The limits of externally supported institution building

A Hospital under Resource Constraints

Von Rudolf Fischer / SolidarMed

We are all aware of the limitations of the purely "technical" approaches in health development. Good governance and effective leadership and management have been on the development agenda for some time now. The hypothesis is that technically improved services need to be embedded in a conducive institutional context to ensures effective, targeted and equitable delivery. However, this is not a magic bullet, and prevailing expectations may be too high.

Since the mid-nineties, SolidarMed has been concentrating on effective leadership and management in its co-operation with partner hospitals in Lesotho. The strategy we have been following could be called "institution building". The stated aim is to empower partner institutions and their key staff to manage operations successfully and to develop planning and problem solving skills which will enable them to master future challenges to their institutions thereby enhancing sustainability of health services.

The approach has been one of strengthening governance and management functions in three ways:

  1. By supporting the development of procedures and instruments financially and through dialogue, coaching and provision of external expertise
  2. By financing key investments in training, infrastructure, equipment and software
  3. By tying financial support for 1) and 2) to submission of proof for discharge of core governance and management functions. We do not require them to deliver specific reports to the donor, we rather "force" them to go through the yearly governance and management cycles according to their own rules and regulations. We accept as proof of delivery their routine documents such as minutes of board meetings, reports on annual internal performance reviews, work plans, budgets and externally audited financial statements.

Building on comparative advantages?

In the late nineties SolidarMed offered the partner hospitals an opportunity to develop a mid-term strategic business development plan with professional external assistance. These strategic plans are broken down into yearly plans of operation in a planning exercise attended by board members, key management and staff representatives. Our financial support is then negotiated on the basis of the yearly plan of operation approved by the board.

One would expect that such a strategy should be fairly successful since our partner institutions in Lesotho, which are church hospitals, have a number of comparative advantages over public hospitals in Lesotho and other countries in Eastern and Southern Africa when it comes to developing good governance, and accountable and effective management.

  1. They are fairly autonomous in that they have a board of governors which may, theoretically, be answerable to the owner, usually a bishop, but in practice the boards have full responsibility for running the institution. And some of them have a fairly good community representation on them. This is not far removed from the kind of decentralised decision making and accountability Health Sector Reforms all over Africa are striving to establish.
  2. They are also autonomous in their crucial management operations such as hiring and firing which has traditionally not been the case with government institutions and has always been an impediment for the establishment of an effective work discipline.
  3. They are free in procurement and other core administrative functions.

However, as you will see, results of this institution building strategy are mixed. St. Joseph's Hospital in Roma, Lesotho, is one of SolidarMed's partner institutions in Lesotho. It has, by any standards, a fairly good board with a number of competent and well connected members. Over the past years, the hospital has been suffering from persistent problems in the area of labour relations and from a negative image in connection with perceived low quality of services in general and patient care in particular. About a year ago, the board of governors of the hospital therefore decided to have a management audit performed. The board entrusted the mandate to the "Institute of Development Management". The IDM is a reputable regional organisation with offices in Lesotho and Botswana. It specialises in management services and management training for both public and private institutions.

I now want to share some of the findings and conclusions of this management audit with you. I am sure they will provide food for thought. I am not going to summarise and comment, rather, I am going to provide you with a number of quotations from the original text, because I believe that they speak for themselves.

The case of St. Joseph's Hospital at Roma, Lesotho,
as seen through a Management Audit Report

Excerpts from the Executive Summary

The management audit revealed that the most critical constraints facing the institution emanate from three major capacity constraints namely: financial, material and human resources.

The review noted significant effort, at the higher echelons of the institution, at improving the corporate governance profile of the institution, efforts which were inundated by severe resource constraints.

Financial resources by way of Government subvention averaging around 65% of the annual hospital budget, was only meant for wages of the professional categories of staff, yet significant amounts were needed to refurbish physical infrastructure, replenish ailing basic medical facilities, and pay for support services and utilities as well as wages of support staff. Besides, the Government grant was only meant to pay professionals at their entry (basic notch) level salaries.

The hospital was only capable of generating an average income of between 25-30% of its constrained annual budget, income that was barely sufficient to maintain a modern outfit.

The resource constraints imposed on the institution have had far reaching ramifications on management action including: inability to motivate staff, inability to hire suitable personnel, inability to source requisite equipment and supplies, and inability to meet maturing obligations.

The restraint imposed on management as a result of constrained resources, has reverberated to general staff as manifested in their responsiveness to duty, respect for supervisors, general attitude, behaviour, frustration, etc. The observed deterioration in the quality of service such as patient care, could partly be seen as an expression of disillusionment.

Highlights from the Report

Due to the hospital's total reliance on the Government subvention for professional and technical staff salaries, there is neither upward mobility nor salary enhancement. ... It has been established that all people in the same scale are at the first notch, regardless of number of years in the employ of the hospital. The view of the team is that this kind of situation does not allow people to assume voluntary leadership and thereby makes determination of seniority difficult. ... the apparent financial constraints has forced the hospital to adopt a less motivating payment structure, probably because it cannot afford anything other than what is coming from the Government subvention.

The review team gathered that the attitude of staff towards management, colleagues and their work was very negative and impacted negatively on the operations of the hospital.

Members of staff ... ascribed the prevailing negative attitude and poor relations to the apparent declining status of the institution, lack of management skills, shortages of medical supplies and equipment, and the general decline in resources. They perceived that the prevailing situation did not allow for professionalised service delivery as they could not perform certain procedures effectively. As a result, people were reluctant to implement management decisions and act professionally, perhaps due to frustration. People have now adopted the "I don't care" attitude. ... There was a general consensus from the nursing personnel, medical practitioners, management, patients' relatives (community) and review team that the quality of patient care was significantly deficient, in terms of nursing care, drugs, equipment and medical supplies.

An evaluation of control systems for handling finances and donations was carried out ... the review team gathered that the accounting function of the hospital was inadequately staffed in terms of requisite competencies. At the time of this review the hospital did not have a qualified accountant in place. Two assistant accountants were then managing the accounting function. It was also gathered, as a result of this deficiency, that the external auditor was preparing the actual financial statements in addition to auditing the same. It was further gathered that despite the existence of an elaborate accounting manual, the accounting personnel did not seem to be aware of its existence.

Operational income base, which is mainly charges to patients for various medical services, was rather too limited in generating sustainable income. Moreover, the inability of the hospital in collecting debt from patients was putting an additional strain to the already weak financial position of the institution.

The limits of strategic planning
Findings of the management audit team:

The review team gathered during the general staff meeting that there were widespread concerns that Management was doing nothing in the implementation of the Strategic Plan 1998-2001.

Further, the review team noted the general perception/mood of staff that it was pointless engaging consultants such as the current ones to carry out studies whose recommendations would only end up in the archives of the hospital.

In view of the above concerns, the audit team carried out a review of the extent by which said strategic plan provided strategic direction for management action as well as the extent to which the eight identified strategic options had been addressed.

Conclusions of the management audit team:

It must be noted ... that the strategic plan is a management tool developed by the Management of St. Joseph's Hospital in a consultative process that involved all stakeholders, including the hospital employees. Further, it must be appreciated that expected outcomes are the desires of all stakeholders, however, their achievement is heavily dependent on resource availability.

In our view, management had made great strides in the implementation of plans indicated in the strategic plan. The observed delays in carrying out some of the very good intentions are understandable in light of severely constrained resources. Besides, the fact that implementation was documented through annualised "Action Plans" was a positive indication of management effort and commitment.

*Input by Rudolf Fischer, Ph.D., Executive Director, SolidarMed, for the session “Take care of your money – and of people! The role of Governance and Stewardship“ at the MMS Symposium 2003. Contact: info@solidarmed.ch.