How Have Internal Markets Changed the Organization and Delivery of Public Services - Essay Example

? Topic: Lecturer: Presentation: Introduction Public services are services provided by government to its citizens through the public sector. The services are considered as essential and as such should be guaranteed for all citizens regardless of gender, race or religion. The government has an obligation under the human rights convention to provide these basic services or goods such as health, education, shelter to improve the living standards of the citizens. Governments are often criticized for not providing quality services to citizens and as such it has undertaken the responsibility of carrying out reforms in the public sector by partnering with private sector and voluntary organizations in improving services. This has in turn led to emergence of new management tactics in the public sector. Public services differ from other services provided by private sector in various ways. Private organizations produce goods and services for sale with an aim of making profit and hence are not available to people who cannot afford them. On the other hand, the aim of the government is to provide the essential services to all citizens especially those who can’t afford. It does not aim at making profit by providing the services (Flynn, 2007). The public services also help the other members of society indirectly due to trickling effect of benefits from those who consume the services such as education. As opposed to private services which are acquired individually depending on affordability, public services are paid collectively through taxes and some can’t be offered in isolation. Some public services though are subject to charges such as leisure facilities, care for the elderly, and some drugs. The people accountable for ensuring the citizens get the services are the politicians who represent the needs of the electorate. The facilities used to provide the services are publicly owned although the government can rent private facilities to be able to provide the services. The government through public sector reforms has been engaging the services of private organizations in order to offer efficient services. There has also been need to provide high quality services and minimise costs therefore, the government employs the management tactics of the private sector to achieve the reforms needed (Hoggett, 1991). The organization and delivery of public services has therefore changed tremendously over time. One of the services affected by these changes is the provision of long term care for the elderly which will be discussed throughout the paper. Public Administration to New Public Management Traditionally, public administration dominated the public sector management. Organization and delivery of services was controlled by the central government through public service employees. The services were funded by revenue collected from taxation, in essence citizens pay for the services indirectly but the provision of the services does not depend on how much individuals contribute as tax; services are offered equally to all. Bureaucratic controls were evident in administration and provision of services. The politicians elected by the people determine what is to be offered to the electorates through the budgetary process. They also determine the bureaux to supply the services as they are selected to lead ministries and make legislations for local authorities on services to carry out (Flynn, 2007). The organization and delivery of care services for the elderly were controlled centrally by the Department of Health through the regional health authorities. The department organized purchasing and provision of care for the elderly and the disabled (Brereton & Vasoodaven, 2010). The public enterprises followed strict procedures regulated by law. The work of the managers of these enterprises was to implement national policies. The management policies were geared towards ensuring trusted workers and development teams who in turn would promote public service values. Customer (citizens) satisfaction would lead to mass support of the politicians and the government in power hence the managers ensured the employees gave satisfactory services which met the demand of citizens and fulfilled legal requirements (Hood, 1991). The public enterprises were immortal in nature and were the only ones providing public services thus the administrators and professionals in these enterprises were employed on long term contracts. The enterprises which are monopolies were prone to giving asymmetric information so as to continue supplying services at expense of citizens (Lane, 2000). Transparency and accountability are key to public administration. Openness in the procedures of purchasing and supply of public services is therefore important. The rights of the citizens are emphasized hence the need for accountability by the public administrators. The actions of the administrators are documented and made available to citizens thus the citizens are aware if there is breach of law or procedures not followed. There is no flexibility in delivery of services as budget is fixed through budgetary procedure. (Lawton & Rose, 1994). The public administration practices were criticized for not bringing out the desired results. They were seen as inefficient in organization and delivery of public services. They could not manage costs effectively as the enterprises are monopolised and thus can alter the cost of production (Barzelay, 2002). The quality of services was also compromised as the organization gave wide ranging services to large number of citizens and the motivation for professionals was to promote public sector values not to attract customers’ thus low quality standards. The service care providers aim was not to attract elderly people to the nursing homes but to promote the health services sector. The elderly did not have an option but the services offered by public practitioners under the National Health Service. Public enterprises are also characterized by existence of strong trade unions and professional organizations that represent the interests of the workforce. The organizations ensure the workers rights are not infringed and ensure good working conditions. The government criticizes these unions as they interfere with running of the public enterprises. With privatization of the public enterprises on going, these unions and professional bodies are stripped of their power and hence prefer to compromise (Barzelay, 2002). The emergence of new management techniques derived from the private sector has changed the organization and delivery of services in the public sector. The government is bent on creating institutions and organizational contexts which resemble the organization and management of the private sector. The UK health sector has experienced many wide ranging reforms in organization and management of health services over time especially the care for the elderly in nursing homes, hospitals and residential areas (Osborne & McLaughlin, 2002). The aim of the new public management is to enhance efficiency in delivery of services, control costs and provide high quality services to the recipients who are citizens. In order to achieve this, the public sector engages the services of the private sector and voluntary organizations in providing services. The government has privatized most of the public enterprises but still owns the organizations by holding majority share in a joint-stock company. The government also leases assets from private sector and the private sector in turn also uses state-owned assets to provide public services. The public sector operations have also undergone reform through decentralization of services. According to Ackroyd (1995), the provision of social services has undergone three stages of development. From local public administration in 1950 to central welfare state 1950-1980 and lastly decentralization 1980-1995, mode of service delivery being participative management. For example, the care services for the elderly were decentralized from National Health Service to primary care trusts and community based fund holders. This has greatly reduced waiting time for patients hence it is an efficient way of service delivery (Brereton & Vasoodaven, 2010).The central government delegates’ power to local authorities and regional authorities to decide on the provision of services. Funds are allocated by the government through budget but the local government is given autonomy to manage the funds. This enhances efficiency and effectiveness as services are delivered near to the consumers. Another area where private sector management practices are emulated by public sector is competition. The private industry has many players who compete with each other to be the leader in the market thus improving the quality of their products to attract consumers. In the same way, competition in the public sector is through competitive bidding of tenders. Public enterprises which had autonomy of providing supplies have to compete for the same with several providers from private and voluntary sector (Lane, 2000). The organization which offers the lowest bid whether private or public is given the tender thus minimising costs. The public sector is forced to reduce costs and offer efficient services or face closure due to lack of tenders. The department of health gives tenders for provision of care services to the elderly hence the services have improved greatly. The contract is given on a short-term basis as opposed to public administration where enterprises were immortal. Job security is not guaranteed as performance is based on contract and institutions need to win tenders to survive. Barzelay (2002) argues that new public management is the application of new institutional economics to public management and also a point of view about organizational design. It thus involves making policy choices or decisions or solving problems of one department at a time. The decision which influences public administration is the separation of purchasing and provision or supply services. The political authority of bureaucrats is divided into those who buy goods and services and those who supply or produce goods and services. The chief executives who control the tendering process perform one function. For example, they either carry out operational function or oversee policy-making so as to enhance efficiency. The public manager has discretion in the process of supplying goods and services. The problem occurs due to unresolved issues of demand side and opportunistic behaviour in the bidding process. Though public sector have embraced reforms and adopted new management techniques, it is not easy to replace public administration as it has some features not present in new public management. The values attached to procedures, rights in voice, and legal control are not embraced by the internal markets (Barzelay, 2002).Users of services have rights in public administration and are given charters to enlighten themselves of their rights to efficient services and to demand accountability through legal processes. New public management has played a great role in changing the way care for the elderly is organized and delivered. There exist the providers of the service and the purchasers thus putting emphasis on patient choice. The National Health Service (NHS) trust in this case is the provider and the districts are the purchasers (Flynn, 2007). The internal market for the services is regulated by contracts, competitive tendering and inclusion of private sector in provision of the services. The provision is through different agencies as opposed to when it was centralized to department of health. The local municipalities are responsible for social welfare services to the elderly and long term in-patient care. The national care standards commission regulates the providers and supports consumers to ensure quality services are provided. The consumers have access to information regarding available alternatives hence faster access to the service (Department of Health, 2000). Markets and Networks There have been a lot of changes in provision of welfare services. There has emerged a Quasi-market economy where public sector is partnering with private sector and voluntary organizations in provision of public services. (Bartlett & Le Grand, 1993). Monopoly and bureaucracy in provision of services such as health, housing, education and community care is eroding. Education being a key driver of the economy is central to public sector reform. As the reforms take place, so are the changing roles of the managers and workers who offer the services. For example, the role of the head teacher in schools is changing drastically as education reforms take place. He or she is supposed to account for achievement of standards centrally determined and at the same time ensure the teaching staffs comply with new techniques (Ross, 1994). Jackson & Stainsby (2008) acknowledges the challenges managers encounter in the face of reforms. The administrators make judgements by referring to predetermined criteria. Like in education sector, the performance standard is determined by the government through the examination council and the head teachers gauge performance of pupils on the basis of the set standards. In care services, quasi-autonomous foundation trusts formed through contracts with NHS provider reduced waiting time and improved quality. Through competitive service provision, the consumers have a wide range of choices to choose from and they are aware of their rights due to the available information to the public especially due to technological advancements (Newman, 2001). The problem is that the practitioners work over a wide range of sectors and can’t concentrate on providing healthcare for the elderly. They have flexible work locations and task performed and as such they travel where the clients are to offer services. The managers of these sectors have discovered that to provide efficient and quality services, a new mode of public management is required where the players in the market cooperate and have long term relationships with fewer suppliers rather than short-term contracts with many suppliers (Flynn, 1994). Team work is also evident as partnership exists among organizations. Professionals from a number of disciplines in patient centred services form teams to provide range of services to the elderly. The new form management emphasizes on performance related pay which is individual based thus making team work irrelant. To counter this, new relationships based on quasi-contract emerge. This kind of relationship stresses the outcome of the contract rather than the process itself (Le Grand, 1990) Trust between the key partners is important in ensuring the outcome is achieved. Collaboration based on trust is therefore basis for post-NPM. Performance, Quality and Risk Management Public administration was seen as not producing quality services for the citizens. The performance indicator provides government opportunity to retain control of departments by exercising ‘hands off’ rather than ‘hands on’ control (Carter, 1994). The performance of different departments is measured against set standards but clear objectives are required and the means to measure performance output. Payment of benefits is measured by peed and accuracy in which it is calculated. Education is measured by exam results. The government exerts control indirectly by requiring the state agencies to account for their aims, actions and achievements for efficiency (Hopwood, 1994: 145). Power (2004) argues that risk management is at the core of public service delivery. The organizations try to link risk management and strategic objectives and thus risk management becomes part of internal controls. This is due to the fact that risk focuses on outcomes and performance (Walshe, 1991). The growth of information technology has also contributed to new ways of managing risks. According to Power, risk taking agencies hand the risks back as part of own risk management. These include; insurance companies, financial organizations and financial professionals. In provision of care for the elderly, health providers have potential for error and hence health policies are acquired from other industries who are highly reliable (Reason, 1997). According to Waring (2005), patient safety has become a major international health policy priority due to clinical mistakes which are a major threat to safety of patient care. Lean Thinking Lean thinking is derived from lean manufacturing techniques of Toyota whereby elimination of waste is emphasized. This concept has been taken up by public sector in provision of public services. Toyota employs fourteen management principles in its lean techniques (Liker, 2004). These principles can also be used in the public sector to eliminate waste and provide quality services. IHI (2005) argues that driving out waste makes work add value and serve customer needs and believes the lean operations are being successfully applied in the health sector. Liker indicates that management decisions should be based on long-term philosophy at expense of short-term financial goals and this entails commitment to customers, employees and society. The government has put measures that ensure old people receive the care they need. The Royal Commission on Long term Care recommended that services should be related to needs, has clear objectives, guaranteed quality and provided continuously by the concerned agencies (Department of Health, 2000). This corresponds to the principle of lean thinking by Toyota Company. The human resource managers can ensure achievement of this goal. Changing Role of Human Resources Management Managing human resources is a very complex task especially with globalization and ever changing environment. The role of HR managers in the public sector is further complicated by the influence of internal markets and emergence of quasi-organizations where employees work across various sectors of the economy (Collins, 2005). If a public enterprise is privatized, the employees work under the private company and where assets have been rented to private sector to provide public services, the employees work for the private firm but are employed by government. The professionals offer services across the divide. For example, doctors work in public hospitals and also at the contracted agencies or organizations. Sometimes they find it hard to define who their employer is especially when their services are outsourced (Bottery, 1998). The practitioners provide care services to different agencies. There is flexibility of personnel as opposed to bureaucratic public organizations where jobs are designed and followed strictly. This enhances business performance and competitive advantage. The employees also gain new skills as they interact with employees outside original employer’s boundary. The advancement in technology has also enabled a lot of changes in service delivery. The use of the internet allows consumers to get information regarding various public service departments and have a variety of choices based on the information. The citizens are also aware of their rights and the standard of quality they expect to get from public servants. Auditing of accounts is also made easier by keeping accounts in electronic form for easy retrieval. Conclusion The organization and delivery of public services has undergone tremendous changes over the past few years. New management techniques derived from the private sector have been used to drive public sector reforms. The internal markets have encouraged the formation of quasi-markets where the public enterprises partner with other sectors of the economy to provide the much needed services by the citizens. There have been improvements in quality of services, auditing procedures, risk management and efficiency of the public sector. The emergence of new human resource management has also played a part in creating commitment to service provision, improved quality of products, career advancement for professionals among others. The management of care for the elderly has also changed by the mentioned reform to better serve the elderly. References Ackroyd, S. (1995) ‘From public administration to public sector management: Understanding Contemporary Change in British Public Services’. International Journal of Public Sector Management, vol. 8(2), pp. 19-32 Bartlett, W. and Le Grand, J. (1993) ‘The theory of Quasi-markets’ in Le Grand, J. and Bartlett, W. (eds) Quasi-Markets and Social Policy, London: Macmillan Barzelay, M. (2002) ‘Origins of the New Public Management: An International View from the Public Administration/Political Science’, in McLaughlin, K., Osborne, S. and Ferlie, E. (eds.) New Public Management: Current Trends and Future Prospects. London: Routledge. Bottery, M. (1998) Professionals and Policy: Management Strategy in a Competitive World. London: Cassell. Brereton, L., Vasoodaven, V. (2009). The Impact of the NHS Market: An Overview of Literature. CIVITAS. Carter, N. (1994) ‘Performance indicators: ‘backseat driving’ or ‘hands off’ control’, in McKevitt and Lawton, A. (eds.) Public Sector Management; theory, critique and practice, London: Sage. Colling, T. (2005) ‘Managing Human Resources in the Networked Organisation’ In Bach, S (Ed.) Managing Human Resources: Personnel Management in Transition, fourth edition. 90-112 (Nexus) Department of Health. (2000). ‘The NHS Plan: The Government’s Response to the Royal Commission on Long Term Care’. http://www.royal-commission-elderly.gov.uk Flynn, N. (1994) ‘Control, commitment and contracts’ in Clarke, J., Cochrane, A. and McLaughlin, E. (eds.) Managing Social Policy, London: Sage. Flynn, N. (2007). 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