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COJ Robotics & Artificial Intelligence

Corporate Public Hospitals, Systematic Review

Rahati M1, Masoudi Asl I2, Aboulhallaje M3* and Jafari M4

1Faculty of Management, South Tehran Branch, Islamic Azad University, Iran

2Department of Health Services Management, School of Health Management and Information Sciences, Iran University of Medical Sciences, Iran

3Department of Health Services Management, School of Health Management and Information Sciences, Iran University of Medical Sciences, Iran

4Department of Health Services Management, School of Health Management and Information Sciences, Iran University of Medical Sciences, Iran

*Corresponding author: Aboulhallaje M, Department of Health Services Management, School of Health Management and Information Sciences, Iran University of Medical Sciences, Iran

Submission: July 11, 2022;Published: November 25, 2022

DOI: 10.31031/COJRA.2022.02.000543

ISSN:2832-4463
Volume2 Issue4

Abstract

Background: In recent years, corporatization has been introduced as an institutional plan for public hospitals in order to improve efficiency and reduce public ownership, and also to decentralize health system. In this regard, this study is a systematic review of identifying types of corporate hospitals and introduces necessary components for the corporate hospitals.
Method: This study was conducted in 2018. In the initial search, 52 studies were found that by examining 24 related articles were elected. A qualitative assessment of documentation was made, which 17 papers selected. The collected data were described and compared based on the World Bank model variables as: ownership, structure, decision right, responsiveness and social functions.
Result: Each country has implemented a specific type of corporation due to its environmental conditions and infrastructure of health system, including healthcare companies, Foundation or charitable foundations, joint stock companies, limited liability companies, holding companies, and trusts. Some variables are incomplete and some are completely implemented, in each country.
Conclusion: Corporatization has increased autonomy of hospitals in terms of financial, human, physical, and equipment resources. Increasing independence leads to the responsiveness of managers. One goals of corporatization have been to increase efficiency of hospitals, which most countries must achieve it.

Keywords:Corporate public hospital; Systematic review; Hospital

List of abbreviation:PPP: Public-Private Partnership; NHS: National Health System

Introduction

Over the past 50 years, many of low and middle-income countries have built their health systems based on government budget, which became vertical bureaucracy within sector. The most important functional weaknesses maybe are technical and allocation inefficiencies, failures in coverage of low-income and poor groups, and also poor responsiveness to stakeholders [1,2]. It is obvious that governments cannot put all or a large part of health care system from the state budget [3,4]. In the meantime, hospitals as the most important components of health system, have a special sensitivity and also importance in the economy and health [5] so that about 50-80% of health sector budget is allocated to hospitals (especially in developing countries) [6-8]. Claim is that the reform of public hospitals into autonomous units improves management, allocation of public resources, and promotes hospital responsiveness. This will be done by reducing mechanisms of government direct control, as well as delegation of authority from the state to hospital managers’ level. According to World Bank model, different levels of autonomy can be considered for public hospitals on a spectrum, and in this one , four organizational models are defined for hospitals: budget hospitals (administrative units affiliated to higher regional or national levels), autonomous hospitals (giving more authority and responsibility to hospitals, and exposing them to the market), Corporate hospitals (imitation of the private sector decision making system in the public hospital) and private hospitals [9].

In recent years, corporatization has been introduced as an institutional plan for public hospitals in order to improve efficiency and reduce public ownership, and also to decentralize health system [10]. Various studies shown that corporatization has different results. In some researches, public hospitals efficiency has increased after corporatization, and has led to improve production and financial resources [11,12]. In some cases, performance has improved, but progress has not been sustained. Failure to implement key aspects of the model has led to poor results in other cases [9,13]. With corporatization, complete control over all inputs and service delivery issues are almost given to managers. Corporations are often established as a legally independent entity. The status of the corporate entity includes a hard budget that makes it fully responsive to its financial performance. At least in the event of bankruptcy, dissolution is impossible, theoretically. When a hospital is a corporation, often acts as a private corporation, though is still owned by the public sector. The responsibility mechanism is carried out by the board of directors, which includes financial performance objectives such as profit or return on assets or equity, dividends, and reinvestment policies. These objectives usually require sufficient commercial returns. In a corporate hospital, managers (board members) who usually have complete responsibility [9]. In this regard, according to the above, this study is a systematic review of identifying types of corporate hospitals and introduces necessary components for the corporate public hospitals.

Methodology

Databases and search strategies

In this systematic review, in order to achieve scientific documentation and evidence related to corporatization of public hospitals, databases such as Science Direct, Scopus, ProQuest, PubMed, springer and Google scholar and along with some Iranian databases such as SID and Magiran were investigated. The key words were “Hospital”, “Health”, “Company”, “Enterprise”, “Corporation”, “Public Company”, “Joint-Stock Company”, “Trusts”, “Government-Owned Company”, using the “and” and “or” letters. No time limitation was considered for retrieving studies. Primarily, a study protocol was developed, which consisted of formulating the study question, defining the inclusion and exclusion criteria, and developing a database search strategy. The other stages included retrieving the relevant studies, extracting the relevant data, appraising the retrieved studies, synthesizing the data, and creating a report. The reference lists of the retrieved articles were scanned for any relevant papers that were not found in the first search. Furthermore, hand searches were performed for identifying additional studies and completing the search coverage.

Inclusion and exclusion criteria

Inclusion criteria were studies published in English or Persian languages; conducted by applying qualitative, quantitative, or mixed-method designs. Also, those articles without full text and/or those that were duplicates were excluded.

Methods of screening and selection criteria

We import selected papers into the Endnote software and delete duplicate papers. All papers were qualitatively evaluated by two researchers. Both researchers initially analyzed the titles for relevance. A consensus agreement was necessary for each publication to be documented on the review board. The relevance and role in developing the concept of the study were the main criteria for assessing the quality of the articles in the process of interpretive review of the articles [14]. Table 1 shows the quality appraisal checklist. Furthermore, the data associated with each of the selected papers were summarized in a form. Figure 1 explains the screening process of retrieved papers.

Table 1:Criteria for quality appraisal of the papers.


Figure 1:Screening process of retrieved papers.


Data analysis

In this study, content analysis was used to summarize the data. So we first read the texts and re-read them to get a sense of the whole idea and general understanding of what the authors were talked about. Then we divided each texts into smaller parts meaningful units, and these units were coded and then classified into categories. We went further and created themes for reporting the results. The coding was done by 2 coders, and classes were identified based on the knowledge of researchers involved in the coding. This process was repeated until an agreement about the richness of classes was achieved. The grouping of the codes was accomplished with respect to the World Bank model variables as following:
A. Ownership: public, semi-public or private
B. Structure: board of directors, supervisory board or mix of them
C. Decision right: includes making decision regarding financial management, procurement, residual claimant, and human resources management
D. Market exposure: earn revenue under market conditions rather than rely on government funding
E. Responsiveness: Responsiveness to board of directors, Independent audit, Publishing results in a transparent and understandable way, Formation of one or more quality committees
F. Social functions: Includes identification of goods or public services and Private non-drafted package of public goods, transfer of public goods to governments, allocation of subsidies to demand side, development of insurance and so on.

The coding was accomplished using MAXQDA Version 10 software.

Finding

In a systematic review, referring to variety of companies which their definitions are given as in Table 2. The achievements demonstrated that the under studying countries were from Europe (6 countries), Asia (4 countries), Oceania (one country), and Africa (one country), Which include Czech Republic, Estonia, Spain, Portugal, Sweden, England, New Zealand, Tunisia, Singapore, Malaysia, Lebanon and Iran. (Table 2) As Table 3 presents, seven countries have Republic political system, and the other five countries have constitutional monarchies. Health system of five countries is National Health System (NHS), Social Security System in five countries, Health Insurance Fund in one country, and one country has Compulsory Savings Fund system. Stewardship of health sector is defined in Ministry of Health level in all countries, except the Czech Republic. In Czech Republic, local authorities and in some cases the central government is responsible. Hospital corporatization was done under the name of Healthcare companies in six countries, Foundation or charitable foundations in four countries, joint stock companies in two countries, Limited Liability companies in two countries, Holding companies in two countries, and Trust in one country. Additional information about countries, and also their hospital corporatizations types are given in Table 3.

As shown in Table 4, reforms in corporate hospitals, explained as follow.

Table 2:variety of companies and definitions.


Table 3:Features of countries and the types of corporatization hospital.


Table 4:Reforms of corporate public hospitals.


Ownership

The ownership of corporate hospitals is belonging to national governments in 8 countries (Spain, Portugal, Tunisia, United Kingdom, Singapore, Malaysia, Lebanon, and Iran), is belonging to local and regional governments in 3 countries (Czech Republic, New Zealand and Sweden). In Estonia, in addition to government municipality is shareholder of hospitals, too.

Structure

In 7 countries hospitals are administrated as joint stock company (Czech Republic, Estonia, Spain, Portugal, Tunisia, Malaysia and Lebanon), as Holding in Singapore and Iran, as a Limited Liability Company in Sweden, and as Trust in England. Hospital has board of directors in 7 countries (Portugal, Tunisia, New Zealand, England, Singapore, Malaysia, and Iran), which most of them were selected by Ministry of Health. In Lebanon, board of directors is appointed by the Council of Ministers by Ministry of Health recommendation. In Portugal and Malaysia, members are appointed by the Ministry of Finance, in addition to Ministry of Health. In Tunisia, members were selected amongst the employee, in New Zealand, by Region government, and in Sweden, majority political party have representative in board of directors, but the majority of the members are private. Corporations are administrated by the Supervisory Board that appointed by the Minister of Health, in 2 countries of Spain and Estonia, In the Czech Republic, companies are administrated by board of supervisors and the board of directors. Supervisory board is appointed by shareholders, and board of directors appointed by board of supervisors. Tunisia has established a medical committee, in addition to board of directors. The corporation’s activities are under government supervision in 7 countries (Czech Republic, Sweden, Portugal, the United Kingdom, Singapore, Malaysia, and Lebanon), and also are under commercial law in 5 countries (Estonia, Spain, Tunisia, New Zealand and Iran)

Financial management

The main source of revenue is based on insurance contracts in 6 countries (Czech Republic, Estonia, Sweden, Singapore, Malaysia and Iran). It is based on state budget in 3 countries (Spain, New Zealand and Tunisia). In Lebanon, in addition to the state budget, financing was done from the sale of services. In Spain, the budget is set up by the regional assembly, by government in New Zealand, and by board of directors in Tunisia. In Portugal, 80% of revenue is from state budget, and in England, is achieved from buyer of services and assets sale. Hospitals have right for investments in 6 countries (Estonia, Tunisia, England, Singapore, Malaysia, and Iran). In Czech Republic, regional government invest through own resources and loans. In Spain, Investments was done under public procurement law, and in New Zealand based on a fixed budget. In Portugal, hospital has right to invest, up to 2% of their revenue. In England investment was done through loans and credit facilities of Trusts, and large investments were done through public-private partnership (PPP Model). In Sweden, rules are centrally determined for negotiations, prices, return on investment, and productivity goals (Table 5).

Table 5:Reforms of corporate public hospitals.


Procurement

Procurement is expressed in 5 countries (Estonia, Spain, Sweden, New Zealand, and Malaysia). In Sweden purchase was done without budget constraints during the first year. In New Zealand, purchase contracts were done for 90% of revenues. In Malaysia, they have authorization to purchase medical equipment and supplies. In Estonia, purchase of expensive, high-volume Equipment is done centrally. In Spain resource and contract management was done in accordance with the Public Procurement Law.

Residual claimant

In 7 countries, hospitals have right for residual claimant (Estonia, Tunisia, England, Sweden, Singapore, Malaysia, and Iran). In Czech Republic, regional government may authorize the hospital for residual claimant. In Spain, hospital is not able to maintain residual claimant. In Portugal, residual claimant was done from insurance payments, and in Lebanon, Ministry of Health has authority for residual claimant.

Human resource management

Human resources in seven countries are combination of public and private sector employees (Czech Republic, Estonia, Portugal, New Zealand, England, Sweden and Malaysia). In these countries, changes in employee salaries and benefits must be approving by Ministry of Health or the Ministry of Finance. The staff employed in corporate hospitals in the three countries of Singapore, Lebanon, and Iran are completely contractual and salaries and benefits in accordance with private-sector labor law, and they are complete authority to decide on their arrangement. In Spain employees are under the law of the private sector, and also public service or Parliament law. In Tunisia there is no authority for deciding about human resources, but they have authority for determining number and level of organizational posts. Hospital has authority to apply disciplinary procedures for staff, except the medical staff. In the England, physicians are administered by board of directors. Hospital director only manages other employees. In Portugal, private physicians are contracted for special services. In Tunisia, physicians, pharmacists, and dentists are working as chairman in hospital.

Market exposure

Service packages determining was done based on Ministry of Health or the Regional Health decision in 6 countries (Spain, Portugal, Sweden, Tunisia, England, Singapore, Lebanon, and Iran). In Portugal, corporate hospitals are independent in determining package of services. Service package is determined by negotiating with the insurance fund in Czech Republic. In Estonia, determine of service packages is decided by Ministry of Social Affairs, and new services need to be approved by government. In New Zealand, although, competition law applies, but there is a monopoly of geography for acute care over 24 hours. Malaysia has the full authority to deliver every services, to who and how. There is a competition between Tunisia and Iran for attracting medical personnel, and they have authority to employ qualified managers, as well as having authority to open and close wards (with approval of health department). In Malaysia, there are Monopoly authorities in some markets, like cardiac transplantation, pediatric cardiac care, and transmissible diseases. They are also main authority to employ specialists, and then specialists can implement new programs and strategies for clinical departments. In England, Trusts can agree with medical groups to reduce service tariffs. In Sweden, hospitals compete with each other to increase service delivery.

Responsiveness

In all countries, board of directors is responsive to public supervision entities, to Ministry of Health, particularly, for its responsibilities and functions. In 3 countries of Singapore, Malaysia, and Iran, in addition to being responsive to public supervision entities, they are also responsive to their holding. In New Zealand, there are 3 public supervision entities (District and Regional Health Authorities, and Ministry of Health), and in England and Spain there are two public supervision entities (local government and parliament).

Social functions

Corporations are doing social responsibility through cross subsidies for vulnerable groups in three countries of Singapore, Malaysia, and Iran. In England Free services are delivering regarding to Trust needs and capabilities. In other countries, there is no mention for social function, according to studies.

Discussion

As mentioned above, each country has implemented a specific type of corporation due to its environmental conditions and infrastructure of health system, including healthcare companies, Foundation or charitable foundations, joint stock companies, limited liability companies, holding companies, and trusts. Some variables are incomplete and some are completely implemented, in each country. In the under study countries, ownership of all hospitals remains for government after reforms and restructuring. Preker et al. [9], according to their successful experiences in hospital reform, stated in England that there is no need to transfer hospitals ownership to private sector, and it is possible to merely delegate affairs [9]. But in the Pirozek et al. study (2015) it was demonstrated that successful management in form of economic results adjusted only with the private type of ownership. Size of the hospital, size of supervisory board, and senior management education did not have a reliable effect on hospital management efficiency [3]. In countries with corporatization hospitals, that their activities were under commercial law, it can be said priority is to increase efficiency and cost recovery. This is proved in Ferreira et al. [11] study, and they stated that corporatization hospitals have the highest efficiency levels [11].

A study by Rego et al. [15] showed that hospitals efficiency in Portugal has increased since the time of beginning corporatization [15]. Also, Moreira [16] study pointed out that corporate hospitals are going to become more efficient [16]. Aidemark et al. [12] showed in Sweden, corporatization has improved the production and financing [12]. But in the Braithwaite et al. [17] study stated, most of the debate about the privatization and corporatization of public hospitals is ideological rather than evidence-based [17]. The study argues that advocate of privatization or corporatization claim for increased efficiency, better service quality, and opponents believe that privatization leads to negative consequences such as reducing justice, endangering efficiency and reducing the quality of services. Generally, researchers concluded that evidence was often weak and contradictory, and stated these results depended on motivator of assessor.

In most countries, board of directors has been selected to manage hospital affairs. In all of them Ministry of Health, with direct or indirect choice of members, intends to monitor hospitals performances after reform. Also in some countries, finance ministry has been involved in selection of board members, which led to control of revenue and expenditure. In this regard, Ramesh [18] study emphasizes management independence for hospital reform. He stated independence should be accompanied by strong government stewardship, continuous monitoring, and also coordination [18]. In many countries, corporate hospitals have public and private sector employees. Salaries and benefits of private sector employees are under labor law, and management can have full authority over them.

Also, in public sector employees (except in the field of salaries and benefits), management have authority to incentives employees and deliver quality services and also more quantity. Hellgren et al. [19] concluded physicians who are employee in private sector and corporate hospitals, and change-oriented, respectively, and they are more productive at private hospitals compared to physicians in general hospitals [19]. Also, there are organizational condition, justice, and trust in private and corporate hospitals compared to general hospitals. They conclude in this way that physicians of private and corporate hospitals have more positive experiences about their working conditions.

Conclusion

Corporatization has increased autonomy of hospitals in terms of financial, human, physical, and equipment resources. Increasing independence leads to responsiveness of managers. One goals of corporatization have been increase efficiency of hospitals, which most countries must achieve it. Hospitals should consider social functions along with efficiency increasing.

It can be said health system has complexity and special issues in each country that cannot prescribe a global version for reforming it. But with regard to the above, consideration of the following variables is essential in the public hospitals corporatization.
A. Ownership
B. Structure
C. Right to make decisions on Financial Management
D. Right to make decisions on Procurement
E. Right to make decisions on Residual Claimant
F. Right to make decisions on Human Resource Management (HRM)
G. Market exposure
H. Responsiveness
I. Social Functions

Limitation

This study focus was just on English and Persian texts, as the researchers were fluent in both these languages; English as an international scientific language and Persian as the first language of the researchers’ team members, so other studies in other languages have not been considered in the analysis..

Declaration

Ethics approval and consent to participate

The study was approved by the Ethical Committee in Faculty of Management, South Tehran Branch, Islamic Azad University, Tehran, Iran.

Consent for publication

Not applicable.

Availability of data and materials

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

Authors’ contributions

MR: Conception and study design, data collection, data analysis and drafting the manuscript. IMA Conception and design study design, data collection, and data analysis. MA: Conception and design, data interpretation, critical review. MJ: Study design, data interpretation. All authors read and approved the final manuscript.

Acknowledgement

This study was extracted from Ph.D. Dissertation with title “Designing an Appropriate Financing Model for Public Hospitals Accepted in Stock Exchange Market” in Faculty of Management, South Tehran Branch, Islamic Azad University, Tehran, Iran.

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