Workplace Reform in the Healthcare Industry – The Australian Experience

Abstract

Purpose

Research has called for increased relevance of business reporting. A step towards that goal is an increased disclosure of non‐financial information. At the present time, non‐financial information is mostly provided on a voluntary basis.

Design/methodology/approach

Valuation relevance of non‐financial information is studied by examining the information content of 200 analyst reports written on a respective number of firms listed in the S&P 500 index, while simultaneously performing a disclosure study of non‐financial information by the same 200 firms in their annual reports.

Findings

We found the valuation relevance of non‐financial information to be related to the size of the target firm. Further, analysts’ use of non‐financial information is related to the level of non‐financial information in the 10‐k report of the target firm. Finally, analysts tend to rely more heavily on forward‐looking non‐financial information than on historical non‐financial information.

Practical implications

The findings in this paper have implications for policy makers, preparers of business reporting, and others having to make judgments on information usefulness.

Originality/value

This study looks at the valuation relevance of non‐financial information, as opposed to earlier studies that have judged the usefulness of non‐financial information by measuring its value relevance. Information is regarded to have valuation relevance if it is used by analysts in the valuation process. Hence, valuation relevance offers an alternative way of measuring information usefulness.

Citation

O’Donoghue, P. (2006), "Workplace Reform in the Healthcare Industry – The Australian Experience", Management Research News, Vol. 29 No. 9, pp. 598-601. https://doi.org/10.1108/01409170610709023

This book feels weighty and solid when picking it up and, on reading it, I can say this is an indicator of its content. This book is aimed at scholars who are interested in health sector management, particularly workforce and employee relations issues. It is both an excellent primer for students and resource for teachers and researchers and is well indexed. Each chapter contains extensive references, which provide further reading that will be an excellent aid to students and teachers. I was interested to look at this from the perspective of a practitioner in industrial relations in the field. For me, the book proved a nugget due to the wealth of background information, description of the funding, governance and industrial relations systems and the range of very instructive case studies it contains. It is one that I recommend for your collection as well as the library shelf.

Aside from the introduction, the book is divided into 3 parts – Part 1 is a descriptive section that introduces the reader to the Australian health system, Part 2 contains a number of case studies of reform and attempted reforms and Part 3 focuses on future challenges. The authors aim to use the strength of the contributor's disciplines to provide a descriptive account of the system and a broad set of theoretical arguments that address the impact of reform on the work of the health professional and support staff. This successfully bridges different theoretical approaches to health industry analysis and injects an industrial relations element to their work that is missing from other writing.

This work relates the application of new public management practices (NPM) to the Australian health system and its recent reforms. In essence, NPM represents the adoption by the health sector of private sector management techniques, based on neo‐economic rationalist notions that emerged predominantly in the 1980's. NPM aims at greater efficiencies through cost reduction strategies such as outsourcing, performance benchmarking and flexible (core and non‐core labour) staffing. In her case study titled “Outsourcing and structural change”, Young provides the most explicit description of this phenomenon in Australia. Overall, funding reforms, such as case mix and the use of Diagnostic Related Groups were the battering rams of change and the biggest stimulus to the management and reduction of costs, particularly through cutting wage costs. The focus is on public health in which health workers are generally government employees.

The introductory chapters provide a very good description of the system in Australia – the governance and funding arrangements, the history and trajectory of industrial and employee relations and the various reform efforts. Also, the Part 2 case studies provide a menu of reform examples that could guide efforts to instigate change in other organisations. Part 3 “Future challenges” canvasses various issues that could shape the direction of health service provision. A key point here is the observation by Bartram et al. (“Developing a strategic approach to people management in healthcare”) of the limited relevance of human resource management to executive management. This is quite salutary and represents quite a challenge to reformers, given that CEO's or directors of medicine or nursing have enormous potential to influence the style of management and the application of HR processes to staff in their respective hospital divisions.

For me, and I suspect for many scholars too, Part 1 is the most useful section of the book. Chapter One by Willis et al. (“Health sector and industrial reform in Australia”) provides a good description of the governmental and funding arrangements, setting out in clear terms the complex nature of the relationships. It describes the workforce, including the work classifications in the system, and explores the relationship and the tensions between the medical and nursing staff and allied health professionals, who are growing in numbers and seek to apply the requirements of their own discipline. In addition, there is an outline of salary and wage determination and the recent moves from a centralised system to decentralised enterprise bargaining arrangements.

Similarly, Chapter 2 by Duckett (“The Australian healthcare workforce”) provides an excellent detailed account of the health workforce, an overview of workforce planning and the complications in the prediction of supply and demand. He outlines the ever present pre‐occupation with money, costs and budgets and quality care. His focus is on nursing, medical and allied health staff where shortages in supply have led to consideration of workplace reform, such as labour substitution and restructuring. Using a nursing example, he describes cross boundary job classification developments and the emergence of the nurse practitioner (a meaningless title!) who assumes some of the “lower” skilled responsibilities of doctors. Also, attempts to develop cross boundary classifications at the lower end of nursing responsibilities, such as personal care workers and patient service assistants are mentioned. Duckett identifies another interesting example of the pressure on supply that occurs with the feminisation of the medical workforce, due to interrupted work lives or demand for part‐time work. This increases the pressure on the system to develop more family friendly practices to assist in balancing work and life demands.

The Part 2 case studies are an interesting, eclectic mix which show case the work of a range of independent scholars who have investigated different elements of the reform agenda in Australia. Some common issues and themes emerge in this section; such as, the central role of government, the various tools of reform that reflect an NPM agenda, and the role of management and unions. Bray et al. refer to outsourcing of functions as the principal means of reform; Young highlights the division of labour into core and non‐core; De Ruyter focuses on the spread of casual and temporary staff; Willis and Wilkes on outsourcing and changes in technology, and Stack describes the massive substitution of professional nurses with lower cost personal care workers. Almost all of these reforms were unilaterally initiated by management and employees were not able to influence the outcomes in any significant way, despite the presence of unions with high membership, like the Australian Nursing Federation and the Health Services Union. What is observed in many of the case studies is that enterprise bargaining has failed to deliver industrial and organisational reforms, unlike in other Australian industries. This observation is consistent with this writer's experience in the health sector in which unions have used enterprise bargaining to retain, if not reinforce, the status quo, such as with job classifications. This generates frustration on the part of management, which in part explains the tendency to unilateral initiation of change, rather than the use of more collaborative approaches to reform. As Leggat and Dwyer point out in their chapter on innovation (Part 3), management attempts at reform avoid moving away from traditional staffing arrangements and, thus, best practice has not emerged.

Part 3 focuses on future challenges and provides an interesting set of chapters, although on disconnected subjects. As mentioned, Leggat and Dwyer investigate innovation and acknowledge the high rate of clinical, technical and funding innovation, but see that HR is characterised by caution, and indifference. This leaves staffing issues, classifications, roles and rewards somewhat untouched and potentially neglected. This is consistent with Bartram et al.'s investigation on the application of strategic HRM. They identify an absence of any focus on people management and a failure to allocate sufficient resources to this. Iedema et al. place clinical governance in NPM and highlight the tension between management imperatives and quality of care. Interestingly, they consider that clinical governance has the scope to break the stranglehold of the speciality medical groups over clinical work and standards and open up the opportunity for inter discipline dialogue.

Sinclair‐Jones's chapter on outsourcing and electronic health service provision is an unexpected, but excellent insight to the application of the combined NPM methods and new technology to change health service delivery. It demonstrates how easy is it to render geographic and job classification borders superfluous through outsourcing to lower cost centres in overseas locations beyond the reach of indigenous regulation, such as industrial classification and salary prescriptions. Naturally, this gives rise to a range of challenges such as questions of quality control, standards, legal liability and fraud.

The conclusion by Young et al. succinctly and lucidly draws out the issues and trends and suggests areas that warrant further research. In particular, they note the failure of enterprise bargaining to generate workplace reform, which reinforced old arrangements, though it did deliver higher wages for many health workers. Change is limited, but the case studies demonstrate various efforts directed to reform and the potential for change. Unfortunately, much of this was management and doctor initiated and mainly focused on cost reductions, with consequent work intensification, role conflict and loss in morale and commitment. The division of labour is still clearly defined and the hierarchical relationships and models of practice remain intact, despite all these efforts. For the future, this may inspire a move to strategic human resource management as a means of generating more productive reform. After all, health is a labour intensive industry and it deserves this move.

While I have a very positive view of this book, I have identified several shortcomings that if addressed would improve future editions. Firstly, despite that title, the work is not a complete Australian picture, as there is no reference to several state and territory systems. The title infers that the coverage is comprehensive and the system in all States and territories are the same. Several chapters usefully describe the industrial arrangements in different states, for example Townsend and Allan and Bray et al. My thinking is that this could have been brought together with other material in the introductory section to describe the Australian system more comprehensively.

Secondly, I would have appreciated early in the book a fuller description of what is meant by NPM. NPM is mentioned many times, but the reader is left to accumulate piecemeal its components in order to obtain a definition. Thirdly, there is no reference to community health services, which is mainly responsible for primary health care delivery. It may be the smallest sector, but it is important. Fourthly, the contribution and place of ancillary staff are only mentioned and barely discussed, thus the chance to portray developments in these areas of workforce is missing. Many technical and para, professional roles already exist at the interface of nursing and allied health and provide much potential for reform of practices. For example, personal care workers, laboratory technologists, dental therapists and theatre technicians are very much involved in aspects of clinical care and provide scope for intelligent contributions in modern hospital, aged and primary care settings.

Also, in industrial relations terms, the timing of this book is excellent as it perfectly captures the current situation in Australia. This is a time potentially of the most significant change in IR in Australia. The Federal Government has amended the Workplace Relations Act 1996 with adoption of the so called “Work Choices” legislation, which enshrines greater deregulation and individualisation of employment relations, as well as anti union, anti collective processes. All of this is supposed to make the workplace more flexible and facilitate reform and productivity. Future editions will no doubt contain a chapter that contrasts past and current IR practices and the affect on health sector reforms.

Notwithstanding the above criticisms, this book is very readable and an immensely useful resource to practitioners and scholars alike and I recommend it very highly.