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Hospital Managerial Accounting, a field to
explore: ENCC or ad hoc model?
Pierre Mévellec, Professor Emeritus, University of Nantes
Benoît Nautré, Director of the Hospital St Augustin
Summary:
The new unified financing system, based on the production measures, place hospital structures vis-à-vis an
alternative: to implement the model suggested by supervision (ENCC) or to develop its own model. This choice
is particularly crucial for not-for-profit establishments, their originality being any more taken into account by the
law HPST. The Hospital Group St Augustin made the choice of an autonomous instrumentation. Choice based on
a participatory approach associating the health professionals to the structuring of the economic model and the
definition of the refunds intended for control. This text puts in perspective the development of an
instrumentation and debate on the governance of the hospital structures and offer a track to bypass the
traditional conflict between medical and administrative power by calling upon the concept of boundary-object.
Keywords: healthcare costing, boundary-object, governance,
Cf. version française pour les annotations
Hospital Managerial accounting, a field to
explore: ENCC or ad hoc model?
Management tools, in the broad sense, are built on the basis of representations of the functioning of
the organizations in which they are located. These representations themselves integrate with an
overview of the functioning of the society context in which these organizations fit. The development
of non-indigenous organizations from the dominant model in a society is problematic in the long term.
Indeed, the management instrumentation that they tend to incorporate draws them imperceptibly
towards the dominant model. It is therefore important to maintain and operate its originality, so that
the not-for-profit hospital movement (Nautré, 2007) acquires a critical reading of the standard
management tools and invests in the development of specific variants of the management
instrumentation consistent with its vision. The introduction of cost calculation and its supports within
the information system is seen here from the organizational learning perspective.
If the cost concept has always been convened in discussions on the financing of the health care system
(Moisdon and Tonneau, 1999), it has changed over the last thirty years. Theoretically, one can
distinguish three phases: daily historical full cost, estimated global cost, and finally standard unit cost
per pathology. This evolution in cost variants used for the management of the health system has given
rise to two complementary and overlapping questions: is cost a good indicator of pilotage for a health
care system? If so, is the current variant likely to be efficient for the management of health care
organizations?
The answer to these questions cannot be disconnected from the global environment of the health
system, subjected to a succession of reforms whose effects cannot be limited to the financing of
hospitals. Indeed, beyond moving from global allocations to funding on the basis of activity (T2A),
reform requires closer liaison between medical units and administrative and nursing logic,
accountability of actors through the dissemination of a medico–economic culture, and further, looking
for appropriation by the actors of the piloting tools. In line with the principles of the New Public
Management model, orders of April 1996, the Hospital Act of 2004, Hospital Plan 2007 and finally
Hospital Patient Health Territory Act (HPST), all these reforms require 'corporate governance' as a
means of driving performance.
We have structured our study as follows. The first part includes a brief presentation of the field and
the methodology of intervention followed by an exploration of consistency between modes of control
and instrumentation in cost calculation. The second part seeks to describe three different stages
followed, in order to provide the development of a piloting open tool.
A: Health care organizations looking for new piloting tools.
1 Field study and research methodology
The French hospital system includes two broad categories of institutions, private organizations and
public organizations or organizations associated with the public sector. The first have been profoundly
reformed over the last twenty years, to adapt their offer to economic and technical developments in
medicine. In fact, their mode of financing, unchanged since their inception and only related to activity,
places them in a highly competitive market. Concentrated movements have marked the end of a
medical or family ownership for the benefit of specialized health groups, refocusing the decision-
making and management tools into the hands of senior management. The latter are either governed
by public law, and in this case governed by relatively cumbersome and inertial administrative logic, or
belong to not-for-profit organizations (mutual entities, religious congregations, foundations...). The
mode of financing of these institutions, public and private not-for-profit, has substantially evolved over
the last two decades. In 2004, a "global allocations" scheme, which allocated institutions an annual
budget relatively independent of their activity or the usefulness of their care offer was abandoned and
replaced by "pricing per activity" (T2A). This marked change of logic places these structures under
direct competition from the commercial sector and highlights a serious management shortage. Private
not-for-profit institutions, more fragile than their public counterparts, because less protected by their
private status, are thus subject to the difficult challenge created by any change of environment:
disappear or innovate. We thus justify the choice of our field, the Augustines Clinic in Malestroit (CDA).
The property of a religious community, CDA experienced in 1996 a serious economic and structural
crisis, which led to the redefinition of its provision of care as well as the creation of a new managerial
model. This model, described in a recent research work (B.Nautre, 2007), has led CDA to move from a
local hospital (emergency, medicine, general surgery, obstetrics) towards an average capacity hospital
(140 beds), specializing in geriatrics, palliative care, rehabilitation and follow-up care. CDA is part of an
integrated Group including a retirement home, a training center, and a home-care hospital. Two other
developments are of interest for our work, on the one hand the concern shared by the management
team and the medical community for the development of a management tool, on the other hand the
desire to base their strategy on strong ethical values and a sense of action. Since 2004, CDA has been
subject to T2A funding for 50% of its beds (medicine) and is preparing for the transition of all of its
beds to this mode of funding in the near future.
The methodology adopted is intervention-research, in the sense proposed by David (2000):
"intervention research is to help on the field, to design and implement models, tools and
processes for managing [...], with goal of producing knowledge useful for action and theories
of different levels of generality in management science". The choice of a single field, despite
the bias that it can induce in terms of objectivity and external validity of the findings, promotes
strong interaction between research and reaction of the Organization (Yin, 1994). This work
aims to participate more with a capitalization of knowledge than to create or overturn a theory;
it is part of the logic described by Wacheux (1996), a logic which "it organized an active and
methodical consultation in the Organization, to produce knowledge on a process of change
notified and enabled". Organized over a period of 3 years, the research has been structured by
a pilot group, a researcher, managers and doctors from CDA, as well as specific skills required
by the approach (IT management, nurses, functional managers). A journal, bringing together
all the records of meetings, documents, bibliography, is viewable by all members involved (on
the CDA intranet and on paper). This text renders the work carried out during the first 18
months.
2 Hospital governance or management by values
In many research papers and publications dealing with hospital management, published during the last
decade, two major trends can be identified and with them, inseparably, two approaches to
management instrumentation. But the two paths meet regarding the specific difficulty of this type of
organization to establish an effective relationship between the choice of management tools and their
impact on the improvement of the performance of the structures (Clement, 2001, Cremadez, Jules,
1992, Claveranne, 2003).
2.1 Corporate hospital governance
A first path, relying on the contributions of corporate governance (CG) in the field of health, studied
the abilities and limitations of this model for a transposition to hospital governance (GH). It tends to
promote the concept of rates, intrinsic to the T2A, to incite institutions to homogenize their practices.
It requires internal behavior that matches global cost structures to the constraints of these unit rates.
The question of the historical conflict between managerial and medical power has induced here the
problem of the latitude of managerial power as well as location of power (Charreaux, 2010). This
approach emphasizes the multiplicity of stakeholders that represent as many principal actors in the
agency theory. The measurement of performance and by way of consequence, the development of
tools for measuring costs poses a series of questions. Measure for whom? The model of the ENCC is
interesting here, in the sense where a number of health care organizations have volunteered for
experimentation without any real involvement of medical communities (the language of the ENCC is
strongly accountancy-based and models hospital activity into "units of analysis"), and without
clarifying the purpose of the process, informs an external database to set rates or participate in the
development of a new internal management approach. How does one measure? By relying on
standard costs, which amounts to asserting the independence of costs by activity or to relativize their
imprecise nature or even political breakdown of indirect costs. By relying on the marginal cost, which
would imply that the increased activity in a speciality did not substantially influence the distribution of
the burden of structure and induces only homogeneous short-term spending... Finally, who is involved
in the process? Here again, confrontational relations between managerial and medical power are at
the heart of the debate, management tools language increases the asymmetry of information thus the
specific power of the management community, but at the same time justifies the withdrawal of other
stakeholders (including the medical corporation) who oppose accounting logic to their professional
logic.
The same work also stresses non-independence, in organizations which are public service providers
between authority and controlled organization (Muselin1999). The CG and subsequently the new
public management model poses, as a precondition to any incitement to performance, independence
between control and execution. The results from this approach are the centrality of the contract and
the underlying idea, inspired by the agency theory, of a contract as a way to reduce the costs of
monitoring the agent (the hospital director) and encourage him to align his interests with those of
the principal (the regulatory body becomes representative of the interests of the user). But, in the real
world, the definition of the terms of the contract is facing great difficulty in defining the borders of the
organization (De Pouvourville, Letourmy, 1995), where does the mission of the hospital commence
and stop, what about the competition, even the "agreements imposed"? The HPST law (Hospital,
Patient, Health, and Territory) does not simplify this problem, it complicates it even, to the extent that
it strengthens the capacity of interference by the ARS (Regional Health Authority) in the structure of
markets, partly against the model of framed competition prevailing in the model organized by the
orders in 1996.
The Manager, in the agency logic described previously, tends to focus on the instrumentation model
that strengthensspecific information and therefore its power over the organization. Thus, a "standard
costs" (base of the T2A) model will be more comfortable in the sensethat it is disconnected from the
real cost structure. Management tools preferred by this model differ so little from the existing tools
developed under the overall budget arrangements. These mainly budgetary tools are based on a
representation of the organization in units of analysis: these, with regard to the volume of shared
resources, leave the manager with a very wide latitude to meet its two major constraints. The first is
to adapt to what is most likely to be funded by a regulatory body (Mimetic attitude) playing on the
breakdown of its support costs. The second is to promote any particular activity (through the display
of a return on investment or a partial loss), playing with indirect cost allocation rules to justify policy
decisions.
2.2 Management and values at the hospital
A second path is interested in the nature of the organizations studied, classified in the category of
professional bureaucracies (Mintzberg.1991) or pluralistic organizations (Denis et al., 2004). More than
the pitfalls associated with bureaucratic mechanisms, we focus here on one of the specificities of this
type of organization which is the predominance of the institutional framework, patterns, values,
serving as a landmark for actors in action (Valletta, Denis, 2005). In this reading, the performance of
the hospital would be to search more within the capacity of the strategist to take into account and
translate these values into action with the actors and stakeholders of the organization, and less to
compel these actors and stakeholders to adapt their behavior to make their activity compatible with
tariffs imposed ex ante. In this neo-institutional reading, we admit that players agree to engage in the
search for performance only if the economic representation of their activity is in tune with their own
meaning developed under their own schemes (Valletta, Karaki, 2005). The doctor in geriatrics will
focus on correspondence between the homogeneous group in which his patient is classified and the
duration of stay, when this attitude fosters that which is contained within its own value framework
(thus it gives meaning to its action). He must understand that this mastery will increase the capacity of
its service to meet its mission, and then increase the means at its disposal.
The tools measuring costs resulting from this approach are quite different from those of the first
approach. Firstly the need arises for internal design and not adaptation of a model imposed from
outside. Here each professional or group of professionals should define how they contribute to the
added value related to a stay or an activity. For example: the social service of a hospital contributes to
the realization and the quality of a stay, in the same way as a care service. At the same time, the way
the service perceives its contribution, and especially how it will be involved in the qualification of this
contribution, will act directly on its interest to intervene in the process and buy into a learning logic
related to the global strategy of its organization.
Even if it appears somewhat simplistic to oppose the two approaches, it is useful for the debate. On
one side there is the construction of a new representation of the health care organization imposed
from the outside based on a new corporate governance. On the other side, the development of an
autonomous representation specific to each structure, inducing continuous learning, representations
which would take into account the expectations of stakeholders and turn them into tools supporting
performance incentives. One can say that hospital reform is today facing a challenge in terms of choice.
In the first case, too much confidence in the possibility of transfer of the mechanisms of corporate
governance into hospital governance, transposing without qualms management tools in respect of
the results they have shown into industry or market services, may undoubtedly lead to the pitfall
described by Or and Renaud (2009) 'the chosen mechanism, which is unique to the France .provides for
a reduction of tariffs in case of increase of the overall hospital activity and not according to the
evolutions of activity of each institution. This device, which makes no distinction between the different
activities produced and which does not take into account the individual effort of institutions, is
problematic and may cause adverse effects. This generates a highly opaque system for settlements
with little foreseeable market developments. In addition, at level and equivalent activities range, an
institution may be "sanctioned" in its funding because of strategic decisions made by other institutions'.
In the other direction, the approach of autonomous self-construction, taking into account specific
values of the studied organizational field, and most researchers agree to recognize the highly
institutionalized nature of the health sector (Valletta, 2004), opens a way to make sense of cost control
at the hospital. Where the market does not tell the value, it seems that it is starting from the value
problem and its representation by stakeholders, that one can develop a shared vision of the strategy,
and derive cost measures contributing to performance improvement.
3. The technical options available
Let us examine in more detail, technically, these two tracks taking as reference the standard cost
proposed by the regularity authority model. Is this representation built for the needs of the global
regulation, relevant to the development of management tools specific to each structure? Can each
structure embark on the development of a specific model?
The functional model used by the regulatory authority distinguishes 3 functions: clinical function, the
medico-technical function, the logistics function and 3 other frameworks: the mixed units of analysis,
royalties from practitioners and subsidiary activities. The functions are divided into functional units or
medical units. The allocation base between units of analysis are varied even if the duration of stay and
the consumed euros are the two main bases. Specific work units, especially for the medico-technical
and logistics functions are proposed. It is a model of health care organization based on craft
perspective. The coexistence of three subsystems, the public hospital, the for-profit hospital and the
not-for-profit contradicts the Ashby law which states that to control a complex system one requires a
control system of the same complexity. Therefore, there are obvious risks of perverse effects using a
single cost system as a tool for piloting three diverse subsystems. However, it probably isn't for the
supervisory authority to anticipate these risks but for the structures concerned to document these
risks, to be able, through negotiations, to achieve convergence between the collective interest and the
specific objectives of each system. So it's worthwhile looking at the inherent characteristics of the cost
used as piloting instrument in an attempt to deduce some recommendations on its use within health
care organizations. To quote Edmonson (1996), no doubt inspired by a Japanese proverb, "most
practitioners carry a hammer and assumes the presence of nails ' one should avoid making the ENCC
cost version the manager’s hammer.
Whatever the system, the piloting is based on the ability of the pilot to measure both objectives and
achievements, to guide decisions so that the latter maintain or bring back the system to the desired
path. This is done in human organizations by an information system. The latter collects, processes and
allows the linking of multiple measures, an expression of the variety of the system to be controlled.
Used to controlling physical systems not reacting to the measure itself, except down to the subatomic
level, we tend to think that measures in the social field are of the same nature as usual scientific
measurements. But it is not so because the measure in social environment can be neither separated
from its producers nor its users (Meason, Swanson, 1979). It is in this context that the concept of cost
must be interpreted, as used in health system management.
Management tools, and the cost system is a major one, are the result of a modeling process carried
out by stakeholders who want to control it. This begs the question: does the notion of DRG cost
express a sufficient representation of the real world to act effectively on it?
Management control in any organization must be at the service of the strategy. If one accepts this
hypothesis, representation proposed by the regulatory authority may be admitted as relevant only if
one accepts the lack of strategy within the hospital structures (forced public service) or the neutrality
of the information with regard to the strategy system. The lack of strategy can be expressed positively
in the form of 'the only possible strategy is alignment with the standards of the Ministry model. The
tariff based on ENCC indicates the "one best way". One must use this model as a functional
benchmarking to progress towards best practices. The ENCC provides both economic constraints and
an organizational target, in a word, it overrides local strategies to guide the actions within each of the
functional units belonging to the health care organization. We can easily see that this substitution can
only eradicate the originality of the not-for-profit sector. It is vital for this sector to develop a model
capable of supporting dialogue with the ENCC, and not be consumed by the underlying model
represented by the ENCC.
The neutrality of management tools that prevailed until the 1970s is no longer defended. On the
contrary, the evolution of tools has become one of the major levers of change in organizations. One
cannot ignore the impact of the introduction of the concept of DRG cost on the operation of healthcare
organizations.
If we defend the idea of a minimum of institutional autonomy then we must accept that each should
build its own representation, more or less close to that proposed by the Ministry, according to its
degree of assumed autonomy and strategic willingness. Distancing oneself from the standard model
opens doors to other dimensions than the economic dimension. It offers the opportunity to reflect on
its own functioning, on the relations between social groups, between specialists, between
communities of practice, in short, to launch bases of a learning structure, potentially innovative instead
of being guided by a hypothetical 'one best way' that would emerge, as by magic, from the ENCC and
the pro format P&L.
Finally, it is also the only means, collectively, of getting closer by trial and error to the optimum scenario
which may not arise mechanically from the application of the ENCC as stressed by Or and Renaud
(2009). It is by confrontation and debate between the standard cost of the ENCC and specific costs of
the various institutions that the regulatory authority can improve its management of the health
system.
As in all organizations, one can imagine, in health care organizations, the construction of an integrated
information system such as an ERP, or a more flexible approach that accepts multiple business
approaches reflected in specialized software.
The multipolar nature of health organizations would act against the success of an ERP (Romeyer, 2003,
Nobre 2009). The needs and expectations of the medical profession, those of the administrative staff,
and those of external partners or branches will find it difficult to be formalized and to be adjusted
during the implementation of the ERP project, inevitably bound in time and by available resources.
Romeyer (2003) highlights the technical difficulties of overcoming and obtaining traceability among
the three areas to cover: information flow, physical flows and support activities for patients. Added
to these technical difficulties are the difficulties associated with the implementation process, slow and
complex as well as difficulties related to both external stakeholders (lack of experience in the health
sector) and internal (difficulty of changing work habits).
On the other hand, the acceptance of specialized software development, each with its own rate of
evolution, risks depriving senior management of the transversal and synthetic vision necessary for
developing a strategy for the institution. There comes a time where abundance must be channeled
within a global model. The latter will have a dual function, on the one hand of offering a global vision
of the functioning of the organization on the basis of the existing IS, and on the other hand, of
contributing to the piloting of the future developments of the IS, to respond better to the expectations
of the various stakeholders. The idea is then to allow the specialized development systems to expand
their horizon but to develop their interfaces so as to foster a genuine central dashboard.
The passage of local and specialized software to a global template is the necessary condition for the
establishment of a central control device capable of articulating the different logics promoted by
stakeholders and translated partly in different sub-systems. The development interfaces must respect
a number of principles to deliver the expected service. The first is the completeness of data from
heterogeneous sources. The second is the consistency and completeness of traceability. Finally the
selection and construction of indicators which should be adapted to the needs of each institution.
The encompassing model must have an economic 'layer' to ensure a minimum interfacing with the
regulatory authority. Its construction can be organized according to two different logics: a logic of
objects or an activity logic.
Conventional models are built rather according to the first option. They try to answer the question:
what (service) object has consumed what resource? The approach is analytical. Faced with an
impossibility of resource allocation one will be sought by a technical detour (more or less sophisticated
and more or less realistic) to operate the allocation of the resources concerned (Mevellec, 2005).
Models built on a logic of activity are interested first in realized productions, whatever they are. Once
all production and activities have been identified, one addresses the consumption of resources, which
are consumed by the activities and incidentally by objects for which one wants to calculate the cost.
Focusing on production allows the global template to respect local business logic while integrating it.
It seems that it is therefore on this basis that the global model of health care organizations should be
built if they wish to develop a forum for strategic debate. It is only on this basis that the economic
model can enables the different expertises which cooperate within institutions to become visible,
instead of having them melt into the anonymity of the accounting categories representing various
resources consumed by DRG.
The ENCC retains as a basis:
« In accordance with the principle of homogeneous unit of analysis, institutions must proceed with the
splitting of their activity in units of analysis (UA). UA is a subsystem of cost assignment which implies a
homogeneity of the activity. It must therefore allow the rapprochement between clearly identified
resources and a precisely measured activity. "(p.13)
The ENCC is placed in the second logic but things become less clear when it comes to the allocation of
resources 'focusing direct assignment to the stays of a series of medical costs, in addition to their
assignment to the UA' (p.36). Pictured here is clearly the first logic which aims to directly affect
maximum costs to the single object that is the duration of the stay by DRG. This methodological floating
does not in itself contribute to making the ENCC model a clear support for a strategic debate between
actors of the most heterogeneous skills in economic and accounting. We believe that a model should
convey only a single logic, although it should be able to answer multiple questions.
B. Design of tooling and confrontation in the field
1. The ad hoc model design
1.1 Construction of the model
Two options are available to the designer of the model of a health care facility. A prescriptive approach
and an empirical approach. The normative approach simplifies the work and will generally go much
faster in the construction of the model. The standard is of course provided by the model of the ENCC.
It is for the designer to check which activities are present in the organization, among those provided
for in the ENCC. This task can be achieved in a confined area with minimal contact with the operational,
be they medical or administrative. The model is presented as the reference to which the organization
has to become closer. The risk is proportional to the gain of time and resources obtained during the
construction: a non-appropriation of the model by the operational and consequently its difficult use
for the management of the organization. The model will be the tool of the accounting department,
representative of the 'accounting logic', the regulatory authority logic and not the image of the
functioning of the organization because its design has not been a collective learning exercice.
The empirical approach involves the actors themselves in the design of organization representation, a
representation in which they will recognize themselves. This condition seems fundamental to us to
have the information from the model accepted and used. The counterpart is the unwieldiness of the
approach and its cost (Thurnston, Kelemen, MacArthur, 2000). Nevertheless, these two critical
viewpoints, largely reiterated in the professional press, must be relativized because they ignore an
important side effect of the approach: the information and training of a very large number of actors in
the principles of economic modelling, the demystification of the conventions and sharing of the choice
of inevitable conventions of representation involved in modeling. This work with the operational will
avoid, for example, separate maintenance of the buildings for their use to focus on the service
provided: provision of functional m2 for other services. According to the organization and the size of
the facility, cleaning, maintenance, can each be the subject of a separate analysis but what is important
is to agree whether medical and administrative services should discuss the maintenance cleaning,
heating, etc. or if it is the provision of the m2 which is the support of intra-organizational relations. In
the medical sections one may be wondering, for example, about patient flow-related activities and
those related to the length of their stays. Does one opt for two units of analysis to better identify the
causality of resource consumption or can one accept some approximation to match the department
and the unit of analysis?
It is also at this stage that one decides how to qualify the value created by the different units of analysis
and their selected production measure. Some units of analysis are identical to those of the ENCC, but
it is interesting to compare the choices of the production measure. The case of the laundry is an
example of the difference in points of view. On the one hand, an ENCC template centered on the
technical function in the narrowest sense defines the volume of activity by the input, i.e. Kg of dirty
clothes. On the other hand, our model deals not with the technical function but with the process that
integrates the supply and delivery and defines the volume of activity by Kg of clean linen provided,
which represents the value created for internal clients. The value support is more rewarding for staff
and is gaining its support on the need to measure, while the same claim for the arrival of dirty linen
met passivity and resistance under various pretexts.
The case of catering also deserves a comment. While the accuracy of resource allocations and the
fineness of the costs is a goal, the ENCC voluntarily neglects the cost of breakfasts and snacks. If all
patients are fully hospitalized, this convention has no impact on the costs of the DRG. However if day
hospitalization is equal to full hospitalization, the phenomena of subsidization is no longer negligible.
If we differ on the choice of certain choices, we appreciate the effort made in the context of the ENCC
to move away from pure volumetric allocation bases. The choice of prescription lines for the
breakdown of pharmacy operating expenses seems to us particularly appropriate.
1.2 The architecture of the model
Two questions arise at this stage. Would one take into account the reciprocal benefits between units
of analysis (Mevellec 1995): does the IS department provide services to the human resources
department which in turn provides services to IS? On this point we suggest having the wisdom of the
ENCC, i.e. not taking them into account. This increases the complexity of the model for a very relative
benefit. This technique is to be used only if it is likely to highlight local costs significantly very different
from those obtained without reciprocal benefits (direct cost). The second question concerns the
organization of the units of analysis into a hierarchy. One aspect of this problem has already been
mentioned above, it being the decomposition of a process into its activities. The second problem is the
consumption of the production of one unit of analysis by another. When all consumers of the service
provided by a unit of analysis are internal to the Organization, prioritization is necessary except to
accept arbitrary allocation of costs to customers. Typically, support functions such as human resources
management, an information system or housing service fall into this category. These choices having
been made, it is possible to organize different activities depending on their role and their behavior
within the organization. We propose to distinguish 5 types of resources, resources being understood
here in the sense of production capacity at the service of the business.
Figure 1: Typology of resources
The concrete translation of the proposed hierarchy can, for example, be as follows:
Capacity resources
Resources linked to patient volume and duration of stays Resources linked to patient flow
Prescribed medico-technical resources
Medical activities
Figure 2: Partial view of the model
The units of analysis included in this hospital (with no technical platform) collect all costs. There is
never double-billing on a unit analysis and on a stay. All costs generated by the operation of a unit of
analysis are full costs as capability resources are consumed by all remaining units of analysis. The only
costs which are allocated other than on a duly measured service consumption are the general support
costs. Each unit of analysis is characterized by its production and it is the unit cost of that production
which is the allocation base used to value the consumption of services by remaining units of analysis
or cost objects. These measures of production are hardly different from those proposed by the ENCC,
it is the mode of assessment of their cost and their interpretation which is different.
2. The model for the structuring of refunds.
By opting for extreme logic one can imagine two antagonistic reviews. The first which places the
patient at the heart of care organization, leads to the calculation of cost of a single object: the cost of
the individual stay. The second, which adopts the point of view of doctors and medical knowledge
leads to the presentation of the care institution in the form of a grouping of medical responsibility
centers within which all other services merge. Before developing intermediate solutions, let us
examine these two extreme situations.
2.1 The patient at the heart of the care structure.
The relationship between the cost of the unit of analysis and the cost of stays is rightly at the heart of
the approach of the ENCC. If this appears legitimate insofar as the ENCC must provide a basis for the
tariff, this procedure can be considered risky and clumsy for an isolated institution. Certain expenses
are simultaneously attributed to units of analysis and to patient stays. This approach blurs the total
cost of the units of analysis involved because, according to the type of analysis to which we refer, the
amount of expenses to be taken into account is no longer the same. This parallel allocation, in addition
HousingHuman resource
managementI S
General support activity
KitchenLaundryAdministrative
supportFront desk
Balneotherapy PhysiotherapyRadiology/cardiology
Social servicePharmacyErgotherapy
Follow-up careFunctional and
physical medecineMedecinePalliative careGeriatrics
Spiritual accompaniyng
to its computational complexity, increases the risk at the moment of the imputations and compromises
the reliability of the cost of stays. It would have been more logical to build the cost of stay as a process
during which the patient consumes various services, both administrative and medical. This would have
allowed us to replace, for each stay, the double-billing by a detailed technical follow-up. Any medical
act or any service from which the patient benefits should be documented in the patient’s record. It is
on this technical basis that the cost of each patient's stay will be calculated here. Traceability must be
one of the structuring concepts of the information system (Mevellec2005).
Figure 3: Patient-centered modeling
The economic review of the care provider is modeled on the calculation of a full cost. The patient is
hidden behind the DRG and the contribution of the various services, whatever they may be, is treated
in the same way. Kitchen and laundry are no different from physio-therapy or occupational therapy or
medical activity per se. Patients are also independent from each other and nothing in the model
underlies the solidarity which is at the heart of the French health care system and in particular the
strategy of our not-for-profit hospital.
2.2 The medical unit at the heart of the information system
Changing the way of looking at the hospital structure leads quite naturally to the development of a
different economic review. The economic balance of the organization is no longer to examine every
patient stay but to look at each identifiable medical unit within the hospital structure. We will not
discuss here the detail of this display that is part of an internal power game. We are concerned only
by the modalities for the review of the economic data which reflect the functioning of the organization.
In this context all data must focus on medical units. The patient, in the same way as service providers,
which are all considered as ancillary services, disappears behind the main services i.e. the medical
units. The question is no longer whether the patient YYY... has consumed 3 sessions of physiotherapy
and a consultation with a dietitian, but now the question relates to how many sessions of
physiotherapy and how many dietary consultations have been prescribed by medical unit X. At the
1
Cost of stay
T2A for the DRG of the patient
KitchenLaundryAdministrative
supportFront desk
Allocation on all units of analysisBased on their service consumption
Lengthof stay
consumptions
Margin
same time, management no longer questions the profitability of this or that category of patient but
the viability of such or such medical unit. The customized processing of YYY patient is no longer visible.
What appears is the medical behavior globalized at the medical unit level. These are black boxes for
senior management, which perceives only the overall economic result. This architecture mapping is
shown below.
Figure 4: Modeling focused on medical units
2.3 The result of a first Exchange with physicians.
The presentation of the two extreme solutions to the hospital doctors led to a reaction whose source
is in the truncated representation of their activity. "How is the patient's stay valued in our service?",
"is there a traceability of the time that we devote to each patient?" 'I do not see pharmacy spending'
"How do your costs take into account the quality of care and the quality of the environment that we
offer to our patients?", "if one does not see patients how can one act to help to return to the economic
balance if it is endangered? '' "all our patients are different and it is our duty to treat them as best as
possible given our knowledge, how can this be justified?”, «the T2A rates are not the result of
theoretical work but are based on an examination by doctors of best practices, we cannot be, without
exception, very far from the implied standard that constitutes the T2A tariff. "You must give us
information which would enable us to react to the causes of our potential overruns", "we are currently
under DMS (average length of stay) pressure and alerts; if you put still other pressures on us, I
despair of doing my job", "If the DMS is not an appropriate lever, then what is - it or they? ''
At the end of more than an hour and a half of exchanges between physicians and between physicians
and the project leader, it is clear that the agreement between the economic vision contributed by
management accounting and the medical vision contributed by doctors could find strong support not
for one tool, but for a combination of two new management tools for the hospital: a cost per medical
unit and one technical dashboard by DRG. The chronological approach, which had been considered for
cost calculation and the development of dashboards must be replaced by a synchronic approach of the
T2A income
Margin by medicinal unit of analysis
Balneotherapy PhysiotherapyRadiology/cardiology
Social servicePharmacyErgotherapy
Follow-up careFunctional andphysical medecine
MedecinePalliative careGeriatrics
HousingHuman resource
managementI S
KitchenLaundry Administrativesupport
Front desk
two management control tools. Non-financial dashboards, based on the analysis of all the medical
requirements and the length of stay by DRG, both satisfies and reinforces, through new information,
the logic of medical care, at the same time offering support for dialogue with managers, because the
medico-technical parameters are all cost drivers. Income per medical unit simultaneously allows
management to 'visualise' the contribution of each medical team to the overall functioning of the
organization and offers senior management the possibility of better targetting its demands and
improving the allocation of any free resources.
3. Dashboard as a boundary object
The above management models should not be designed as purely economic models (Briers, Chua,
2001). A model provides us with a representation of the overall operation of the organization and its
multiple productions. Each of these productions constitute in itself an area of management and a
source of reflection on the production of value within the organization. He who speaks for the
production of value must identify one or more clients as stated quality analysis and more widely, its
stakeholders. We make the assumption that, on this basis, it is possible both to strengthen
management on a business basis and transversal management basis of the strategy. Beyond the costs
of stay, the model allows the preparation of multiple reports in an economic dimension, but also in a
medical dimension, since all acts and syntheses are dealt with in the model. We believe that this
capacity can be stimulated by the notion of boundary objects (Trumpet, Vinck, 2009) that will combine
both medical and economic dimensions.
Here we shall resume the theoretical perspective opened up by sociologists (Vink 1996, Star and
Griesmer, 1989) in the study of the functioning of the networks of researchers and engineers. Even if
our objects do not have all the features of the objects studied by the aforementioned sociologists, they
are close enough be able to make reference beyond the traditional categories of management control
(Zeiss, Groenewegen, 2009, Wenger 2000)
Figure 5: The piloting tools as a boundary-object
The boundary object formed by the coupling of a DRG dashboard and a contribution margin per
medical unit allows us to support efficaciously both the dialogue within each community of practice
and between the two communities through the various mechanisms of standardized translation
available in the infrastructure of the organization’s information system and within the two
communities. The patient record, OSII in the figure, is a good example of this effort to standardize
medical information. This standardization allows a strengthening of internal exchange within the
medical community while enabling it to interface with administration and management tools. We
intend to continue to explore this track in the continuation of our work.
Conclusion
Our purpose is less to criticize the ENCC than to show that focusing on costs and not on overall
management is a risky approach to the organizations providing health services. Everyone recognizes
the complexity of costs and the difficulty of organizing dialogue between management and the medical
community. It would be a pity that responses to the T2A in hospital structures reinforce this problem
instead of serve as a springboard towards a leap into the management of complexity. To make this
leap when implementing cost systems, each institution must take the opportunity to think collectively
about real functioning, joint productions and the social value thus produced. In exchange, the medical
community should derive benefits in the form of a workable data base for improving practices, and
senior management would be able to collect material for strategic reflection on its positioning and its
alliances which serve its territory. In addition, that different categories of staff will be able to add an
economic dimension to their professional thinking. In short, we believe that the modelling issue
suggested through the ENCC is vital for the transformation of the health system and that it would be a
tremendous waste to restrict it only to cost calculation and not to use it as the starting point of a
Boundary object
Dashboard by DRG
P&L by medical
unit
Abstract representation of the organization
Managerialgroup
Community of medicalpractice
Questions/answer
Questions/answers
Accounting /OSII/GA/PMSI
Standardizationof the translation
Management dialogue
collective learning process (Carlisle, 2002). The use of the concept of the boundary object for this
reflection appears to us extremely promising, as shown in our initiative, which is still in its infancy, and
that we will continue in the context of our longitudinal case study.
Finally, this research, like all intervention-research limited to one organization, cannot claim the
generalization of the model proposed for all hospitals. However, depending on the categories of
organizations that we describe in the first part, it appears that private not-for-profit sector structures,
in particular those whose strategy is based on the attachment to value systems, institutions within the
meaning of Granovetteur (1994), would be particularly suited to take advantage of this model: in fact,
we want to show that the construction of a piloting model only finds its usefulness when it is
understood and translated into sight structuring or networking (Callon, Latour, 1991), around the
strategic object that the model wants to have emerged.
Thus we can issue the principle whereby, in a type of organization that we have described as highly
institutionalized, in an organizational field characterized by the absence of relationships between value
and market, this strategic object is neither natural nor predefined. It is instead the result of a
collaborative construction. The meaning attributed to it by the organization stakeholders, that is to
say, its management effectiveness and its role in inciting performance, results more from its ability to
comply with their individual expectations than from any specific power linked to any particular
management logic. It is, therefore, on this strategic object, in the sense of a boundary object,that we
should focus. The fact of being specific to each organization, with its evolving, unstable character, thus
inciting the construction of fitted and flexible models, must be recognised.
Thus, whether it is the ENCC or an ad hoc model, the field to explore is vast, and the debate is at the
center of contemporary issues in the context of hospital system reform.
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