Publicness in times of market accountability: Lessons from a changing hospital industry in Germany

Abstract

Drawing on findings from a multiple case study on the changing hospital industry in Germany, this article sheds fresh light on the implications new public management-driven regulatory frameworks may have regarding the ‘publicness’ of public service settings. It is shown that, in the area under study, key ingredients of the settings’ traditional mission persist, as do expectations towards soci(et)al effectiveness of actual service delivery. However, this is paralleled by the rise of market accountability within and around these settings which undergirds the ‘privateness’ of public-service providing undertakings. Hydrid accountability relations coincide with a new organisational settlement which leads to a fuzzy configuration regarding the role of publicness. This is why a consistent reinvention of the latter is unlikely to occur under a regulatory framework featuring non-statutory and competitive public service provision.

Keywords

Accountability administrative organisation hospital industry professionalism/professions regulation

Introduction

The dynamic nature of public-service providing organisations has become an important theme for scholars engaged with the ‘publicness’ of these undertakings, that is (in short), with the latter’s commitment to goals defined by the general citizenry (Alford, 2016; Anderson, 2012; Bozeman, 1987; Rauh, 2015; Thoenig, 2006). In the related debate, a key issue has been the boundaries between the public sector and its environment, extending to reflections about the role of private and nonprofit undertakings involved in public service provision. In previous times, scholars tended to make strong distinctions, arguing that structural characteristics made public-service providing undertakings function in a particular way, including when it comes to relations with stakeholders. With wide-reaching regulatory change across various areas of public service provision, more recent contributions have cast doubts on this assertion. Some scholars claim that the aforementioned distinctions have disappeared altogether where different public-service providing undertakings abide by the same regulation. Others imply that regulatory change has brought about hybrid configurations to these undertakings in which traditional characteristics mingle with elements adopted from private business (Christensen and Lægreid, 2011; Lægreid, 2014). This is deemed a result of ‘New Public Management’ (NPM) that, while maintaining political objectives for the common weal, has made these providers comply with what purchasers, empowered consumers, competitors and regulators applying benchmark-based performance schemes prompt in terms of organisational behaviour. All this seems to imply growing privateness within the affected organisations, along with new management models at work place level (Krotel and Villadsen, 2016).

But, what is the ‘fate’ of publicness under these conditions? The literature dealing with this question appears inconclusive (Arrelano-Gault et al., 2013: 154). From early on, critics have warned against ‘quasi-market failure’ (Lowery, 1998); mission drift due to the adoption of ‘techniques of business administration’ (Denhardt and Denhardt, 2000: 551); and, transforming public sector activities into mere ‘costumer service’ (Jos and Tomkins, 2009: 1078). However, a widespread impression has been that taking the business rationale on board would not necessarily impede providers from delivering according to public expectations towards effective services, the delivery of merit goods, or equitable performance. Assumed levers for this are the vocations of employees (Hall et al., 2016); the make-up of policy environments (Miller and Moulton, 2014); or sophisticated forms of statutory governance, e.g. concerning quality control in quasi-markets (Enthoven, 2012; Le Grand, 2003). Even in a ‘privatized world’, it is assumed, publicness can be ‘reinvented’ (Hamelin and Spenlehauer, 2014).

Drawing on evidence from the German hospital industry, this article argues that to examine this contention, regulatory environments and their implications for the affected organisational settlement must be taken into account. If these environments confront providers with ‘market accountability’ (Borowiak, 2011: 134–148; Garn, 2001), publicness becomes fuzzy and its full ‘reinvention’ is unlikely to occur. It may persist as a reference point, yet it is challenged permanently at organisational level. Regarding the destiny of publicness in hybrid configurations, the hospital industry in Germany is a good test case as, in this country, public services are not provided by a unitary statutory institution (such as the British NHS), but by organisations with various legal forms. Besides shedding light on this national configuration to which the international literature has hitherto paid scant attention (though see Klenk and Pieper, 2013; Mattei, 2016), the article contributes to this literature by scrutinizing implications of the NPM-driven reorientation of public service settings through the aforementioned conceptual lens (publicness versus privateness).

The first section reviews basic strands of theory around publicness and accountability in public service settings; elaborating on both privateness and market accountability in the evolving context of public service provision, it delineates the conceptual grid used for the subsequent analysis. This analysis, based on evidence from both hospitals and intermediary organisations involved in the governance of the German hospital industry, is summarized in the second section that also depicts the methodology underlying this research. In the conclusion, the findings are discussed with an eye on general lessons to be drawn from the case.

Publicness, market accountability and the organisational settlement of inpatient care

In the wider literature dealing with ‘publicness’ as a characteristic of public-service providing organisations, there seems to be a general agreement that the former materializes in the latter’s attachment to societal goals and related political accountability, as well as in practices expressing such attachment regardless of micro-economic concerns. This implies that, in areas such as public transport, regional development, or human service provision, the respective organisations ‘align administrative efficiency and legitimate action towards desired societal outcomes’ (Arrelano-Gault, et al., 2013: 156). However, whereas some scholars tend to assume that providers with characteristics typical of private business will have difficulties in accomplishing such practices (see Evans, 2013), others stress that ownership does no longer connect with the type of service provided in a context of directive forms of statutory governance being on the retreat (Aulich, 2011; Kimberly and Campbell, 2011). It is argued that even if not being part of the state (but of the voluntary or private business sector), providers may offer public service ‘practices’ due to a given level of ‘environmental publicness’ (Miller and Moulton, 2014: 554), that is, collective stakeholders endorsing these practices, e.g. by special funding and control schemes. In this vein, it is also put forward that, throughout contemporary welfare states, any kind of organisation, whether public or private, exhibits mixed characteristics, with some related to norms set by political authorities and others independent from these norms, e.g. commitments to its financial health (Bozeman, 1987; Johnsson and Dobni, 2016).

Concerning major driving forces behind publicness to persist under such conditions, not only a given policy environment but also vocations of providers and sophisticated forms of statutory governance (quality inspection, etc.) are considered to preserve this orientation in times when the latter is no longer corroborated by a strong unitary public sector. Soci(et)al effectiveness, so the argument goes, can remain an imperative norm here, with goals related to social integration and agreed in the wider society. Thus, in fields where a ‘public service ethos’ (Brereton and Temple, 1999, emphasis added by authors) is cultivated, the involved agents may espouse distinctive normative orientations (Moulton, 2009), for instance concerning the rights of users or principles of equitable service delivery. Their goals may conform to a certain mission (Wright and Pandey, 2011), with ‘organisational reputation’ following from the respect of that mission (Waeraas and Maor, 2015). It is assumed that even with commercial provision, expectations to deliver public value to the collective citizenry can be ‘mediated through the political process’ and then entail commitments that go beyond mere ‘instrumental efficiency’ (Alford, 2016: 680).

However, an organisation’s ability of bringing its publicness to bear depends on its wider regulatory environment, more precisely, on both the actual direction of political authority and the established modes of resource allocation (Anderson, 2012). As it is well known, the movement towards ‘New Public Management’, starting as of the 1980s, has altered this environment markedly (Denhardt and Denhardt, 2000); and while some scholars have argued that the NPM mantra was followed by a period of ‘new public governance’ (Osborne, 2006) – making public service provision (re-)focus on what is agreed by stakeholder networks –, recent studies suggest that the NPM orthodoxy is quite vivacious internationally (de Vries and Nemec, 2013; Hyndman and Liguon, 2016; Wollmann et al., 2016). NPM-driven reforms came along the promise of increased user-friendliness and greater responsiveness to relevant stakeholders. Yet this promise was meant to be achieved by transforming the orientations of those running and monitoring a public service setting (Clarke and Newman, 2009). Attention shifted to short-term success measured by ‘value for money’ in the eyes of major stakeholders, whether individual users, service-purchasing agencies or Government.

What is more, ‘under NPM, accountability is based on … competition’ (e.g. Lægreid, 2014: 328). This implies that conformity to political prescriptions is less relevant than achievements in what has been labelled market accountability throughout the wider literature (Borowiak, 2011; Garn, 2001; Lægreid, 2014; Page, 2006). While marketization came with various models (see Hansen and Lindholst, 2016, dealing with healthcare), these models share general characteristics when considering its relation to publicness. As Borowiak (2011: 135) mentions, market accountability can foster the publicness of a given provider and its services, e.g. by shifting power to users (now understood as customers). Moreover, those strands of economic thinking proponents of NPM have drawn on presuppose that competition will, if regulated properly, ensure the best output for a given amount of resources (Enthoven, 2012; Le Grand, 2003). Thus, where public authorities procure a certain type of public service by contracting the best offer available, including in terms of quality, this ‘quasi-market’ is assumed to pursue soci(et)al goals favoured by voters and taxpayers. The same would apply to a model where public instances control the price of a given service and then grant users direct payments to be spent for a service-provider of their choice, with the latter being subject to formal quality inspection (which resembles the configuration of the German hospital system, see below).

Yet from a theoretical perspective, market accountability can also constrain publicness. For Borowiak (2011: 135/136), it provokes ‘social disengagement’ on the side of service-providing agents; a ‘competitive logic of exit’ in the behaviour of stakeholders; and ‘no consensual agreement on performance criteria’. As market accountability ‘operates through the actions of individual buyers and sellers’, it makes public service settings operate under the influence of ‘impersonal system forces’. This is consistent with earlier assessments of NPM-driven reforms, arguing that, with (partial) marketization, public-service providing organisations, especially when urged by third party payers to keep outlays down, are enticed to check all available opportunities to avoid economic strain (Denhardt and Denhardt, 2000; Lowery, 1998). Given the strong information asymmetry in areas such as education, social support and healthcare, available options include underperforming in areas difficult to monitor from outside, attracting users from peer organisations while having no better services to offer, or responding to consumer demands that have little to do with what the public mandate is about (marketed frills instead of solid service provision). External control may not be able to inhibit such policies as providers are often dealing with highly individual cases so that finding a metric for defining (and measuring) service standards proves a tough challenge to public authorities. All this is certainly an issue in the case under study below, as German hospitals do not operate in a classical quasi-market with a single purchaser of healthcare packages.

Be it as it may, from the perspective of a public-service providing organisation, market accountability provokes policies and behaviour oriented towards what other market players expect, and these expectations are not necessarily congruent with soci(et)al goals. Thus, treating more users or increasing turnover regardless of actual needs would not be consistent with such goals. However, while the aforementioned assumptions of Borowiak (2011) appear relevant, it makes sense to apply the concept of market accountability to all situations in which organisations follow the expectation of accomplishing tasks in both an entrepreneurial and competitive way. Accordingly, the ‘fora’ for such accountability are manifold. They embrace users to whom public-service providing organisations offer choice and exit options (instead of mere political voice); voters or enrolees of insurance funds claiming economic ‘fitness’ from those who deliver services; and commissioners or inspectors imposing pre-defined performance benchmarks and making their contract or control policies contingent on where a given provider stands within a broader range of similar undertakings.

After all, it is an empirical question how organisational actors experience the advent of market accountability and cope with the latter. However, in the terminology of theories dealing with publicness, ‘the increase in constraint by economic authority’ is susceptible to undergird the privateness of the affected organisations (Moulton, 2009: 890). In essence, such privateness materializes in internal mind-sets geared towards economic success. The individual achievement of a given undertaking in economic terms becomes a central reference point – although various options exist for this: Thus, a public-service providing organisation can be led to being ‘good’ in the eyes of given group of costumers, or it can seek to offer services cheaper than other providers, especially when economic loss is on the horizon (Rauh, 2015). Anyway, the respective mind-sets are endorsed by management models adopted from the (capitalist) private sector and often set into practice by agents having gained experience in that sector (Krotel and Villadsen, 2016).

All this does not exclude ‘multiple accountability’ (Bovens and Schillemanns, 2011). Regarding contemporary Western welfare states, the ingredients of publicness mentioned earlier are likely to persist in and around public-service providing organisations, not least because of the political accountability of those mandating and overseeing the latter. When these ingredients coincide with growing market exposure, the result is hybrid accountability relations (Lægreid, 2014: 335). The task environment – made of patients, funders, regulatory bodies etc. that is, factors that influence an organisation’s ability to achieve its goals (Thompson, 2003) – contains various external expectations that are likely to trigger pluralistic policies and behaviour within such organisations.

The healthcare industry, and hospitals as their cornerstones, is a case in point. Internationally, the market rationale (Cookson and Dawson, 2012; Reich, 2014; Simonet, 2011) and business-like management (Koelewijn et al., 2012; Reay and Hinings, 2009) have changed the chemistry of this industry. By tradition, hospitals have been conceptualized as ‘professional bureaucracies’ (Mintzberg, 1983) in which classical public administration and a strong professional autonomy in the organisations’ apex were concurrent (Freidson, 2001). Meanwhile, as research from various countries suggest, regulatory change has altered the organisational settlement of inpatient healthcare (Anderson, 2015; McGivern et al., 2015; Nordstrand Berg and Pinheiro, 2016; van de Bovenkamp et al., 2017; van der Pennen et al., 2015; Witman et al., 2011). While it seems that professional communities maintain leeway to cultivate their traditional perspective on soci(et)al effectiveness, they confront expectations that stress entrepreneurial thinking and responsibility concerning the economic well-being of their undertaking – that is, its privateness (Bode and Märker, 2014; Exworthy et al., 2015). The emphasis lies on results, rather than ‘correct’ task execution; popular management tools foster instrumental behaviour (in the sense of Vosselman, 2016) rather than mission commitment. Hence, at site level, ‘goal ambiguity’ (Anderson, 2015) is likely to occur (see Carvalho, 2014, dealing with nurses). But what is the fate of publicness under these conditions?

The case of the German hospital industry

The evolving regulatory framework and its implications

At present, the German hospital industry consists of 2000 independent economic entities that are embedded in an arm’s length governance structure (Bode, 2013; Porter and Guth, 2012). The national hospital law stipulates that patients have to be treated according to their needs and on the basis of scientific standards subject to a formal quality assurance scheme (for the latter, see Vrangbæk et al. , 2016: 127–129). While state stewardship is weak, a complex network of intermediary organisations (representing the industry, doctors, sickness funds, and patient groups) collaborates for developing this scheme and overseeing its application, as well as for agreeing more fine-grained regulation concerning funding streams and competencies for healthcare provision. Thus, a national board composed of representatives of the aforementioned intermediary organisations agrees on the admission of therapies eligible to reimbursements from the sickness funds (Krankenkassen), the most important funding source in the German healthcare system. Also, standard prices for hospital treatments are updated in negotiations between these funds and independent providers, with the national government overseeing this process. No doubt that all is fundamental to the publicness of inpatient care in Germany.

However, from to the 1990s onwards, the regulatory framework has changed markedly, with NPM-driven reforms translating into a new accountability framework (see contributions to Mattei, 2016). Compared to other countries, NPM adopts a distinctive character here as it is operated by specific quangos (the sickness funds) in a long-established landscape of provider pluralism. Nowadays, hospitals no longer obtain (historical) budgets based on calculations of the input used for meeting needs and in combination with comprehensive capacity planning. Rather, they are meant to receive money for value, that is, fees for each disorder under treatment, via a pricing system through which registered illnesses are assigned to ‘diagnostic related groups’ (DRGs). On this basis, sickness funds agree prospective case-mix budgets for each undertaking, whether public, nonprofit or private (for-profit). Note that patients have (always had) a right to select their hospital, and ever more seem inclined to do so, at least for elective operations and in densely populated areas (Geraedts and de Cruppé, 2014). Importantly, hospitals can host a greater number of patients than fixed in the agreements with the sickness funds. They will then have to accept discounts on the aforementioned fees, yet they may manage to negotiate a higher prospective budget in the subsequent year.

Across the entire industry, capacity planning by the (regional) state(s) has become much less relevant meanwhile. As of today, most funding for investment equally hinges on the achieved volume of treatments, so the ‘money-for-value’ approach also applies to opportunities of capacity building (there are different provisions for university teaching hospitals, though). In some areas, providers can also go for special agreements with sickness funds, agreeing special prices for a given healthcare package (notably for integrated care schemes, see Bode, 2010). While this particular contract business is still in its infancy it may become more important in the near future as a reform enacted in 2015 has created additional options in this respect. Until recently, all this has gone alongside a rapid growth of the private (commercial) hospital sector that held one out of five beds in 2015. While these undertakings differ markedly from their peer organisations in the nonprofit and municipal sector (see Klenk and Pieper, 2013), all providers are put on equal footing regulation-wise.

With business-like management thinking penetrating the entire welfare state, human service providers such as hospitals are ever more judged against their economic fitness. Budget pressures are high. Note that 46% of all German hospitals did not break even at least once between 2013 and 2015 (BDO/DKI, 2016: 18). Providers have to count with collective stakeholders eyeballing undertakings that incur a deficit. Owners – whether local authorities or associations from the voluntary sector – may be led to close wards or to merge with other providers, notably in regions with (assumed) oversupply. Under these conditions, the regulation in force makes hospitals strive for treating as much as patients as possible, in order to fill beds and to improve economies of scale.

Consequently, although the industry embraces only very small sections for open price competition and cannot be considered a full-fledged market, its regulatory environment creates various kinds of market accountability, unlike what Klenk and Pieper (2013: 344) seem to imply. Such accountability matters in the aforementioned situation of (comparative) underperformance, since the destiny of a given hospital depends on its ability to keep per-case-costs low, or at least lower than competitors do. In addition, it makes itself felt with providers seeking a comparative edge over rivals in terms of input–output ratios (the expenditure for patients as opposed to fees received). And it is particularly strong in the (small) contract business mentioned above. Since German citizens enjoy free access to a hospital of their choice, those patients who have time and skills for taking personal decisions (after listening to the advice of their outpatient doctor), may be attracted by marketing efforts and ‘special offers’ (that is, the promise of sophisticated treatment and above-average performance) within a given ‘catchment area’. In contrast to the past, the current regulatory framework strongly entices hospitals to make such efforts and offers. Given the spread of those management models mentioned above (in the section on ‘Publicness, market accountability and the organisational settlement of inpatient care'), it is unlikely that the healthcare staff can ignore the related incentive structure. All this fosters privateness in the organisational settlement of inpatient care and concerning the latter’s relationships with critical environments.

Dealing with hybrid accountability: Evidence from a multiple case study

Methodology

The evidence presented in what follows originates in a multiple case study (Stake, 2006), conducted between 2011 and 2014. Besides an extensive review of quality press reports dealing with the German hospital industry (between 2010 and 2015), this study was largely based on problem-centred interviews (Witzel and Reiter, 2012) subject to directive content analysis (Hsieh and Shannon, 2005: 1281). Among other things, the investigation was meant to shed light on perceptions of hybrid accountability at organisation level, more precisely (in the context of this article): external expectations encountered by hospitals as public-service providing undertakings and the organisational settlement in which these expectations have to be managed.

Two sets of interviews were analysed. One embraced 15 representatives of intermediary organisations including professional associations. These experts were expected to condense knowledge about developments within the industry, as they belong to the ‘regulatory infrastructure’ (Bode, 2013) of the German healthcare system, namely: sickness funds (including their national umbrella); the hospital industry (its national federation); associations of hospital agents (managers, doctors, nurses, social workers); the federation of out-patient doctors; the major trade union of the industry; and finally, the ministries of the Länder, that is, the greatest territorial divisions of the country, responsible for hospital planning and investment funding. This part of the research was mainly meant to ‘ground’ information gathered at organisational level, addressed by the second series of interviews with managers, medical directors and central nurses in 15 acute care hospitals. This second set of interviews embraced a mix of smaller and larger entities from different regions. To avoid overcomplexity due to differences in organisational incentive structures, commercial providers were not included; it was assumed that nonprofit and municipal hospitals, truly challenged by market accountability, could reflect potential tensions between the latter and publicness more obviously than their commercial rivals.

All interviewees were asked about how they perceived change in hospitals (their undertaking or German hospitals in general) and in the organisations’ environment over the last 15 years; this was followed by questions on how they felt about the importance of business-like performance criteria in the industry and about implications of such criteria in terms of service quality; finally, they were asked about extant possibilities to strike a balance between (micro-)economic and other goals. The issue of accountability was not addressed directly but played an important role in the respondents’ reflections on the aforementioned three themes; therefore, perspectives on this issue as shining through the interviewees’ utterances could be deemed rather ‘authentic’. The coding procedure was oriented by the three themes as presented above and focused on the role of market rationale; expectations related to the hospitals’ public mission; and how the two aspects materialized in descriptions of the task environment for present-day German acute care hospitals. While not being representative of the entire industry, the analysis thus illuminates a particular configuration that may exist throughout wider parts of this industry, given that the latter is subject to one and the same regulatory framework.

The section hereafter summarizes key findings of this study. Within the confines of this article, it is impossible to retrace the entire process of analysing the data and inferring insights from it. However, some spotlights on the material illustrate how major respondents perceived the overall development of the industry. Below, a couple of emblematic utterances are presented by using citations, albeit without providing the wider context of the latter.

Findings

In the interviews conducted with representatives of intermediary organisations, ‘market terms’ often became salient when respondents were elaborating on the industry’s recent development. First of all, the existence of commercial providers was taken for granted, although ministries of the Länder argued that it made the steering of the industry more complicated. Furthermore, it was deemed normal that providers of inpatient care think in terms of their undertaking being an enterprise, with concerns for both developing the ‘special profile’ of their undertaking and making sure that costs incurred per patient did not exceed the respective reimbursement. Representatives of the industry’s major umbrella organisation (Deutsche Krankenhausgesellschaft) believed that these orientations were widespread which was also confirmed by the professional associations (whether for nurses, doctors, or social workers). Medical associations observed that top managers pushed chief physicians towards following entrepreneurial approaches. One interviewee saw a creeping tendency towards concentrating a hospital’s range of activities on well-paid treatments. As for the nursing profession, a respondent said that the latter felt urged to accelerate the treatment process and to contribute to early discharge. She made the case of ‘cut-throat competition’ pervading the industry, involving, among other things, a partial shift from classical bedside care towards investing in ‘hotel services’. Interestingly, an interviewee representing an association of hospital-based social work argued that supporting such developments proactively might upgrade her professional group as it could contribute to make their undertaking leaner and, by extension, more competitive, e.g. by collecting more comprehensive information on patients. Across all interviews conducted at the intermediary level, it seemed to be common wisdom that hospital agents were expected to accomplish their work with a focus on the material well-being of their organisation in a context where economic risks basically lie with individual providers. Hence, at this intermediary level of the industry, market accountability was a crucial reference point.

In part, this chimed with the views of leading hospital agents. The respective interview material contained many hints to perceptions of privateness, that is, internal mind-sets geared towards economic success. Most administrators were moderately enthusiastic about competitive orientations within the industry, but confessed they eventually had no other choice than playing the game. They saw a necessity ‘to survive successfully in the market’, as one interviewee put it, with competitive intelligence being deemed indispensable. A colleague (from another hospital) expounded that his undertaking participated in an ‘arms race’ around site certification, with the latter being meant to promote this undertaking in the market. One manager explicitly stated that competition was, after all, about making ‘patients come and not go elsewhere’. Another expected doctors to sell their excellence to an external audience in order to create ‘his (her) own market’ when liaising with outpatient peers.

Some medical directors agreed to this, finding it necessary to raise revenue and develop profitable activities while others were more reluctant in this respect. One interviewee, asked about options to improve an undertaking’s balance sheet, said it was important to become known in a hospital’s local environment, for instance by imparting courses to outpatient practitioners or giving lectures to self-help groups. A fellow affirmed that, with the current funding scheme, there should be a concern ‘to get the best reimbursement possible for each patient’. Central nurses equally referred to market accountability. One reported that ‘responding to the demand side’ nowadays was a major requirement while a colleague asserted that in the event of a poor balance sheet, a major concern for ‘each leadership group’ should be to identify measures for ‘getting back into the black’. It was often put forward that a major expectation for the nursing professions was to respect calculations of outlays for each patient as opposed to reimbursements achieved.

Simultaneously, however, all interviews contained utterances reflecting an attachment to the publicness of inpatient care. This was quite evident for the intermediary organisations that were interviewed. While these were clear about market accountability having become an issue, some observations were made with a sceptical overtone. Thus, representatives of the hospital federation said clinics were sometimes obsessed with their ‘business portfolio’ and about being competitive, e.g. in the encounter with outpatient doctors referring patients. ‘Strictly speaking, with competition, you are accountable to your own interests and less to society’, one interviewee lamented. The president of the association of hospital managers criticised a race to the bottom concerning the share of qualified non-medical staff among the personnel. An association of nonprofit hospitals stressed that it was imperative to maintain critical, need-oriented activities even though this could generate losses.

In a similar vein, ministries of the Länder defended a need-oriented approach to capacity planning in order to preserve the industry’s mission area-wide, with ‘hospitals being there to serve the population, not to make money’, as one interviewee put it. This may be considered ‘cheap talk’ because the Länder do not provide but a small share of the funds allocated to the German hospital industry; nonetheless, such utterances reflect the cognitive mind-set of a major player in this industry. A similar stance was taken by collective actors representing the healthcare professions. The two associations of doctors in the interview sample noted that the extant regulatory framework made hospitals economize on advanced training and continuing medical education, both deemed vital to the public mission of hospitals. His fellow went further and argued that the objective of area-wide, need-oriented, comprehensive inpatient care was incompatible with a regulatory framework fostering interorganisational competition: ‘All activities accomplished [in the hospital industry] are aligned with the treatment of sick people (…); this cannot be addressed by principles used for governing industrialized, commercial service supply’. Similarly, representatives from the non-medical healthcare professions insisted on the latter’s commitment to universal service provision.

Interviewees from the sickness funds, the major funding bodies of the German hospital industry, showed similar concerns. Notwithstanding the funds’ general approval of the existing regulatory framework and of enhanced competition among hospitals, they claimed tough external quality assurance in order to preserve the hospitals’ public mission (they saw menaced by poor local management in the first instance).

On the whole, although the most relevant parties inhabiting the regulatory infrastructure of the industry did not share a common grammar when being asked about how publicness could be made sure in technical terms, the bulk of interview statements suggested a strong attachment to both soci(et)al goals connecting with political accountability and practices expressing this attachment regardless of (micro-)economic concerns. This implies that expectations towards maintaining and cultivating the publicness of inpatient care are palpable throughout the wider industry.

As for the interviews conducted at organisation level, this orientation equally came to the fore, albeit more implicitly. Thus, when asked about budget issues, medical directors reported that doctors insisted on their professional ethics and were concerned about economizing on costs not being ‘in favour of medical therapy’. One director expounded that the hospital market sometimes was like a ‘shark pool’ while a colleague said he ‘hoped’ that activities were not driven by ‘economic pressure, but by medical excellence’ which ‘should remain the key principle of every hospital’. Likewise, a nursing line managers asserted that the key challenge consisted of preserving a basic level of quality for all patients and ‘to keep in mind our values’, against pressures to consider cases under treatment in mere economic terms. In general, the interviews conducted with healthcare professionals bore witness to diffuse worries about traditional values being stressed by interorganisational competition. Even CEOs sympathetic with a strong business orientation were aware of these principles being a critical issue. At least, they seemed to be attentive to reputation dilemmas, e.g. in the event of the wider public learning about organisational policies motivated by commercial purposes. Thus, according to one manager, hospitals should not ‘speak out loudly’ that some of their activities are geared towards attracting patients in the first instance.

But if market accountability matters and glossing over the publicness of inpatient care appears impossible, how is this situation being managed in the new organisational settlement of inpatient care? The aforementioned research revealed that German hospitals have gone though a comprehensive process of internal restructuring, although the data also hints at limits to the adoption of policies typical of private business (for instance, Taylorised production pathways). When asked about experienced change, interviewees from both intermediary organisations and hospitals referred several times to what they perceived as managerial reorganisation emanating from economic pressures, among which: low cost-hunting operated by medical staff (e.g. efforts to use of less comfortable medical products); benchmarking exercises geared towards comparing cost profiles across patients and wards; pay-for-performance schemes (addressing physicians) and wage cuts (affecting non-medical staff) in the event of deficits; various modes of just-in-time management with reduced time slots for both talking to patients and running preventive activities, finally disorganised shift work and problems with substitute pools including emergency services.

Importantly for our question, the conditions under which the coinciding expectations towards publicness and privateness have to be met in practical terms seem to involve a greater degree of individual responsibility and entrepreneurial spirit, meant to foster a given undertaking. Interviewees spoke about recurrent efforts for making healthcare professionals sensitive to the (micro-)economic dimension of their activities, describing, among other things, the activities of controllers confronting doctors with monthly ‘balance sheet data’ for their wards. CEOs felt a need for making all co-leaders co-entrepreneurs; doctors were led to sell their excellence and to develop ‘their own market’; part of the non-medical staff reasoned in terms of taking personal initiative in helping their organisation (or ward) improve the balance sheet. Asked about how to strike a balance between the two aforementioned expectations, hospital agents explained that they felt urged to consider the economic interest in their day-to-day operations while at the same time seeking clues for containing trade-offs between this interest and the latter’s non-economic purposes as much as possible.

Conclusions: Living with hybrid accountability

Exploring developments in the German hospital industry, this article has sought to examine the fate of publicness in an era of hybrid accountability relations. From the case study-based evidence one can certainly not infer insights about the depth and scope of the dynamics underway. Further limitations of the analysis reside in its cross-sectional design (as retrospective considerations can be biased) and the type of interviewees the investigation was based on; arguably, ordinary employees or patients may consider recent developments in a way different to leaders from both individual hospitals and intermediary organisations of the industry. What the evidence does suggest, however, is a distinctive configuration that may potentially play out in larger parts of the industry. In this configuration, key ingredients of classical public-service settings (a legal mandate, a distinctive service motivation, awareness of a special mission, etc.) remain salient, as do expectations that relate to the industry’s soci(et)al effectiveness. At the same time, the new regulatory environment fosters the privateness of healthcare providers, by altering the organisational settlement in which public service provision takes place.

In this settlement, the processing of hybridity becomes a day-to-day challenge, with success in economic terms being a strong signpost. The settlement comes with ‘neo-bureaucratic’ elements, materializing in what various scholars studying public administration have referred to as ‘accountingization’ or ‘managerialised’ leadership (Du Gay, 2013; Farrell and Morris, 2003; Harrison and Smith, 2003; Nordstrand Berg and Pinheiro, 2016; Vosselman, 2016, addressing hospitals). Top administrators, while being aware of their undertaking’s publicness, concentrate on achieving economic success and seek to convince co-leaders to keep the latter always in mind. Healthcare professionals in particular juggle with goal ambiguity; given their professional ethos, they cannot sidestep the publicness of their organisation, yet growing privateness exposes them to individualized modes of organisational control and pressures to mingle orientations towards publicness and economic performance at work place level. Following the reported evidence, this transformation goes beyond mere organisational rhetoric – although a discourse on market accountability can also be used to make rank-and-file employees swallow the bitter pill of an ever increasing workload.

While this transformation has been spearheaded by commercial providers in many places, our material, covering the municipal and nonprofit hospital sector, suggests that it is underway even where pressures to satisfy shareholders or income interests of owners do not exist. In the German context, it seems that it is market accountability rather than mere privatization (the rise of commercial providers) that adjusts expectations towards and within the industry. An additional finding of the research project this article is drawing on endorses this conjecture: The project had also exploited a database containing the bulk of reports on the industry published in the German quality press between 2010 and 2015. Very few of these reports made a difference regarding ownership when blaming ‘the system’ for not delivering on promise. Despite a couple of harsh local conflicts around the very process of privatization, it seems that once a given hospital has been established in a new legal form, ownership becomes less of an issue – notwithstanding that some stakeholders complain about the potentiality of money contributed to social healthcare insurance or the fiscal budget being used for boosting profits.

In terms of theory, authors such as Moulton (2009) seem to be right when contending that public values entrenched in regulatory frameworks remain relevant in a landscape of non-statutory and competitive service provision. In Germany, this is particularly perceptible because political authority connects with a well-organised regulatory infrastructure defending the interests of professions and other collective stakeholders interested in cultivating the publicness of the industry (while the for-profit sector has hitherto remained a minority force in this infrastructure). Moreover, official norms of soci(eta)l effectiveness do no longer provide a clear demarcation line between the privateness endemic to independent enterprises and the inherited mission of public-service providing undertakings.

And still, the evidence presented above casts doubt on the assumption of public service settings sticking to norms of publicness simply because these settings are facing a distinctive policy environment and are subject to comprehensive public scrutiny. Despite political accountability remaining strong in this environment, the existing regulatory environment leaves individual providers (that are mostly municipal and nonprofit) with the challenge of being a ‘quasi-business’ seeking a competitive edge over rivals while being committed to soci(et)al goals. It seems that hospitals and their (leading) agents confront decisions without a clear-cut road map at their disposal. True, by outperforming relevant competitors, providers can be lucky and preserve a ‘public service ethos’ for their own undertaking. However, under the current regulatory framework, only few will achieve this long-term.

Be it as it may, from the perspective of those being accountable, market accountability sits uneasily with the publicness of present-day hospitals in Germany. It appears that the organisational ‘enactment’ (Weick, 2009) of soci(et)al goals is volatile even as a transformed organisational settlement urges critical actors to balance constantly ‘between two worlds’ (Witman et al., 2011). Thus, publicness becomes fuzzy, and its full ‘reinvention’ is improbable with providers being exposed to market accountability. Compared to the pre-NPM era, political authority is less substantial since many decisions at organisation level seem to be driven by micro-economic considerations. Despite efforts to reinforce public regulation, for instance with respect to quality inspection, the reported developments imply that German hospitals have in many respects become more detached from both state and intermediary (governance) control. As the short literature review provided in this article suggests, similar configurations may exist in other countries.

Hence scholars engaging with public sector reforms should pay greater attention to the encounter of regulatory hybridity and organisational transformation in public service settings. This is not a mere academic exercise: While many public-service providing organisations may be able to live with hybrid accountability relations in one way or another, it is less clear how publicness can survive long term in a context in which it is permanently challenged in practical terms. While for the sake of higher efficiency and greater user-friendliness, it appears tempting to endow public service with incentives based on market accountability, these incentives, once they affect the lifeline of these settings, will always create confusion around what is their priority.

Footnotes

Author's note

The material exploited for the production of this article consisted of interviews (n = 75) conducted with leaders in 15 hospitals (administators/managers; the medical director; the nursing director; a leading agent of social work staff) as well as 15 representatives of intermediary bodies or associations. Anonomity was guaranteed. The interviews, conducted during 2012 and 2013, were semi-structured and contained general questions as explained throughout the article.

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by the German Research Foundation (Deutsche Forschungsgemeinschaft) (Grant no. BO 1922/8-1).

References

Alford

(2016) Co-production, interdependence and publicness. Public Management Review 18: 673–691.

Anderson

(2012) Public, private, neither, both? Publicness theory and the analysis of healthcare organisations. Social Science & Medicine 74: 313–322.

Anderson

(2015) Publicness, goal ambiguity and patient safety: Exploring organisational factors in hospital practice. International Journal of Privacy and Health Information Management 3: 1–26.

Arrelano-Gault

Demortain

Rouillard

et al. (2013) Bringing public organisation and organizing back in. Organisation Studies 34: 145–167.

Aulich

(2011) It’s not ownership that matters: It’s publicness. Policy Studies 32: 199–213.

BDO/DKI (2016) BDO AG Wirtschaftsprüfungsgesellschaft & Deutsches Krankenhaus-Institut. Krankenhaus-Strategie 2020. Hamburg.

Bode I (2010) Towards disorganised governance in public service provision? The case of german sickness funds. International Journal of Public Administration 2(33): 172–181.

Bode

(2013) Processing institutional change in public service provision. The case of the German hospital sector. Public Organization Review 13: 323–339.

Bode

Märker

(2014) Medicine in management or medics in management? The changing role of doctors in German hospitals. International Journal of Public Sector Management 27: 395–405.

10.

Borowiak

(2011) Accountability and Democracy. The Pitfalls and Promise of Popular Control, Oxford: Oxford University Press.

11.

Bovens

Schillemanns

(2011) The challenge of multiple accountability: Does redundancy lead to overload? In: Dubnick

Frederickson

(eds) Accountable Governance. Problems and Promises, New York, NY: M.E. Sharp, pp. 3–21.

12.

Bozeman

(1987) All Organisations are Public: Bridging Public and Private Organisational Theories, San Francisco, CA: Jossey-Bass.

13.

Brereton

Temple

(1999) The new public service ethos: An ethical environment for governance. Public Administration 77: 455–474.

14.

Carvalho

(2014) Changing connections between professionalism and managerialism – A case study of nursing in Portugal. Journal of Professions and Organisation 2: 176–199.

15.

Christensen

Lægreid

(2011) Complexity and hybrid public administration – Theoretical and empirical challenges. Public Organisation Review 11: 407–423.

16.

Clarke J and Newman J (2009) Publics, Politics and Power: Remaking the Public in Public Services. London: SAGE.

17.

Cookson

Dawson

(2012) Hospital competition and patient choice in publicly funded health care. In: Jones

(ed.) The Elgar Companion of Health Economics, 2nd ed. Cheltenham: Edward Elgar, pp. 219–230.

18.

de Vries

Nemec

(2013) Public sector reform: An overview of recent literature and research on NPM and alternative paths. International Journal of Public Sector Management 26: 4–16.

19.

Denhardt

(2000) The new public service: Serving rather than steering. Public Administration Review 60: 551–559.

20.

Du Gay

(2013) New spirits of public management … post-bureaucracy. In: Du Gay

Morgan

(eds) New Spirits of Capitalism? Crises, Justifications, and Dynamics, Oxford: Oxford University Press, pp. 274–293.

21.

Enthoven

(2012) Health Care, the Market and Consumer Choice, Cheltenham: Edward Elgar.

22.

Evans

(2013) Review: Recent publications on the commodification of public services. Work Organisation, Labour and Globalisation 7: 159–162.

23.

Exworthy

Macfarlane

Willmott

(2015) NHS managers: From administrators to entrepreneurs? In: Waldorff

Pedersen

Fitzgerald

et al. (eds) Managing Change. From Health Policy to Practice, Basingstoke: Palgrave, pp. 139–156.

24.

Farrell

Morris

(2003) The ‘neo-bureaucratic’ state: Professionals, managers and professional managers in schools, general practices and social work. Organisation 10: 129–156.

25.

Freidson

(2001) Professionalism. The Third Logic, Chicago: University of Chicago Press.

26.

Garn

(2001) Moving from bureaucratic to market accountability: The problem of imperfect information. Educational Administration Quarterly 37: 571–599.

27.

Geraedts

de Cruppé

(2014) Krankenhauswahlverhalten chronisch Kranker. Final research project report. Witten-Herdecke, Institut für Gesundheitssystemforschung.

28.

Hall

Miller

Millar

(2016) Public, private or neither? Analysing the publicness of health care social enterprises. Public Management Review 18: 539–557.

29.

Hamelin

Spenlehauer

(2014) Managing to reinvent strong publicness in a privatized world. Public Organisation Review 14: 419–438.

30.

Hansen

Lindholst

(2016) Marketization revisited. International Journal of Public Sector Management 29: 398–408.

31.

Harrison

Smith

(2003) Neo-buraucracy and public management: The case of medicine in the National Health Service. Competition & Change 7: 342–354.

32.

Hyndman

Liguon

(2016) Public sector reforms: Changing contours on an NPM landscape. Financial Accountability & Management 32: 5–32.

33.

Hsieh H-F and Shannon SE (2005) Three approaches to qualitative content analysis. Qualitative Health Research 15: 1277–1288.

34.

Johnsson

Dobni

(2016) Is managerial work in the public and private sectors really “different”? A comparative study of managerial work activities. International Journal of Public Administration 39: 459–469.

35.

Jos

Tomkins

(2009) Keeping it public: Defending public service values in a customer service age. Public Administration Review 69: 1077–1086.

36.

Kimberly

Campbell

(2011) The Delegated Welfare State. Medicare, Markets, and the Governance of Social Policy, Oxford: Oxford University Press.

37.

Klenk

Pieper

(2013) Accountability in a privatized welfare state. The case of the German hospital market. Administration & Society 45: 326–356.

38.

Koelewijn

Ehrenhard

Groen

et al. (2012) Review article: Intra-organisational dynamics as drivers of entrepreneurship among physicians and managers in hospitals of Western countries. Social Science & Medicine 5: 895–900.

39.

Krotel

SML

Villadsen

(2016) Employee turnover in hybrid organisations: The role of public sector socialization and organisational privateness. Public Administration 94: 167–184.

40.

Lægreid

(2014) Accountability and new public management. In: Bovens

Goodin

Schillemanns

(eds) The Oxford Handbook of Public Accountability, Oxford: Oxford University Press, pp. 325–338.

41.

Le Grand

(2003) Motivation, Agency, and Public Policy: Of Knights and Knaves, Pawns and Queens, Oxford: Oxford University Press.

42.

Lowery

(1998) Consumer sovereignty and quasi-market failure. Journal of Public Administration Research and Theory 8: 137–172.

43.

Mattei

(2016) Public Accountability and Health Care Governance. Public Management Reforms between Austerity and Democracy, Basingstoke: Palgrave Macmillan.

44.

McGivern

Currie

Ferlie

et al. (2015) Hybrid manager-professionals’ identity work: The maintenance and hybridization of medical professionalism in managerial contexts. Public Administration 93: 395–411.

45.

Miller

Moulton

(2014) Publicness in policy environments: A multilevel analysis of substance abuse treatment services. Journal of Public Administration Research and Theory 24: 553–589.

46.

Mintzberg

(1983) Structures in Fives: Designing Effective Organisations, Englewood Cliffs, NJ: Prentice Hall.

47.

Moulton

(2009) Putting together the publicness puzzle: A framework for realized publicness. Public Administration Review 69: 889–900.

48.

Nordstrand Berg

Pinheiro

(2016) Handling different institutional logics in the public sector: Comparing management in Norwegian universities and hospitals. In: Pinheiro

Geschwind

Ramirez

et al. (eds) Towards a Comparative Institutionalis – Forms, Dynamics and Logics across the Organisational Fields of Health Care and Higher Education. Research in the Sociology of Organisations. Bingley: Emerald, pp. 145–168.

49.

Osborne SP (2006) The new public governance? Public Management Review 8: 377–387.

50.

Page

(2006) The web of managerial accountability. Administration & Society 38: 166–197.

51.

Porter

Guth

(2012) Redefining German Health Care. Moving to a Value-Based System, Berlin: Springer.

52.

Rauh

(2015) Problems in identifying public and private organisations: A demonstration using a simple naive Bayesian classification. Public Organisation Review 15: 33–47.

53.

Reay

Hinings

CRB

(2009) Managing the rivalry of competing institutional logics. Organisation Studies 30: 629–652.

54.

Reich

(2014) Contradictions in the commodification of hospital care. American Journal of Sociology 119: 1576–1628.

55.

Simonet

(2011) The new public management theory and the reform of European health care systems: An international comparative perspective. International Journal of Public Administration 34: 815–826.

56.

Stake RE (2006) Multiple Case Study Analysis. New York/London: The Guilford Press.

57.

Thoenig

(2006) Rescuing Publicness from Organisation Studies. HAL Working Papers, Paris.

58.

Thompson

(2003 [1967]) Organisations in Action. Social Sciences Bases of Administrative Theory. (with a new preface by Zald MV and a new introduction by Scott WR). New Brunswick, NJ: Transaction Publishers.

59.

van de Bovenkamp

Stoopendaal

Bal

(2017) Working with layers: The governance and regulation of healthcare quality in an institutionally layered system. Public Policy and Administration 32: 45–65.

60.

van der Pennen

Putters

Berden

(2015) Imperfect performance: A case study on the pay-for-performance instrument for physicians in Dutch hospitals. Administration & Society 47: 881–909.

61.

Vosselman

(2016) Accounting, accountability, and ethics in public sector organizations. Toward a duality between instrumental accountability and relational responsability. Administration & Society 48: 602–627.

62.

Vrangbæk

Appleby

Klenk

et al. (2016) Accountability through performance management? Comparing and explaining the institutional design of hospital performance management schemes in Denmark, Germany, and UK. In: Christensen

Lægreid

(eds) The Routledge Handbook to Accountability and Welfare State Reforms in Europe, London: Routledge, pp. 119–132.

63.

Waeraas

Maor

(2015) Understanding Organisational Reputation in a Public Sector Context, London: Routledge.

64.

Weick

(2009) Making Sense of the Organisation. The Impermanent Organisation, New York, NY: Wiley.

65.

Witman

Smid

GAC

Meurs

et al. (2011) Doctors in the lead: Balancing between two worlds. Organisation 18: 477–495.

66.

Witzel A and Reiter H (eds) (2012) The Problem-Centred Interview. London: SAGE.

67.

Wollmann

Kopric

Marcou

(2016) Public and Social Services in Europe. From Public and Municipal to Private Sector Provision, Basingstoke: Palgrave Macmillan.

68.

Wright

Pandey

(2011) Public organisations and mission valence: When does mission matter? Administration & Society 43: 22–44.