Elsevier

Health Policy

Volume 106, Issue 1, June 2012, Pages 37-49
Health Policy

Review
Leadership and governance in seven developed health systems

https://doi.org/10.1016/j.healthpol.2011.12.009Get rights and content

Abstract

This paper explores leadership and governance arrangements in seven developed health systems: Australia, England, Germany, the Netherlands, Norway, Sweden and Switzerland. It presents a cybernetic model of leadership and governance comprising three fundamental functions: priority setting, performance monitoring and accountability arrangements. The paper uses a structured survey to examine critically current arrangements in the seven countries. Approaches to leadership and governance vary substantially, and have to date been developed piecemeal and somewhat arbitrarily. Although there seems to be reasonable consensus on broad goals of the health system there is variation in approaches to setting priorities. Cost-effectiveness analysis is in widespread use as a basis for operational priority setting, but rarely plays a central role. Performance monitoring may be the domain where there is most convergence of thinking, although countries are at different stages of development. The third domain of accountability is where the greatest variation occurs, and where there is greatest uncertainty about the optimal approach. We conclude that a judicious mix of accountability mechanisms is likely to be appropriate in most settings, including market mechanisms, electoral processes, direct financial incentives, and professional oversight and control. The mechanisms should be aligned with the priority setting and monitoring processes.

Introduction

The World Health Report 2000 introduced the notion of a government's responsibility for the ‘stewardship’ of the health system, which “encompasses the tasks of defining the vision and direction of health policy, exerting influence through regulation and advocacy, and collecting and using information” [1]. The notion was subsequently refined and characterized by the World Health Organization as ‘leadership and governance’, which “involves ensuring strategic policy frameworks exist and are combined with effective oversight, coalition building, the provision of appropriate regulations and incentives, attention to system-design, and accountability” [2]. Leadership and governance are generally considered to be the most complex but also the most important function of government in relation to its health system.

Governance can be defined as social coordination and three main types are usually described in the literature: hierarchy, market and network [3], [4]. They rest on different theoretical bases (for example, theories of bureaucracy, economics, sociology) and require different actions from government. A hierarchy implies a need to define rules, allocate resources and responsibilities, with an implication of top-down direct control. A market implies an emphasis on purchasing, regulation, and creating incentives. A reliance on networks implies the need to establish common values and knowledge, and management through professional norms and information.

Ouchi [5] argues that the choice of optimal organizational control in a specific situation depends on two broad contextual considerations: the knowledge of the production process and the ability to measure outputs. Markets are optimal when knowledge of the production process is poor but outputs can be accurately measured – that is, when contracts can be readily written and performance monitored by observing outputs. Conversely, hierarchies might be preferred when knowledge of the production process is good but outputs are difficult to measure – that is, when behaviour can be readily controlled through rules of process. When information on both production process and output measurement is poor, the organization may have to resort to what Ouchi calls ‘clan control’, under which performance is determined by social and cultural norms rather than markets or bureaucracies.

The traditional model of governance was based on hierarchy, but developed towards mixed models including market and network types. This requires new and more general approaches to governance as governments relinquish some aspects of direct control. A focus on leadership and governance therefore does not necessarily imply a need for government itself to finance, provide or otherwise directly control health system resources. Rather, this perspective emphasizes the responsibility of government for ensuring that goals are articulated, that necessary systems, capacity, incentives and information are in place to assure attainment, and that all stakeholders are able to exert appropriate influence on the actions and performance of the system. Indeed, the emphasis upon stakeholders implies that the state cannot impose ‘top-down’ governance. It is likely that – given the diffusion of power in modern economies – the state must mobilize networks of power in order to steer events [6]. In a typically complex health system no one actor has all the knowledge and power required to get things done and the state must therefore necessarily engage in networked governance across many organizations.

The concept of leadership and governance is relatively new in health, and there is little consensus on how to define, model or measure stewardship of the health system [7]. However, management theorists and political scientists have well-established more general models in this domain. In particular, analogies have been drawn between the need to ‘steer’ physical or biological entities, and the need to exercise governance of social systems. Such models have been described by authors such as Beer [8] as ‘cybernetic’, derived from the Greek word κυβɛρνητηζ (kybernetes – a steersman), which is also the root for the word ‘governance’. Osborne and Gaebler [9] note that states now seek to ‘steer rather than row’ their developed economies.

Other authors [10] rely on system thinking to gain a deeper understanding of the process necessary to implement a given intervention in the real-world setting. Only by taking all the relevant implications into account, including how the system will react, what synergies can be developed and what negative behaviour might be expected, can one ensure that the design of the intervention is robust and the intended result will emerge. Veillard et al. [11] propose an operational framework for assessing the stewardship function of health ministries. The relevance of such models to the analysis and strengthening of health systems is clear. Under the World Health Organization definition stated above, leadership and governance involve setting priorities for the maintenance and improvement of the population's health, assessing progress towards attainment of those priorities, and ensuring that all relevant actors are held properly to account for their actions. Following Smith and Goddard [12], we summarize this process with reference to three key components: setting priorities, monitoring performance, and holding to account. Although necessarily a simplification, this three-part model captures many of the essential features of the leadership and governance challenge. It is illustrated in Fig. 1, a representation that underlines the notion of performance feedback inherent in successful governance of the health system. This emphasizes the function of ‘steering’ the systems under scrutiny.

Priority setting can be defined as a more or less systematic approach to distributing the available resources between competing demands in order to fashion an optimal health care system, given system constraints [13]. The most fundamental element of priority setting is to ensure that a clear set of goals is articulated for the health system to act as a basis for such optimization. Experience since the World Health Report 2000 suggests that the principal goals are likely to include variants of the following:

  • Improved health status of the population

  • Safe, high quality health services

  • Responsive health services, meeting the expectations of patients and caregivers

  • Equitable treatment and outcomes

  • Financial protection from the expenditure consequences of ill health

  • Ensuring a sustainable supply and efficient use of resources

The precise formulation of goals, and the degree of importance attached to them, is a matter for individual nations to determine. It is largely a political decision, but there are available frameworks that can help to guide the debate [14]. In practice, high-level goals do not differ substantially between health systems. The task of priority setting is to convert the chosen high-level goals into targets and operational actions for the health system. In contrast, these are likely to vary considerably depending on local circumstances such as pressures on the health services budget and local constraints [15].

Priority setting can take a number of forms, such as required standards of service or aspirational targets of attainment [13]. A common form of priority setting in systems both of mandated health insurance and of devolved tax funding involves the specification of a set of health services (the health basket) to which insurees are entitled [16]. Increasingly, parts of the health basket are being shaped at the national level by agencies at arm's length from government, using techniques such as cost-effectiveness analysis. It is quite common to observe other priority-setting approaches, often running alongside the health basket, such as targets for health improvement, standards for patient safety, or waiting times and other access guarantees.

The IT revolution has transformed our ability to capture vast quantities of data on the inputs and activities of the health system. The immediate stimulus for providing better information has been to improve the delivery of health care by securing appropriate treatment and good outcomes for patients. Without access to reliable and timely information on the patient's medical history, health status and personal circumstances, the clinician will often be unable to provide optimal care, and wasteful duplication and delay may also occur. Similarly, patients often lack the information required to make choices about treatment and provider congruent with their individual preferences and values and offering the best potential health outcomes.

More generally, information is also a key resource for securing managerial, political and democratic control of the health system – in short, for improving its governance. There have been astonishing developments in the scope, nature and timeliness of performance data made publicly available in most developed health systems [17]. Performance monitoring can be defined as the systematic collection, analysis and dissemination of data to inform stakeholders of the actions and outcomes associated with practitioners, organizations and entire health systems. There are many diverse uses of performance information, such as tracking public health, monitoring health care safety, determining appropriate treatment paths for patients, promoting professional improvement, assuring managerial control, and promoting the accountability of the health system to citizens. Underlying all of these efforts is the role it plays in enhancing the decisions that patients, clinicians, managers, governments and citizens take in steering the health system towards better outcomes. A primary purpose of performance information is therefore to promote transparency throughout the health system and to enable stakeholders to hold actors within the health system properly to account.

Specification of priorities and performance monitoring has little purpose if relevant actors do not have the power to use the results to effect change. For example, Mannion and Goddard [18] found that performance monitoring in Scotland was well advanced in the mid 1990s. However, it had little impact on health system behaviour because of a lack of accountability mechanisms and the associated incentives to prompt appropriate responses on the part of practitioners, managers and organizations. The same phenomenon can be observed at a national level – for example, the biennial Dutch Health Care Performance Report [19] has been slow to inform the policy debate and national priority setting.

Stewart [20] argues that accountability has two broad elements: the rendering of an account (provision of performance information), and the consequent holding to account (sanctions or rewards for the accountable party). The availability of performance information is therefore not in itself sufficient to promote accountability. There must also be put in place appropriate accountability mechanisms – arrangements that allow stakeholders to express their judgments on service providers and – where necessary – encourage them to take remedial action. Such mechanisms might include markets in which patients or payers can choose which providers they use, democratic processes in which the public passes periodic electoral judgment on relevant agencies, direct incentives through payment or accreditation systems, and the oversight of providers through professional regulation or through reputational pressure from the judgments of professional peers. The common feature is that they imply some incentive for the provider to take action.

All nations have put in place governance institutions and systems that – to some extent – address the need for priority setting, performance monitoring and accountability. However, the precise scope, design and effectiveness of such mechanisms vary considerably. The objective of this paper is to explore the current state of progress in health system governance in seven countries: Australia, England, Germany, the Netherlands, Norway, Sweden and Switzerland. In particular, it describes the relevant arm's length institutions that have been put in place and the methods they use, assesses the scope and effectiveness of their operation, and discusses the extent to which, as a whole, they serve the leadership and governance requirements of the health system.

There is no single accepted definition of an arm's length institution. The OECD [21] describes them as assuming government responsibilities “at arm's length from the control of politicians, with different hierarchical structures from traditionally functioning ministries and in some cases management autonomy or independence from political influence”. They have been created with two objectives in mind: to improve efficiency and effectiveness, or to legitimize decision-making independent of political influence. The key ways in which they differ from traditional ministries include: different governance structures; exemption from certain managerial, financial, or personnel rules; and a degree of management autonomy. The common feature is a desire to distance the detailed operations of the agency from day-to-day political scrutiny and control. Of course this can be effective only if the agency is given very clear terms of reference and authority. The OECD describes such arrangements as “distributed governance” [21].

The countries were chosen to reflect a range of health system arrangements in high income countries with universal health coverage, largely financed by mandatory contributions in the form of taxation or social health insurance. Table 1 summarizes key national health statistics, highlighting the similarities in many of the measures [22], [23]. In contrast, Table 2 gives a broad comparison of their health system characteristics, highlighting considerable variation in structures of governance. A key unresolved debate is the optimal extent of decentralized control within health systems [24], and we sought to reflect a spectrum from the considerable decentralization found in countries such as Switzerland and Sweden to the high levels of centralized control found in England and Norway. Clearly the issues involved in ‘steering’ the system are very different depending on the degree and type of decentralization in place, and this issue is a key focus of our discussion.

The study takes advantage of an author from each country who is familiar with the health system and relevant policy developments. Consistent responses were sought through a semi-structured questionnaire, summarized in Annex 1, developed in discussion with all authors in order to avoid misinterpretation or ambiguity. In the next section we summarize for each country experience under the three leadership domains, and assess the extent to which they are aligned. A concluding section discusses the findings and draws conclusions for future priorities.

Section snippets

Summary of findings

The survey results are reported in full elsewhere [25]. In this section we summarize the key findings from individual countries. To a large extent the state of progress within a country can be assessed by reporting the type and effectiveness of the institutions that have been put in place to undertake the leadership and governance functions described above. Therefore, as a framework for the discussion, Table 3 summarizes relevant agencies in the seven countries under scrutiny.

Discussion

The brief country sketches identified a large number of arm's length agencies, as summarized in Table 3. The findings indicate a variety of approaches to leadership and governance. This section discusses the results under the three domains, and draws some conclusions for future developments.

Acknowledgements

This paper is based on work commissioned by the Commonwealth Fund for its 2010 International Symposium on Health Policy. The authors would like to thank Sarah Thomson (LSE Health) and Robin Osborn (Commonwealth Fund) for valuable guidance, Sarah Jane Reed (LSE Health) for research assistance, and seminar participants and referees for helpful comments.

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