BOOKS OF RtfiDIfGS - PAHO/WHO

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useful effect if it is done aF an independent
management acu .;;y. However,
if conducted for the purposes of
improving the planning and budgeting
processes, gaining a better underst ,,.'.
ing of production processes, and improving
management skills, performance
evaluation can be an essential
link in a hospital's attempt to improve
its cost effectiveness.
State of the Art-Issues and
Failings
The models presented in the preceding
section outline the scope and elements
of contemporary planning, budgeting,
and controlling processes
(PBCP). Their focus is on ccrurate
cost-effective planning and effective
management control. This section presents
a number of issues associated
with the orientation, design, and implementation
of PBCP in the health
field by highlighting the major reasons
for observed differences between the
state of practice and the state of the art.
'Planning Attitudes
There remains a significant gap between
the public interest and the private
interest of health care providers.
The public interest was characterized
in the first section as being served by
cost-effective programming decisions,
i.e., based on the health care needs of a
service population and using criteria
which maximize system efficiency and
effectiveness. The private interest is,
for the most part, still geared toward
increasing technological capabilities,
facility size, and the volume of patients,
and not toward redur.ing the
levels of expenditures. Exceptions do
exist and, in some cases, this growth is
consistent with development of rational
networks and multiple hospital
.systems. In many cases, however, this
growth in assets and operating ex-
penses is motivated by fear of becoming
technologically obsoietc. fear of being
labeled inferior to other hospitals, and
fear of losing medical staff, patients,
and status.
As yet, the external constraints are
still too loose to prevent hospitals from
reacting to these fears out of pure
self-interest. Enthoven 14, p. 1229]
summarizes the attitude: ·
The problem of how tc hest spend
a given amount of money for the
health care of a population is not
posed. Providers are not required
to set priorities, look at alterriativocs
and make hard choicec
While the debate contir.ues on how
best tu improve institutional planning
dttitudes (i.e.,, by increased direct ecou.omic
regulation or restrucr.turing the
financial incentives), efforts are being
made to improve the means of making
population-based decisions 174], and
prominent students of the industry are
raising the visibility of problems and
methods of increasing cost-effective decision
making, e.g., curtailmng the "fatof-the-curve
medicine," stimulating regionalization
of health care, introducing
cost considerations into the physician's
decision making process, and
controlling the introduction of new
technology j4].
It should be noted that in the current
environment, cost-effective planning
decisions may be impractical and ineffective
unless there is strong community
planning. A hospital which is very
discriminating in the types of medical
equipment purchased, aggressive in reducing
unnecessary utilization, and effective
in managing the admissions to a
properly sized facility runs the risk of
losing its medical staff to competing
hospitals that are less restrictive. Such
a danger would, however, not be as
great if similar efforts were being made
by all hospitals in a community.