The management of health care: a model of control

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Health Policy 29 (1994) 157-171

The management of health care: a model of control

Kerry Jacobs

Depaflment of Accounting, Finance and Information Systems, lJniuersi!y of Canterbury, Canterbury, New Zealand

(Accepted 13 April 1994)

Abstract

This paper is aimed primarily at those involved in managing and implementing management structures in health services. It is concerned with the replacement of historical management structures with ‘proven’ private sector structures. It is argued that a major problem with the private sector models introduced in New Zealand is that they fail to’ recognise the levels of uncertainty inherent in the diagnosis and treatment of illness. The Gibbs Report [ll criticisms of existing management practices are discussed, criticisms that were based strongly on the Griffiths Report [2]. A model of organisational control is outlined, based on Ouchi’s [3] concepts of market, bureaucracy and clan. This model is used to evaluate two major structural changes: the introduction of general management and the involvement of clinicians in clinical directorates. It is argued that success or failure of health service management reform depends on a greater recognition of the underlying uncertainties involved in medical practice.

Key words: Health care; Management; Control; New Zealand; Culture

1. Introduction

This paper is aimed primarily at those involved in managing and implementing management structures in health services. A basic model of the different types of control systems is presented, and it is argued that some types of control are

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158 K Jacobs /Health Policy 29 (1994) 157-l 71

inappropriate for the levels of uncertainty and judgement associated with medical practice.

Starting from the ‘triumvirate’ management structure in New Zealand hospitals, this paper examines two major attempts to reform the management structures in these hospitals: the introduction of general management and the involvement of clinicians in the management process. A model of organisational control systems is described to provide a basis for the discussion of the management reforms.

The past decade has seen a major reform of the New Zealand economy, with a particular emphasis on the core public sector. Many of the controls and subsidies in the private sector were phased out. Parts of the public sector that were not deemed to be ‘core’ were transformed into profit-seeking enterprises, and those that remained were reorganised to introduce competition, to facilitate consumer choice and to produce greater cost-effectiveness. Because health care was such a major component of the ‘core’ public sector, it received significant attention from the reformers. Currently the Health and Disability Services Act (1993) has replaced the fourteen former area health boards with four regional health authorities @HAS), funded on a population basis to purchase health services, and twenty-three Crown Health Enterprises (CHEs), required to operate as commercial organisations and compete for the RHA contracts.

The management reorganisation experienced by New Zealand hospitals involved the replacement of earlier management structures with general managers. Previ- ously, three executives - the chief executive, the medical superintendent and the chief nurse - formed the management team and ran the hospital under the authority of the hospital board. This was commonly referred to as ‘triumvirate management’. Although the triumvirate system was the natural product of hospital development rather than a planned management structure [4], it was seen by the government as a desirable and efficient structure that appropriately reflected the multi-disciplinary nature of the health service [5]. The principal features of the triumvirate structure were the equal status of all the team members and consensus decision-making. Although the introduction of ‘generic general management’ tended to coincide with the formation of the area health boards, it was a separate and distinct process that has continued under the CHE/RHA structure. The clinical directorships discussed in this paper were implemented in 1990 following the formation of the Canterbury Area Health Board. Anecdotal evidence indicates that similar structures existed in the other New Zealand area health boards and continue to exist within the current CHE structures.

2. Problems and pressure for change

Although the triumvirate system was strongly supported in the 1974 government White Paper [5], it was criticised in later documents, particularly the Gibbs Report [l]. This report argued that the existing management structure ‘stifles leadership [and] dilutes accountability’ [l, p. 191, because the responsibility for performance was spread among a number of different people. As a consequence ‘no one person [was] prepared to accept responsibility for inappropriate decisions.’

K Jacobs /Health Policy 29 (1994) 157-I 71 159

Gibbs argued that the defusion of authority among the three executives and the representative role of the medical superintendent and the chief nurse made ‘for poor management relationships at lower levels of the organisation.’ This led to the managerial responsibilities being ignored, and professional groups could ‘unduly influence decisions and work practices in their favour.’ Others [6,7] suggested that the management group were unable to produce a ‘balanced consideration of goals and priorities’ [6, p. 41 and ‘could not generate a coordinated policy’ [7, p. 151. Gibbs recommended that the triumvirate structure be replaced with a single general manager who could be held responsible for all aspects of performance.

Although the official line was that the triumvirate model was ineffective and led to poor management decisions, the actual arguments used against the triumvirate system were inconclusive. There were other, more convincing reasons why the triumvirate structure was scrapped. Firstly, health services management reform was an international phenomenon. Policy makers in many countries expressed dissatis- faction with existing health service management [8]. The triumvirate management of the British NHS was criticised in the Griffiths Report [2]. There it was maintained that there were four consequences of the existing management structure: inadequate planning and performance measurement, inadequate devolution of responsibility to the units, strong involvement of the centre (i.e. Department of Health and Social Security) in ‘the wrong things’ and resistance to change [2, p. 121.

The interest in management reform extends beyond the health care sector. New public management (NPM) is ‘one of the most striking international trends in public administration’ [9, p. 31. Two of the key aspects of this are ‘hands-on professional management’ and ‘stress on private sector management styles.’ The move to ‘private sector management styles’ has become a key public policy agenda in many OECD countries.

Secondly, ‘generic general management’ formed an explicit part of the New Zealand public sector reforms. As a major part of the core public sector, health services received attention from the reformers and became subject to new legisla- tion, which was a significant factor promoting the idea of an identifiable general manager.

Since 1984, New Zealand has experienced a major restructuring of executive government, motivated by concerns about the poor performance of the economy, the growth of public expenditure and the pressure to increase the efficiency of resources [lO,ll]. Many public services were turned into state trading enterprises or sold to private investors. The remaining services were subject to a new legislative framework under the State Sector Act (1988) and the Public Finance Act (1989).

Under the State Sector Act (1988) departmental heads lost their tenure as permanent heads and became known as ‘chief executives’, each one being appointed on a performance-based contract for a maximum term of five years [lo]. While Griffiths criticised the British NHS for not setting precise management objectives or measuring their health output [2, p. 101, the Public Finance Act (1989) required that all New Zealand public sector organisations set objectives and measure outputs.

160 K. Jacobs /Health Policy 29 (1994) 157-171

Thirdly, management reform was part of the attempt by the state to make the health care system more efficient and thus reduce expenditure. New Zealand has a history of state-funded and provided health services. Because of limits on the state’s ability to generate funds and competing demands for resources, budget constraints largely defined the rate of expansion of the health care system.

The interest in rationalisation of the health care system led to two reports dealing with primary and secondary care: Choices [12] in 1986 and, as mentioned, the Gibbs Report [l] in 1988. The Griffiths Report [2] in the UK can be seen as the source of the NHS management changes, but Gibbs’s primary recommendation of structural separation of the health purchaser from the health provider was ignored by the government of the day - although these policies were accepted and implemented by a subsequent National government as part of the 1991 budget. It is unclear whether Gibbs caused the subsequent change in management practices or was simply indicative of the government’s agenda to reform the public sector. However, the Gibbs Report [l] did promote public debate about the efficiency of the health care system, and its recommendations were consistent with the wider public sector reforms.

3. Reorganisation of health service management

The need to curb the growth in health care expenditure, the public criticisms of the existing management practices and the public sector new public management [9] style reforms have all led to a significant reorganisation of public hospital management and the introduction of new management structures. There have also been limited attempts to introduce forms of clinical participation. Both of these control mechanisms were copied from the Griffiths Report.

3.1. Introduction of general management

The government strongly supported the replacement of the triumvirate structure and amended the Area Health Boards Act (1983) to make general management mandatory. Once appointed, general managers were given relative freedom to implement organisational structures in their board, although this commonly involved some level of community consultation [13].

Because of the autonomy of general managers, a wide variety of management structures emerged around the country [14,15]. These took standard hierarchical forms, with middle managers responsible for either a specific service or a locality. It was expected that the application of ‘core’ management principles of planning, explicit output objectives, delegation and self-contained units would lead to the benefits and savings outlined by the Gibbs Report [13].

Canterbury’s resulting corporate structure had three management levels: the general manager, unit managers and service managers 1131. As a consequence, clinical staff found their work monitored and their decisions evaluated by managers with budgetary rather than direct clinical responsibilities. This led to considerable tension between the clinical and the administrative staff, which was confirmed by interview research conducted by the author in the Canterbury area [16,17]. These

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162 K Jacobs /Health Policy 29 (1994) 157-I 71

The CAHB was responsible for running the 23 medical institutions in the Canter- bury area.

In 1990 clinical directorates were established in the CAHB. This move was initiated by the new management as a response to the wider public sector reforms in process [28, p. 21. A clinical directorate was described as ‘the minimum level at which a group of hospital doctors works together to deliver a particular service.’ The doctors in a clinical directorate were represented by a colleague, known as the clinical director [281, who would manage the budget allocated to their service, on their behalf. Senior medical staff were asked to apply for clinical director positions, but many were reluctant to take on the new role.

In several specialities no-one was willing to become a clinical director. Previously all specialities were managed by an elected head, a position rotated between the senior clinical staff. Initially management differentiated between the clinical director and the head of department role. However, in the specialities without clinical directors, the distinction was blurred and the head of department was given the title of clinical director.

To provide the clinical directors with business skills, a management development program was established. Proposals were invited from a range of consultancy firms experienced in the field [28, p. 81. A number of teaching modules were prepared and presented to the clinical staff. Participants were expected to gain an understanding of management skills, strategic thinking, measuring results and performance, total quality management and the application of marketing principles to health care. These modules were not well attended by medical staff.

Clinical directors were involved in the annual planning and budgeting process. Each clinical directorate became known as a health investment centre (HIC). All clinical directors played some part in the establishment of the operational plan for their HIC. In the two or three cases where the clinical director expressed some enthusiasm for his or her budgetary role, they were assisted by the management accountant and the information officer in developing their operating plan into a business plan [28, p. 71. However, most of the clinical staff involved in this process suggested that budgets were given to them without consultation.

Many clinical directors found that their new role was quite different from what they had expected. They believed that they would receive control of a flexible budget. However, most found that ‘budgets were basically fixed and they had little control over either budgets or work levels.’ While some saw this as a short-term condition that would be fixed ‘as the system evolved,’ others suggested that ‘all directors really did was to report cuts to their speciality.’

Some clinical directors saw their management role as a distraction from their primary objective of making people better, and questioned the ‘wisdom of using clinical staff in non-clinical [administrative] work’ [29, p. 21. Clinical directors seemed prepared to work in an executive role but were reluctant to spend too much time generating and analysing information.

The replacement of the triumvirate management structures with general management and the establishment of clinical directorates can be seen as an attempt to introduce new organisational control structures. The next section defines organisational control and describes a model of different types of organisational control.

K Jacobs /Health Policy 29 (1994) 157-171 163

4. Control model

The term ‘control’ has come to mean many things in the context of organisational management. However, two key meanings emerge: firstly control as domination and secondly as regulation [301. Domination arises where the person ‘in control’ has the power to enforce his or her will on others. Regulation occurs when the controller detects a difference between ‘what is’ and ‘what ought to be’ and this difference acts as a stimulus for action. In this paper, control is taken to mean regulation. To be able to identify ‘what is’ and ‘what ought to be’, an organisation must evaluate its performance and plan for the future.

Ouchi [3] identified three different mechanisms through which organisations cope with evaluation and planning. He refers to these as markets, bureaucracies (hierarchies) and clans (culture). Markets deal with the control issue through measuring and rewarding individual contributions; bureaucracies (hierarchies) rely upon a mixture of close evaluation with specified rules; and clans (culture) rely on employing individuals who support a given set of objectives.

Williamson’s [31] transaction theory also offers a similar three-way analysis of control: markets, hierarchies and peer groups. He assumes that all firms aim to minimise the costs of transacting business and that all individuals are essentially self-interested. In a changing environment it becomes difficult to attribute the results for a firm to any employee action, as some external change may have had a significant influence. Therefore a firm will seek to reduce the risk associated with ‘market transactions’ by growing larger and absorbing suppliers and customers with whom they would otherwise contract. The firm moves from a market model of control to a bureaucratic model. Although Williamson [311 recognises the existence of the ‘peer group’ or clan control, he fails to identify its relevance when internal uncertainty makes the formation of bureaucratic rules impractical.

Table 1 defines the relationship between internal and external uncertainty and organisational control. Both Ouchi [3] and Williamson El41 argue that conditions of uncertainty significantly influence the choice of control systems. Ouchi [3] defines environmental uncertainty as equivalent to a low ability to measure results. When the environment is in a process of change it is difficult to determine whether output is the product of effort or of the changing environment. Internal uncertainty is related to the understanding of the transformational process. When the relation-

Table 1 Conditions determining measurement of behaviour and output

-~-

Knowledge of the transformation process

Perfect Imperfect

Ability to measure High 1. Behaviour or output measurement 3. Output measurement Results LOW 2. Behaviour measurement 4. Ritual and ceremony

‘Clan’ control

From Ouchi [3].

164 K. Jacobs /Health Policy 29 (1994) 157-I 71

ship between behaviour and output is clearly understood, it is easy to specify rules to govern behaviour.

The essential element that underlies any bureaucratic or market form of control is the assumption that it is feasible to measure, with reasonable precision, the performance that is desired [3, p. 8431.

Therefore, the choice of control. system must be matched to the levels of uncertainty. As shown in Table 1, there are four different levels of uncertainty an organisation can face.

1. Where it is possible to measure and reward individual performance precisely and there is a good understanding of the transformational process, there is a choice between controls based on output measurement and those based on measurement of performance. Market control is normally cheaper to operate. However, if the cost of failure is high, a behavioural (bureaucratic) control will identify deviance more quickly and therefore be more economic than an output (market) control. A case with a high ability to measure results and a perfect knowledge of the transformational process would be a simple widgit manufacturer. Such an organisation could achieve effective control by having someone watch the behaviour of the employees and the operation of the machines. If all behaviours and processes conform with our desired transformation steps, then we will know with certainty that proper widgits are coming out at the other end, even without looking. By specifying rules for the processes required to produce widgits, we have created an effective control mechanism.

2. Both Williamson [14] and Ouchi [3] argue that environmental uncertainty (low ability to measure results) will cause a firm to use bureaucratic controls. However, to establish such controls there must be a good understanding of the transformational process. The manufacture of high-technology equipment in a competitive market is an example of an uncertain environment but a clear transformational process. Many of these organisations fit Williamson’s [14] model and have reduced the uncertainty associated with market transactions by absorbing suppliers and/or customers. However, once the suppliers and/or customers become part of the company they need to be controlled by rules and management structures.

3. When it is possible to measure performance but not to set rules for behaviour, an organisation must use controls based on output measurement. This situation has been called a number of different things: non-programmed decision-making [30], means-end uncertainty, performance ambiguity and imperfect knowledge of the transformational process [3]. When the means-end relationships are not well understood, it is possible only to instruct the employee about what he or she is expected to achieve. The means of achievement have to be left largely in their own hands. As it is impossible to form appropriate behavioural guidelines, it is inappropriate to use a bureaucratic form of control. Management performance in a stable environment is an example of this kind of situation.

4. If the environment is uncertain (performance measurement is inappropriate) and if the process is uncertain (behavioural controls are inappropriate) then the organisation may be described as ‘loosely coupled’ or ‘irrational’ [32]. It is not

K. Jacobs /Health Policy 29 (1994) 157-I 71 165

possible to rely on market control, which depends upon performance measures, or on bureaucratic control, which depends upon the ability to predict and specify behaviour. There is no alternative but to select individuals who share the values of the organisation and systematically reward and support those individuals within the organisation who display the desired values. This is described as ritual or ceremony and is an example of clan control. Behaviour within the clan is regulated through mutual monitoring by clan members rather than through complex systems of performance measurement. All members of a clan are managers, ensuring that fellow-members support the desired values.

Ouchi’s [3] model can be used as a guide to the selection of an appropriate control system. Each system offers a mechanism to direct behaviour in a manner that is consistent with the underlying uncertainty levels.

5. Analysis and appraisal

This section considers the appropriateness of the New Zealand health service management reforms to the levels of uncertainty experienced in health care organisations. The introduction of general management and the involvement of clinicians in management are together considered as an example of control systems. It is argued that there is more than one way to manage an organisation and that ‘proven’ private sector management tools also include a number of practices based on clan rather than bureaucratic controls.

5.1. Nature of health care systems

Health care organisations can experience several different levels of uncertainty concurrently. In functionally oriented departments, such as pathology or operating rooms, and in administrative departments, such as accounting or purchasing, there is no reason why market or bureaucratic models cannot be applied. A successful operating room is one that is working, and a successful laboratory is one that processes the tests required in the time required. It may also be possible to apply market controls in some situations, although this will introduce a number of transaction costs. Diagnostic and support services were restructured by one of the Christchurch CHEs to group together services that could be subject to market controls and compete separately for outside contracts.

Historically, health care organisations have developed a dual authority structure [33]. Administrative and support departments have adopted hierarchical structures based on classical management principles [34] - which are examples of bureau cratic control structures. Professionals, such as doctors, have tended to opt for management practices based on collective control and representational management [35] - which are examples of clan controls. This split recognises the need to deal with the different uncertainty levels: the more easily measured and well-understood administrative processes and the complex and poorly understood medical processes. Harris [36, p. 4671 argues that the duality concept extends beyond authority structures and that hospitals can be regarded as two separate firms: one

166 K Jacobs /Health Policy 29 (1994) 157-l 71

of medical staff (demand division) and the other of administration and functionally orientated services (supply division).

All treatment decisions contain an element of judgment and associated uncertainty. It is generally not possible to identify the need for different procedures when the initial condition is diagnosed. To establish a diagnosis takes considerable research and judgment. Even when a condition is diagnosed there is often a range of different treatment protocols that could be applied. Judgment has been an essential element in the development of modern medical practice, allowing individual clinicians to experiment with alternative treatments, out of which have ulti- mately emerged those accepted as ‘best practice’. To specify or, more accurately, prescribe medical behaviour in specific circumstances (e.g. ‘If X, therefore B’) would effectively kill such innovation.

There is also a restriction on the use of bureaucratic controls because of the nature of the clinician-patient relationship. The clinician is the patient’s agent rather than the agent of the management. While the management of other organisations can require their employees to account for their performance, the primary accountability of the clinician is not to the management but to the patient. Therefore ‘because of the uncertainty inherent in human disease processes’ [36, p. 4691 and the relationship between clinical staff and patients, bureaucratic controls are not an appropriate way to manage medical practice.

Because of the difficulty of accurately measuring performance and assigning individual responsibility, market controls are generally not appropriate for medical practice. However, considerable efforts have been made to measure performance as part of the New Zealand public sector reforms, making clear distinctions between outputs and outcomes. Outputs are ‘the goods or services that are produced’ and outcomes are ‘the impact on, or the consequence for, the community of the outputs or activities.’ In health care, outputs are defined as activities such as ‘the number of assessments or the number of operations produced [37]. Even with such a simplified approach there remain difficulties in measuring individual and specific departmental contributions, since no one doctor or nurse is responsible for all of a patient’s treatment and associated recovery. Such interde- pendence makes it difficult to assess and reward the performance of any individual or clinical group.

One simple performance measure used by a New Zealand Crown Health Enterprise (CHE) is the incidence of hospital-acquired infection. Clearly good surgery and ward hygiene are important in controlling secondary infections, but the incidence of hospital-acquired infection is also influenced by the condition, age and overall health of the patient. Hospital-acquired infection is also higher in accident and emergency work than in planned surgery. Thus even such a simple measure of performance is difficult to use effectively in health care. Because of these compli- cations the measurement of health care outcomes has remained one of the most challenging aspects of the New Zealand health service reforms.

5.2. New Zealand health service management reforms

General management structures were implemented in New Zealand hospitals as


a consequence of the State Sector Act (1988) and are an example of New Public Management [9] thought. As such, the management model shares a number of the key characteristics of NPM ideology:

1. The stress on clear assignment of responsibility for action as opposed to the diffusion of power associated with the triumvirate system.

2. Explicit measures of performance and quantitative indicators of success associated with the ‘integrated and co-ordinated planning system’ [13, p. 371.

3. Disaggregation of the organisation into separate divisions, units and services.

The introduction of a new structural hierarchy and the emphasis on the control and co-ordinative aspects of the information system indicate that the general management reforms were intended to introduce a bureaucratic model of control to New Zealand hospitals. Bureaucratic controls are appropriate in the administrative and service sections of the hospital but do not consider the uncertainty associated with medical practice. The historical triumvirate structure recognised the dual nature of hospitals in the structure of the management group. However, this appears to be ignored in the new system.

In the UK significant attention has also been devoted to introducing bureaucratic control systems to health care. Bourn and Ezzamel [24, p. 2031 maintain that ‘control in the NHS is seen in terms of corporate, or clan, culture which is subject to challenge by a competing culture derived from essentially outside the NHS and which advocates an approach in terms of increased financial accountability which is more consistent with a hierarchical [bureaucratic] control system.’

It can be argued that clinical participation is a viable attempt to address the clinician side of resource utilisation. Clinical directorships appear to be an example of clan control based on shared values and small group practices. Therefore, clinical directorships should be appropriate to the ‘rapidly changing circumstances and new information’ [36, p. 4691 that characterises medical decision-making.

However, clinical directorships can also be seen as an attempt to capture the existing ‘clan’ relationships within a hierarchical structure [281. This appeared to be an objective in this case. Interviews conducted at Canterbury indicated that a primary goal of clinical participation was to make clinical staff more ‘accountable’ to the administrative hierarchy [17]. This expectation caused resistance among clinical directors and other medical staff and led to the opinion that ‘all directors do is report more [budget] cuts.’ As a consequence many staff were put off models of clinical participation altogether and were left seriously antagonised. Clinical participation also showed some characteristics of clan control. Although the clinical participation was intended to bond the doctors more closely with the hierarchical structure, many clinical directors ended up defending their medical peers and their speciality service [17]. Most clinical directors, while happy to manage the appraisal, recruitment and rostering for junior medical staff, tended to adopt a co-ordination role when dealing with colleagues, illustrating a tendency to adopt clan in preference to a hierarchy.

Looking to the ‘best practice’ [9] in the private sector does not indicate that bureaucratic structures are the only way to proceed. Peters and Waterman 1381

168 K Jacobs /Health Policy 29 (1994) 157-171

show that a strong culture and shared values are what set a successful company apart from a less successful one [38]. There are a growing number of practices that rely on clan control, such as worker empowerment [39], participation and team management. This kind of approach is a major feature of Japanese companies, where over half are based on small group units of eight to ten people. While these units may run in parallel with existing hierarchical structures, management of the unit is based on a strong personal identification with the company objectives and a sense of corporate culture rather than extensive rules or performance reporting. Swedish companies also developed autonomous or self-steering work groups in the late 1960s [40]. Newer approaches, such as ‘total quality management’, also stress the importance of team work and incremental improvement over specialised tasks and hierarchical control. Management models based on clan control are not only well developed but are typical of the ‘best’ private sector practices.

5.3. Management control and the purchaser/provider split

While it is based on a market model of control, the creation of separate purchaser and provider organisations has not really changed the structures implemented by the State Sector Act (1988) or reduced the need to balance the clinical and the administrative sections of hospitals. However, there are some new issues that do need to be addressed in the light of these health services reforms.

The emphasis on competitive health care services is placing increasing tension on the relationship between clinicians and management. Management is required by the Health and Disabilities Services Act (1993) to run the CHEs as ‘successful and efficient businesses’. Clinicians are concerned with caring for the needs of specific patients. Although the requirement to be ‘successful and efficient’ has affected administrators, there has been nothing to change clinician demand. Harris [36] suggests that this kind of tension will lead to a non-cooperative scramble or ‘kingdom-building’, where doctors seek to defend themselves against the risk that resources will not be available, when needed, for their patients. If CHEs are only funded to a specific level, what happens when that level is exceeded? The moral obligation of physicians to defend their patients will come into direct conflict with the ‘successful and efficient’ obligation of the administrator. One option is that clinical staff be free to contract with competing CHEs to provide the required facilities or services for their patient.

RHAs face a challenge in monitoring the contracts they sign. Performance is difficult to measure in health care organisations. Williamson [14] argues that the difficulties in performance measurement and the associated transaction costs are why individuals combine to form firms in a capitalist economy. The area health boards were split to form the RHAs and CHEs. Therefore the RHAs and the CHEs can be expected to experience uncertainty and risk associated with the contracting component of the reforms. Monitoring contract performance in such a situation will be a costly process.

Although the purchaser/provider spiit in New Zealand health care organisations does not change the control issues at the micro-level, such a major organisational change cannot be ignored, particularly when it has such a great influence on the relationship between clinical and administrative staff.


6. Conclusions

It has been argued that health care organisations involve two separate firms: one of medical staff and the other of administration and functionally orientated services. This paper has suggested that it is important to recognise this duality and its source. It has come about because administrative and support departments are amenable to the bureaucratic form of control, while medical departments are restricted by the uncertainties inherent in medical diagnosis and treatment and can only really be controlled by clan structures.

The general management reforms are best interpreted as a conscious attempt to introduce bureaucratic controls into the management of health care. As such they are appropriate for administrative departments and some service units but not for the management of medical units. Clinical directorships are proposed as an alternative management structure. The research reported in this paper indicates that the clinical directorships are examples of both bureaucratic control and clan control. While they represent a conscious attempt to increase the accountability of clinical staff and restrict expenditure, it is concluded that the clinical director is only a low-level manager. However, there is an opportunity for the clinical directors to use the informal social structures as a means of control and to operate as an example of self-managed work groups. It remains to be seen whether this opportunity will be grasped.

Further developments in the management of health services need to recognise the levels of uncertainty associated with health care organisations. Any new systems must cope with both the more predictable administrative and functionally orientated units and the uncertainties inherent in the diagnosis and treatment of illness. Recognition of this duality will require management models based on a mixture of bureaucratic and clan controls. While this does present a challenge, many of these models have already been developed and proven in the private sector.

Acknowledgments

I would like to acknowledge helpful comments from Geoff Fougere, V. Nilakant, Richard Laughlin and Jane Broadbent. I would also like to thank George Salmond and Gavin Mooney for their assistance. Any errors or omissions remain the responsibility of the author.

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The management of health care: a model of control