from medical prescription forms (6). Individual GPs are sent the results of the monitoring for use in self-evaluation. GPs are supposed to compare their prescribing with the averages for the local health-care enterprise or the region.
Third, all rank-and-file hospital doctors are evaluated every three years by a Technical Committee (Collegio Tecnico) consisting of three members, all with medical backgrounds: the head of the unit in which the individual doctors works, the head of the department to which the unit belongs and a colleague with at least five years seniority. Evaluation criteria include target attainment and professional development. Doctors with managerial responsibilities, such as heads of complex units and heads of department, are evaluated by the Evaluation Committee (Nucleo di Valutazione) appointed by the General Manager and made up of experts drawn from in-house staff and from outside.
Fourth, sanctions for hospital doctors are both monetary (loss of the bonus paid for reaching targets) and career (not being promoted to the managerial level). The monetary loss may not be great, but the symbolic value of sanctions is certainly high, as the names of doctors sanctioned may appear in the press. Career sanctions may prove even more effective, as they cover a period of three years. For doctors occupying managerial positions, sanctions include both the loss of salary incentives and non-renewal of the position.
Management by Objectives for doctors (and other health personnel) was introduced with the 1996 SSN staff contract, which gave all doctors employed in the National Health Service the status of dirigente. This is a job title borrowed from industry and used to describe staff with managerial responsibilities. The choice of this title was intended to underscore the strong influence doctors have on health-care costs. In the words of a trade union leader: ‘Dirigenti are supposed to be “people who manage”, not just “people who cure”: they manage an enterprise, they make decisions for an enterprise’. Initially, implementation of Management by Objectives was very slow and faltering, which was reflected in the loose and vague definition of targets. However, over the last three to four years targets have begun to be defined more carefully and have included quantitative indicators for evaluation. From a systematic analysis of the objectives for medical units in three Piedmont hospital enterprises, the objectives can be classified as follows:
a) Budget objectives: meeting the annual budget.
b) Rationalisation/efficiency objectives. Examples include new administrative procedures, computerisation, data collection, more efficient utilisation of operating theatres.
c) Quality improvement. Examples include developing integrated home care for day surgery patients, increasing the choice of residential care for elderly patients, reducing hospital infections, developing cancer screening, setting up pain management clinics and developing palliative care.
The first two types of objective seem to have a limited impact on medical performance, as far as they do not impinge directly on clinical autonomy. But the third type potentially marks a significant shift from the traditional view of medicine as the clinical care of individuals to a population-oriented perspective (7). To the extent that this type of objective is introduced and properly implemented, this may represent an important change in the governance of medical performance. It signals a move from traditional forms of professional self-regulation based on the autonomy of the individual doctor over collective self-regulation by the profession, together with hierarchy-based forms of governance in the form of external regulation by managers and politicians.
Similar mechanisms have been introduced for GPs, but they operate slightly differently, as GPs are not employees of the SSN, but are independent practitioners. Until a few years ago, many GPs operated solo practices, which, among other things, made it difficult for them to keep themselves up to date clinically. Many regions have, therefore, begun to encourage GPs to join group practices, by offering incentives, including monetary ones. This has led to the creation of different organisational forms, including the national agreement (Convenzione) between the Ministry of Health and the GP trade unions in 2005, which took formal note of this development. The emergence of group practices also permits the introduction of new control mechanisms. The salary of GPs consists largely of three components: capitation, incentives for special services (such as home care and participation in special district programmes) and incentives for meeting objectives. Each local health-care enterprise is divided into several districts. In Piedmont, each district has a District Planning Unit (Unità Distrettuale di Programmazione), which governs the performance of GPs. The members of the District Planning Unit include the District Director, three GPs (two of whom are elected by their colleagues and one formally appointed by the General Manager, but in Piedmont elected as well), one paediatrician, one chemist and one outpatient consultant. The main tasks of the District Planning Unit are monitoring and planning. Since 2003, every GP is part of a local team of 15–20 colleagues for a total of 230 teams in Piedmont. Membership in the team is now required by the GP contract. This is an important innovation, as it overturns the long-standing tradition of organisational independence of GPs. Each team appoints a coordinator (referente) and prepares projects, which have to be approved by the District Planning Unit. Alternatively, projects may be designed by the General Manager. As a leader of the trade union for GPs pointed out in an interview, maybe somewhat emphatically: ‘The traditional GP role is turned upside down: he is no longer isolated, but he is a member of a team, and as such he is subject to control.’
The monitoring of the performance of GPs is based on clinical guidelines formulated in the relevant international literature, which cover an ever-increasing part, but no means all, of GP activities. The regions and the Local Health Care Enterprises try to adapt the clinical guidelines to local circumstances and pass the clinical guidelines onto GPs. Monitoring takes place on a yearly basis and includes an assessment of the appropriateness of individual GP performance. In cases of significant deviation from the guidelines, GPs have to justify their performance to the District Planning Unit. The Unit may issue sanctions if it does not accept the explanation. In Piedmont, to date, there have been no sanctions for unjustified medical examinations, while sanctions have been applied regarding unjustified drug prescribing. In such cases, GPs have to cover the extra drug costs incurred. As in the case of other aspects of Management by Objectives, compliance with the formal rules for sanctioning seems to depend on how far local managers, backed by politicians, are able and willing to implement the process. Nevertheless, on paper, and also at times in practice, these developments represent a shift away from the traditional autonomy of GPs as a form of professional self-regulation towards other forms of governance based on hierarchy.
The complexity of negotiating the new governance of medical performance
The definition and implementation of the new mechanisms for governing medical performance involve a complex process of negotiations that includes many different actors and levels of governance. In this section we disentangle this process by focusing on three issues that we consider as particularly useful for understanding how the negotiations work. The first issue is the creation of a new, influential managerial role of the General Manager (Direttore Generale), who heads the enterprise, and the transformation of traditional managerial roles. As this is the main mechanism through which the managerial logic was supposed to become part of the governance of health care and medical performance, it will be considered in detail. The second issue is intramoenia; namely, the possibility for SSN doctors to practice privately in public facilities. Examining this is illustrative of how a strategic issue was negotiated among doctors, managers and politicians. This issue has important implications for medical interests, as well as for the overall functioning of the health-care system through its impact on costs and quality. The third issue is the funding and budget negotiations between the state and the regions. This demonstrates the ongoing character of negotiations, where regional autonomy is seen to be limited and where the financial uncertainty facing regional governments has important implications for the way in which Management by Objectives is implemented.
Negotiating managerialism: the doctors-and-managers game
The 1992 legislation declared that ‘all managerial responsibility rests with the General Manager’. This senior managerial position was meant to replace the Managing Committee, introduced in 1978 and composed of nominees of the political parties. In a break with the long-established tradition in public services, General Managers were now to be appointed on the basis of their professional qualifications and could be dismissed for unsatisfactory managerial performance. Beneath the General Manager, the managerial structure of an enterprise includes the Medical Director (Direttore Sanitario), who must be a physician and is responsible for supervising all medical departments, and the Administrative Director (Direttore Amministrativo), who supervises all administrative departments. Both are appointed by the General Manager, as are the heads of departments.
Two forces, the political parties and the medical profession, soon challenged the nominally substantial powers of the General Manager. As a result, the criteria and procedures for selecting General Managers have become less rigorous over time. When the position was created between 1992 and 1993, the Ministry of Health issued a document detailing the pre-requisites candidates had to meet in order to be eligible to apply for the post. At that time, about 1800 candidates applied for less than 700 positions, but in 1994, when the appointments were first made, the initial list was abandoned. ‘Rule softening’ gradually led to appointments being made by political parties on the basis of party affiliation. In addition, the possibilities for appeal by applicants who were rejected were extended. Furthermore, a General Manager who is dismissed may not be replaced by a new one. Instead, a commissario, with full powers but with a temporary appointment, replaces the dismissed General Manager. As a result, the average tenure of General Managers has been rather short: 3.6 years in the period 1996–2005. In 2005, 38% of General Managers had held their current position for two years or less (Anessi Pessina e Cantù, Reference Anessi Pessina and Cantù2006: 148). A General Manager in Piedmont echoed this: ‘None of my predecessors remained in the job for the full tenure of the appointment (three years). [Nonetheless] … , except for one, none of them was dismissed … some were promoted… . All the others were transferred elsewhere….’ This pattern makes it difficult for the General Manager to work on long- or even medium-term projects within their enterprises.
Complaints about the excessive power held by the General Managers were quick in arriving from the medical profession. They secured a partial success in 1999 with the creation of a Managerial Board (Collegio di Direzione), which was explicitly intended to be a counterweight to the General Manager. The Board, which consists almost entirely of doctors, is supposed to collaborate with the General Manager over some aspects of management activity. Its precise composition is regulated by the region, but it is comprised primarily of senior managers, such as the heads of department and district managers. This appears to be the main forum in which the balance between the managerial and the professional logics is negotiated.
In addition, the spread of the financial logic through measures such as quasi-corporate accounting systems, quality assurance and Management by Objectives has transformed managerial roles within all the health-care organisations. The heads of medical units, who traditionally applied a purely clinical logic, have been forced to recognise new constraints and objectives. This is closely related to the adoption of a new organisational structure for the individual enterprises: medical units, which used to be organised on the basis of specialty, were now to be grouped into departments, i.e. larger units that include related specialties. The General Manager appoints the heads of departments, who can be sanctioned and even dismissed for failure to meet the objectives. New staff had to be hired to perform the wide array of tasks and activities associated with the new managerial procedures, and existing staff, including some physicians, had to be re-trained. In some enterprises, the numbers of administrative staff increased dramatically and, as a leader of a trade union highlighted in one of the interviews, this occurred despite a national cap on recruitment. Yet, the implementation of the new department structure was slow, mainly because of resistance by doctors. In the words of one General Manager: ‘The organisation by department is closely related functionally to Management by Objectives, but it implies going beyond the culture of the single division, which tends to be isolated from the rest of the hospital and the community.’ Seven years after approval of the national law obliging the regions to adopt the new organisational structure, the picture is still patchy: different organisational models have been adopted in different regions and even within single regions (Anessi Pessina and Cantù, Reference Anessi Pessina and Cantù2006).
The crucial issue, then, is who sets the objectives, and how is this done? The objectives for hospitals and local health-care enterprises come from the regional government. These are the product of the political decision-making process, but there is some negotiation with General Managers. At the level of departments and units, a process of continuous negotiation goes on, in which all members of the enterprise take part: the General Manager, the heads of department, the heads of unit, and the administrative staff right down to rank-and-file doctors. As one General Manager has explained:
‘… I mean, I do not need to see a written objective… If the region wants something there are many formal and informal ways to let you understand what the line is … There is no need to put this down in formal objectives. The objectives are already known [informally].’
This quotation points to some key aspects of how the negotiations work. Informal knowledge circulates within the institutional network and as a result the employees and the managers of hospitals and local health-care enterprises are able to gauge the political climate and foresee likely organisational developments in the region and move in that direction, thereby anticipating any formal decision. A good relationship with regional managers and an eye to the political climate are important ingredients for successful negotiations.
Intense negotiations even occur regarding the evaluation of medical managers and eventual sanctions for non-attainment of targets. Both evaluation and sanctions were introduced only recently, with difficulties and delays. As one administrative manager complains: ‘Today [March 2006] we are still waiting for our 2004 incentives. The evaluation has not even been conducted.’
A General Manager describes the negotiations themselves: ‘If the stated goal is, for example, an average hospitalisation rate of 8.0 and I get 8.1, the system will indicate a failed objective, while the Evaluation Committee will consider the objective as achieved.’
Another example is the case of several prominent physicians, heads of units, in the largest hospital in Turin and who were cited in the press for their failure to meet their objectives for 2004. They were given six months to produce counter evidence, which they did. As a result, the trade union succeeded in negotiating that as many doctors as possible could remain in their jobs as unit heads. In the process, the medical trade union accused the General Manager of using unit heads as scapegoats. In the words of a union leader: ‘He [the General Manager] threw them to the press, just to conceal his own [enterprise’s] deficit’.
More generally, funds earmarked for bonuses for target attainment for a given year must be used in that year and cannot be held in reserve for the following year. Hence, funds not used for bonuses in one unit are transferred to other units and are always spent, as the individual unit cannot save up the funds. The trade unions successfully negotiated this provision, which subsequently became part of the collective contract at the national level. One General Manager summarises what appears to be the key challenge for any enterprise: ‘The problem of problems is managing human resources. When I arrived in 2002, personnel was not managed, or it was managed using criteria based on political and trade union affiliation. This is the top problem of this organisation.’ This illustrates how difficult it is for a General Manager to introduce a managerial culture, even in the largest hospital in Piedmont.
Negotiating a strategic issue: intramoenia
The origins of a mixed, public/private regime for medical practice go back to the 1960s, when many doctors working as employees of the insurance funds also practised privately. Even after the creation of the SSN, doctors employed in the public sectors were allowed to practise privately and successfully opposed any attempt to limit this privilege.
The 1999 reform law, written by the centre left Minister of Health, Rosy Bindi, introduced an ‘exclusivity clause’ as the basic pre-requisite for applying for senior positions in hospitals, such as head of a complex structure or department. Doctors were asked to make a once-and-for-all choice and appointments were reserved to those opting to work full time within the hospital. Private practice was allowed only within the hospital in a dedicated space. Enterprises were supposed to designate specific on-site premises for this activity. However, things turned out quite differently in practice. When an enterprise was unable to provide such premises, doctors were allowed to use their own private offices. Possibly foreseeing the potential perverse effect of this reform, the Minister of Health asked the doctors, in exchange for allowing private practice, to make a special effort towards reducing the waiting lists (Bindi, Reference Bindi2005: 72–73). The lack of on-site premises led to the decision to earmark funds to modernise existing buildings and, in the meantime, to allow doctors to work in their own private offices. The oxymoron intramoenia-extramoenia was coined to indicate this odd situation. A few years later, in 2004, the new centre right Minister for Health, Giuseppe Sirchia, a prominent physician, modified the exclusivity clause, and doctors are now allowed to choose on a yearly basis which type of practice best suits their interests. At the same time, the deadline for the hospital enterprise to find an appropriate space for intramoenia practice was postponed. Finally, the monitoring and financial accounting of intramoenia activities left much to be desired.
The continuous nature of negotiations: funding and budget issues
The 1978 legislation, which set up the National Health Service, did not contain specific norms detailing how it was to be financed (Vicarelli, Reference Vicarelli2005: 212), and so from the start the financing of the service was highly controversial. This led to several negative consequences, such as frequent underestimation of funding needs, underfunding and deficits. Until 1998, the SSN was funded by a combination of earmarked contributions paid by employers for their workforce, a special ‘health tax’ on personal incomes and general taxation (Dirindin and Pagano, Reference Dirindin and Pagano2001: 9). Legislation for fiscal devolution in 2000 made the principal source of funding regional taxes with the state intervening with equalisation grants to ensure that all regions had the means to provide minimum national standards of care (Dirindin and Pagano, Reference Dirindin and Pagano2001: 4–5). In the event of deficits, regions were expected to raise regional taxes and take other necessary measures. The aim was to make regional governments more responsible for health-care expenditure. In 2006, six regions (Liguria, Lazio, Campania, Sicilia, Abruzzo, Molise) had health-care deficits totalling 4.3 billion euros (Il Sole 24 Ore, 1 June 2006). This re-opened the ongoing negotiation processes between the state and each of the six regions. In a first step, the regions were given a month to formulate a plan to reduce their deficits. It seems likely that this will lead to further negotiations, and possibly separate agreements with each region.
Tensions are exacerbated by data problems. Numerous regions are still unable and/or unwilling to provide the socio-demographic data necessary for calculating accurate population weights used for determining what funding support each region should receive from the state. Reliable data are available for only five or six regions. Indeed, most regions are reluctant to accept population-based allocation criteria and tend to negotiate these criteria on a yearly basis.
Problems of data reliability reduce the trust between the parties in the negotiations as it means negotiating on an unclear and insecure basis and makes it difficult for the government to hold regions responsible for any health deficit. Recently, Joaquin Almunia, EU Commissioner on Finance, commented on the Italian public accounting system and budgeting process as follows:
‘In spite of several reforms, the process that leads to the formulation of the Italian budget and the monitoring of its execution are still based on numerous documents that use different aggregation and accounting methods. This situation (…) reduces the transparency of the budgetary process and hampers the monitoring of budgetary developments. (…) The information included in the budget does not provide a comprehensive and clear picture of the Italian public finances. (…).’ (EU Commission for Economic and Monetary Affairs, Reference Anessi Pessina and Cantù2006: 236–239).
The political debate on regionalisation was originally influenced by high flying rhetoric: ‘devolution’ and ‘federalism’ were labels borrowed from Scotland and Catalunia, and the tone was set by the Lega Nord party, which at the time was highly influential in the centre right government coalition. However, the actual policies of fiscal decentralisation appear to be a process of nominal transfer of responsibilities, while real financial power remains largely centralised. In addition to the negotiations over funding, overlapping responsibility has generated endless jurisdictional conflict between the state and the regions. For example, the central government and the trade unions sign collective agreements at the national level, which have important implications for the regional budgets, where health expenditure is now by far the largest single item. All this places the financial autonomy of the regions in doubt, which in turn seriously hinders the capacity of regional governments to effectively pursue sound health policies.
Discussion: party governance and professional self-regulation
Both the institutional context described and the corresponding negotiation processes analysed in more detail above shape changes in the governance of medical performance. Here, the prominent role of party politics in the Italian case makes a more general point; namely, the importance of broader political factors for shaping change in medical governance. Change has been two-fold, where hierarchy in the specific form of party governance is gaining ground and where the nature of professional self-regulation is shifting from individual self-regulation to collective forms of professional self-regulation.
Party governance occurs when politicians not only make policies, but also directly manage the enterprises, departments and even units. Managerial and political roles are not distinct, and politicians exert their influence down to the lowest possible level. This is a widespread cultural feature that permeates a large part of the civil service in Italy, and also extends to the business world. In this respect, it is indicative that a wide range of public institutions are populated by full-time politicians, who are estimated to number 500,000 in total (Salvi and Villone, Reference Salvi and Villone2005). Reactions against this situation in the press and in public opinion have been growing recently. In the words of the former Minister of Health: ‘politics should get out of management once and for all, and should instead involve itself in planning and allocating resources’ (Bindi, Reference Bindi2005: 161).
‘Party government’ has been described by Ferrera (1996) and Krause (1996) as a crucial feature of the evolution of the Italian health-care system up to the early 1990s. Our analysis suggests that party governance has survived the party crisis that began in 1992. The new political parties together with the health reforms in the 1990s have not, as was expected earlier (Ferrera, Reference Ferrera, Cotta and Isernia1996: 69, 71), reduced or disrupted party government, but instead have perpetuated it.
The party governance logic we explored in the earlier sections is a peculiar way of defining and dealing with a social issue that is functional when restricted to the institutional arenas of politics, but problematic when applied outside the political system and especially to management. Thus, managerial functions in health care are downgraded; they are a form of ‘management for consensus’: professional expertise is partially left to the party system and the efficiency logic is applied to the extent to which it fits the power interests of the ruling parties. This process of downgrading operates at several levels. At the national level, reforms are approved without any general, long-term vision. The reforms lack detailed planning: since consensus is crucial, they define the first step only, generally in an ambiguous and very vague manner, while the design of the steps to follow is left to future negotiations, not least to be able to accommodate the specific political equilibrium prevailing at that time. This makes for a fragmented reform process, where there is little room for expertise and scientific debate. The same applies to regional health plans, which are supposed to be the main policy instrument. Even if a document that seems to have a sound technical basis does exist, it may have difficulty in getting approval. This is the case with the latest health plan for Piedmont (2006–2010), which, at the time of writing, still lacked formal approval a year after it was initially presented.
This process of downgrading reaches down to the provider level, where in-house innovations and new proposals are discouraged and creative cultural perspectives coming from the outside have limited chance of flourishing. One consequence of this is that it takes a long time for any aspect of organisational change to happen in practice, as this requires the translation into the logic of party governance, with this translation depending a great deal on political circumstances (8). Not surprisingly, the implementation of all new managerial procedures in the enterprises, including Management by Objectives, has been very slow and marred by considerable difficulties (9). In many cases, organisational change seems more like formal procedures superimposed on traditional ways of doing things than instruments for genuine change.
In terms of the four forms of governance described in the introduction to this special issue, party governance is a modified form of hierarchy. It is not a form of governance that is oriented towards control and accountability, but is rather oriented towards political consensus. In other words, hierarchy is downgraded to party governance. Consequently, the policy process is little formalised and implementation of policies occurs through downgraded bureaucratic structures. At the regional level and at the level of enterprises, the decisional process is often controlled by informal clans, made of a relatively small number of politicians, doctors and managers. Many members of these clans simultaneously perform two of the three roles or even all three of them.
Within this context, what happens to professional self-regulation? Theoretically, the downgrading of hierarchy seems to leave more room for self-regulation. In principle, projects for organisational change, and also objectives, can come from below; that is, from groups of GPs or from hospital units, and sometimes they indeed do (10). While it is true that doctors are obliged to engage in a continuous process of negotiation with political and managerial actors, this does not mean that governance of medical performance is not subject to change. As noted in the analysis of the substance of Management by Objectives, some objectives envisage the modification of medical practice.
Change takes place in two different forms. First, doctors have been obliged to pay more attention to budgetary constraints and have to take account of financial considerations in their decision making. Second, doctors have been forced, albeit to only a limited degree, to move from individual self-regulation, in which each doctor regulates his/her own practice, to collective self-regulation, in which the profession as a whole regulates the practice of each doctor. These forms of self-regulation differ in two important respects. In the first place, collective self-regulation limits the autonomy of the individual doctor, something that many doctors do not like. Secondly, collective self-regulation is largely based on evidence-based medicine, which involves a shift of power within the medical profession as a whole, with the epidemiologists and researchers acquiring more influence. In sum, professional self-regulation is changing, and the medical profession appears to be an important actor contributing to this change.
Notes
(1) There are two types of enterprises: local health-care enterprises (Azienda Sanitaria Locale) and hospital enterprises (Azienda Ospedaliera). The former runs all non-hospital services, including GPs, and is divided into districts. The local health-care enterprises also run those public hospitals that have not been transformed into hospital enterprises. In June 2005 there were a total of 180 local health-care enterprises and 95 hospital enterprises (Anessi Pessina and Cantù, Reference Anessi Pessina and Cantù2006). Over the last two years, there has been a move to reduce the number of enterprises mainly to contain costs.
(2) In 2005 the private share of annual health-care expenditure was 30%, and private beds accounted for 19% of total hospital beds (Cergas, Reference Cergas2007).
(3) In the region of Lombardia, private health expenditure rose by 44% between 1995 and 1997 (Maino, Reference Maino2001: 226).
(4) Except when otherwise stated, the following analysis refers to the national level.
(5) Examples of targets for enterprises include the reduction of average length of stay by 10%, the increase of day hospital admissions by 5%, the implementation of a given administrative procedure and the reduction of hospital infections.
(6) Unit reports form the database for the annual summary report by the enterprise to the region. The region makes its own investigations (including comparisons with other regions) and uses the results of these for evaluation purposes and for setting targets for the following year. Reports of hospital enterprises may be cross-checked for reliability. For example, the region of Lazio uses two types of controls (Filocamo et al., Reference Filocamo2003): a sample of discharge forms is compared against corresponding clinical documentation, as well as against the criteria of ‘standard organisational performance’. A significant deviation in either direction in relation to the first type of control may lead to an increase or reduction of funds paid to the hospital enterprise. A second control is applied to particular groups of DRGs for which, according to the scientific literature, there is a high risk of inappropriate use.
(7) The distinction between the two perspectives was first introduced by Scott (1982) and subsequently used by Freidson (1985, 1986) to support his ‘restratification’ hypothesis. See also Tousijn (2006).
(8) This also helps to explain an interesting result of our interviews: the majority of the interviewees seem to be very disillusioned. This seems to be the case irrespective of the position covered, personal approach to the job and cultural background.
(9) It is interesting that the expression Management by Objectives is seldom used in official documents and, even where it is, there is often no reference to the management literature.
(10) Recent examples in Piedmont include a project on the revision of international guidelines on osteoporosis and their adaptation to local needs, by a GP group, and a project on ‘no pain hospital’ by hospital doctors.
