INTERPRETING FIGURES…FROM LITTLE PREDICTABILITY TO MORE AMBIGUITY IN HOSPITAL MANAGEMENT

Inger Johanne Pettersen

Associate professor

Bodö Graduate School of Business, 8049 Bodö, Norway

Inger.Johanne.Pettersen@hibo.no

Abstract

Introduction

Over the last decade a number of innovative management accounting practices and techniques have appeared to improve the quality and reliability of management accounting information in public sector. The aim of this paper is to gain more insight into the link between management accounting innovation and organizational learning and change in the hospital sector. Especially, we will focus on the processes of defining, interpreting and sense-making of accounting information in this complex public sector management. On this background we put forward the following questions:

· How can interpretation of and adjustment to accounting information be understood on macro-hospital level (county level)

· How is management accounting innovation, such as the introduction of a new funding system, defined and interpreted on internal, clinical level in a hospital

The Norwegian Reform

Until July 1997 funding of Norwegian hospitals was independent of how many in-patients they treated. Now Norwegian hospitals are paid on 60-70% per-case basis (including out-patient services). With data from the county of Nordland and case-study of a University Hospital we discuss the two different funding systems as to how the hospitals adjusted to these different systems of budget constraints.

Implications

We found that the hospitals had adjusted to the frame budget system from1991-1997 by systematically creating budget deficits, which were identified as one dominant budget driver during this period. This process can be defined as experiential , organisational learning. When the new system was introduced 1997, we found that the internal, clinical level in the hospital made a conceptualisation of the funding model which was differently from the governmental descriptions of and intentions with the system. Our findings indicate that due to these different observations, conceptualisations and concrete experiences on clinical level, more ambiguity will occur in controlling hospital activity and cost under the new per-case funding system.

An earlier version of this paper was presented at the 15^th Nordic Conference on Business Studies 18^th – 20^th August 1999, Helsinki, Finland, the Nordic Seminar on Research in Hospital and Health Care Management , 2^nd-3^rd December 1999, Århus, Danmark and the Conference on Accounting and Management (FIBE) 4^th-5^th January 2000.