79065 - Management Systems in Healthcare

Learning outcomes

This course provides students with some frameworks concerning the use of accounting in the healthcare sector. In particular, it focuses on how management accounting information can support managers of healthcare organizations in decision making. Starting from the basic tools of management accounting and management control, the course explores the issues that healthcare managers face in working within an organization where professionals (especially clinicians) influence decision making, and where a growing demand for services can compromise financial sustainability. Students who complete the course successfully know about: • The characteristics of healthcare organizations that affect the way they do business, and that influence how they design their management accounting systems • Ways that organizations can account for their costs and how the cost accounting effort can assist managers to deliver more efficient services, and also help them to determine appropriate prices when necessary • How responsibility centers can be used to encourage all the actors to adhere to the organization’s strategic goals • Why some programming decisions require a capital investment analysis, and how to undertake the appropriate analyses through accounting information • Some ways to prepare the operating budget in a healthcare setting • The important characteristic of performance measurement in healthcare organizations • How to design a useful set of reports (both financial and non-financial) for managers of a healthcare organization • How the technique of variance analysis can improve a manager’s understanding of the reasons underlying the differences between actual and budgeted financial results, and thus help the manager to choose the appropriate course of action

Course contents

This module looks at how healthcare organisations can measure, manage and improve their performance. In particular, we will consider connections between strategy, performance measurement and continuous improvement - and examine how these elements can positively affect the performance of organizations and individuals.

We first look at strategy formulation and implementation, to understand how to set priorities and direction in organisations, and to define how the main objectives should be achieved. We then turn to performance management as a key means to execute strategy: while organizations may design appropriate corporate and business strategies, they usually fail to execute them. Therefore, we will consider how this could be avoided and, in particular, how performance measurement systems – balanced scorecards, dashboards, etc. - could help put strategy into practice.

Finally, we link performance measurement and management to improvement and innovation. Healthcare organizations are increasingly required to be more efficient, provide greater value to patients/customers, and address the needs of their key stakeholders. However, research shows that short term ‘fixes’ and mere applications of tools rarely work. In this module we will see how improvements can be achieved and sustained only through a deep understanding – and sometimes re-engineering - of organizational processes, and through the promotion of learning and improvement at individual, team and organizational levels.

This module is rooted in the real world: we will look at the latest thinking and tools, carry out exercises (e.g., on how to develop strategy, scorecards, targets and indicators), and use real examples from various organisations. At the same time, we will look for relevant academic work that could explain why certain approaches work or not, and what we could do to effectively manage performance in organizations.

Readings/Bibliography

The main texts we will use are:

Gray, D., Micheli, P. and Pavlov, A., (2014), Measurement madness – Recognising and avoiding the pitfalls of performance measurement, John Wiley & Sons.

Slack, N., Brandon-Jones, A. and Johnston, R. (2013), Operations management, 7^th ed., Pearson.

Specific pre-readings are:

Day 1:

Gray, Micheli and Pavlov – Part I (chapters 1 and 2)

Kaplan, R. S. and Norton, D. P. (1992), ‘The Balanced Scorecard - Indicators that drive performance', Harvard Business Review, Vol. 70, No. 1, pp. 71-79.

Kaplan, R.S., Norton, D.P. (2000). ‘Having trouble with your strategy? Then map it’, Harvard Business Review, Vol. 78, No. 5, pp. 167–176.

Day 2:

Gray, Micheli and Pavlov – Chapter 7

Day 3:

Gray, Micheli and Pavlov – Chapter 6

Days 4-5:

Slack et al. – Chapters 15 (pp. 464-481), 17 (pp. 534-551) and 18 (pp. 578-592).

Assessment methods

The marks for this module are awarded for an individual assignment.

The essay will have to be 2,500 words’ long (+/- 10%), excluding references and tables. Longer or shorter essays will not be marked.

Greater detail will be provided on the first and last days of the module.

Office hours

See the website of Pietro Micheli