The New Public Management and Its Principles - Literature review Example

New Public Management The New Public Management and its Principles Today, there is a new prototype of public management called the “New Public Management” (NPM) which came into use at the beginning of the 1990s to describe the type of reforms being carried out within the public sector in countries such as the United Kingdom (UK). Basically, the NPM can be thought of as a form of management which is used for structuring changes within an organization. According to Hood (1991), he defined the NPM as a move to create an organization which was based on professional management modalities and some doctrines should be followed including: 1. an emphasis on hands-on professional management skills for active, visible, discretionary control of organizations (freedom to manage); 2. explicit standards and measures of performance through clarification of goals, targets and indicators of success; 3. a shift from the use of input controls and bureaucratic procedures to rules relying on output controls measured by quantitative performance indicators; Thus, with the NPM, there is an increase in the usage of private companies and semi-governmental bodies in carrying out public services together with those delivered by the traditional government bodies. This can also be seen within local governments where there is now competition to tender goods or services. In the UK, the “Competing for Quality” is a market reform using NPM principles to extend its services into the central government whereas the “Private Finance Initiative” in the central and local government was formed to increase the utilization of private investment in order to provide certain public services paid for by taxpayers. Some the areas of provision include health, education and even the building and maintenance of roads. New Public Management in Healthcare Records as early as the 1980s have shown that emphasis and changes have been made within healthcare systems not only within the UK but globally in order to reform the way management as well as administration is being carried out (Dent, 2003). Additionally, governmental organizations have also been trying to extend the scope of management, the ability to actually market their services and to have a greater control over input and output levels (McKee and Healy, 2002). Attention has primarily been put on the importance of welfare regime characteristics and political traditions which shape healthcare reforms in order for a variant of NPM which is distinct to that particular country is implemented (Dent, 2006, p. 624). Surprisingly, traditionally, the role of clinical professionals were not given due attention in this context and this has led to a further separation of the clinical and managerial context (Degeling et. al 2006, p. 649-652). This may backfire at attempts of NPM within the healthcare system as the clinicians would be more resistant with the changes which are being implemented. As noted by Fitzgerald and Dufour (1998, p. 199), there is a growing body of evidence which suggests different scenarios being played out all over the world. For example in the Netherlands where doctors have traditionally operated according to a “fee for service” model, there has been less opposition to the marketization of health services as this increases their personal earnings. In a survey by Rundall et al. (2004, p. 251-268) which compared data from the United States (US) and the UK, there was a divergence in opinion with doctors in the UK being far more likely to believe that hospital management is driven by financial rather than clinical priorities. Similar findings were seen in Australia, New Zealand and China. In Finland, medicine has become a hybrid of both clinical as well as calculative in order for a clinician to be accepted as competent (Kurunmaki, 2004, p. 336). We would now look into the strength and weaknesses of NPM practices within the healthcare systems of the UK as well as Denmark. New Public Management in the UK The National Health Service (NHS) has undergone many revamps in order to improve its management of resources since the 1960s and in 1974, the NHS underwent a major revamp (Klein, 2001, p. 72-73). In 1983, the Griffiths Report suggested that the NHS should be turned into a managed organization very much similar to that of a private organization. Hospitals were not to be managed by doctors but by general managers with backgrounds in management, accounting and administration who would not only run the paperwork of the hospital but also ensure that the funds and resources within the hospital were well managed. Thus, from 1986 to 1995, there was an increase in the number of managerial staff within the NHS from approximately 1000 to 20842 (Pollock, 2005, p. 39). This shifted the traditional balance of administrative powers by doctors onto the hands of proper managerial staff and this group of people also took over the implementation and enforcement of government policies. However, as much as there has been the shift of power and responsibility, doctors too were supposed to learn to be better administrators especially in regards to managing resources and be even let in the role of controlling budgets. Thus, we can clearly see that NPM practices were already put into play within the healthcare system in the UK. However, medical associations were strongly against this move to create managerial positions within the healthcare organization consisting of non clinicians as they felt that good managerial/administrative decisions could only be made by a clinician (Harrison et al, 1992. p 138). However, the central government pressed ahead with this reform using NPM practices and the rise of the liberal criticism of the public services provided the government with an even stronger and more rationale basis for the introduction of competition within the NHS (one of the NPM doctrines) through the purchaser-provider split and the creation of a quasi market (Ranade, 1997, p. 85-87). This strengthened the position of managers and led to a better administrative system within the NHS. The competition also caused the various service providers to improve their services which translated into better services for the patients. This also led to the development of a clinical directorate which has become a global standard in healthcare (Llewellyn, 2001, p. 597). In the past, bureaucratic procedures which translated into red tape were used to manage healthcare facilities as well as accounting procedures. With NPM, there is a shift from this modality to the usage of output control measures which are further evaluated constantly via quantitative performance indicators. Thus, whenever a particular modality is found to be less effective during an audit, a new modality or one which has been changed to suit the needs of the organization is practiced. The decentralization of units within the healthcare system in the UK too has increased efficiency. Each unit is given its own autonomy as well as objectives and target and these units work better as in the past, micromanagement takes up more resources and the central organization is unable to keep track of so many things at a given time. Subsequently, there was an increased acceptance of the NPM practices and more doctors took on roles as clinical directors and this created a new group of managers who were very keen to be involved in revamping management in order to keep costs down, review performance on a regular basis as well as encourage evidence based practice within UK hospitals. With this, some doctors have also taken up opportunities to improve themselves via enrolment in management courses rather than the traditional practice of enrolling only in clinical based courses (Forbes et al, 2004, p. 167). However, a current study by Kirkpatrick et al (2007) has showed that the reason why some doctors are not embracing these practices would be the lack of in-house training and education. Additionally, medical education does not place any or minimal emphasis on the management of finances as well as performance (Sinclair, 1997). Another weakness of the NPM within the healthcare system in the UK would be doctors feel threaten in regards to their medical autonomy as well as their contractual independence to engage in outside activities such as private practice (Davies and Harrison, 2003). Whenever NPM policies are being implemented, the clinician who is also a manager might feel that pursuits of financial gain might infringe on what he/she does within the hospital. One is also open to criticism if a particular policy within the hospital would seem to have been carried out for the sake of creating financial opportunities for an individual. In order to prevent this, NPM policies should be unbiased but it is difficult in practice. Another one of the weaknesses of the NPM which has been found would be its role in eroding traditional values and ethics of civil servants such as fairness and impartiality, values of which public service is based on (Denhardt and Denhardt, 2000, p. 550). As noted earlier that NPM is based on output controls, there is no safeguarding mechanism other than that of the individuals’ as previously, rule-based systems and requirements for open procedures and processes assisted in this mechanism. Additionally, DeLeon and Green (2001, p. 621) noted that by lessening rules and increasing flexibility, corruption within the administration might occur because applications from the private sector may not necessary work well within the public sector. For example, external political forces may influence certain systems of management within the public sector and this would result in the compromise of performance evaluation. New Public Management in Denmark In Denmark, the implementation of the NPM policies and practices was very much different. The historical background behind how NPM was involved in healthcare began when the conservative-liberal government was elected in the early 1980s. The NPM strategy was immediately put into place with emphasis on the modernization of the NPM principles based on stringent control of the budget, effectiveness within the healthcare system but at the same time, maintaining rationalized decisions. Until today, these rules are applied (Ejersbo and Greve, 2005). The Danish government changed the healthcare structure to include a centralized system where health care policy was part of welfare and some of the issues which were discussed included the management of hospitals. It was decided at an early stage that the management of hospitals should not be left to that of clinicians and the idea at that time was to strengthen the management by replacing the clinicians who were running the hospitals to that of proper managers. However, clinicians and nurses were not left out and were incorporated whenever necessary. By incorporating both managers as well as clinicians, the Danish prevented the issue of acceptance which beleaguered the NHS for a long time. Additionally, the move towards a NPM practice also provided nurses with an opportunity to exert themselves and to be recognized as professionals as they argued that they were better managers as well as administrators. The troika (threesome) model was used within the hospitals where there was a doctor, a nurse as well as a general manager who shared responsibility for the hospital’s management and administration. However, this weakness with the implementation of this NPM model was that it could not be applied to the clinic or departmental level as the number of tasks were lesser and issues arose when one party tried to exert more control. A joint management system at the clinic level was introduced at a later time which stated that the nurse and the clinician were responsible for the management of clinics but it did not last as managerial issues were cropping up. The need for a trained manager was undeniable. In 1997, Denmark was facing a problem with quality within the hospitals and it was found that the main reason this was occurring was because of the poor management within the hospitals run by doctors/nurses. A new management concept called the “unambiguous management” was suggested where all managerial tasks were placed in the responsibility of one person at all levels (Sundhedsministeriet, 1997). In later years, the NPM system in Denmark has been on unitary medical management in bigger clinics with nurses acting as the vice manager. The doctor would have the last say in any cases of disagreement. Today, doctors sit on the main board of all the major hospitals within Denmark and some serve as Directors. Additionally, doctors also dominate management within clinics and very few general managers are employed in the system. Thus, we can see that one of the strengths of the NPM policies practiced by the Danish was to evolve doctors into managers with minimal resistance by providing the benefits they enjoyed as clinicians as well as managers. In time, it “forced” doctors to concede that they were not the best of managers but since they were not willing to give up this role in favor of a manager who is not a doctor, they personally improved their positions, understanding as well as education in order to be better managers. With one party less, there would be less conflict. An emphasis of the NPM policies in Denmark also led to a greater emphasis amongst healthcare staff that hands-on professional management skills were crucial towards a healthcare system which is active, productive, efficient and at the same time, adaptable. As the belief that management should be based on what doctors know, this modality serves to protect the patients as well as provide for better services. Clinical audits carried out by doctors who also are managers also set a standard of care which is higher in Denmark as goals are clearly stated at the beginning of every term and successes/failures are reviewed regularly. Under the NPM policies in Denmark, it was intended that the patients participated in the process of evaluating public services as one of the principles of NPM is customer responsiveness (Pollitt, 1995, p. 134). If the results of this evaluation is fed back to the policy makers, then, it can be said that the patients had been involved in the policy making process. However, this form of participation in Denmark is relatively passive and instead of allowing the patients to guide policy, the doctors actually steer the patients in the way which they want them to. Conclusion In conclusion, we can clearly see that there are strengths and weaknesses to the implementation o NPM policies within a country’s system which has been exemplified by the healthcare systems of the UK and Denmark. Within the UK, the system has been to engage separate managerial staff whereas in Denmark, the clinical professionals are the ones who run the system. However, we can also see that different healthcare systems as well as the principles underlying how healthcare is run within a country determines the best NPM policies to be implemented. Policies have to depend on the people who are involved and this would allow us to focus on the professions and not the fixed constraints of management. Greater emphasis should also be put in regards to ascertaining the nature and objective of professional strategies in relation to restructuring public management and to explore a broader context within the sector which NPM is to be implemented. 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