World Review of Business Research
Vol. 2. No. 6. November 2012. Pp. 183 – 199
Performance Evaluation in Italian Teaching Hospitals: A
Case Study
Marianna Mauro*, Emma Cardamone**, Giusy Cavallaro***, Giovanna
Talarico**** and Annarita Trotta*****
The purpose of this paper is to propose and test an original
multidimensional framework to measure the performance of Teaching
Hospitals (THs) by providing evidence from two THs located in the South
of Italy. The survey can be classified as descriptive-explanatory research
based on the case study methodology. The added value of the research
is addressed in the proposed model. For scholars, this study contributes
to the ongoing debate on THs’ performance measurements and offers an
original and specific set of indicators. For managers and practitioners, the
model serves as a guide for assessing hospitals’ performance and for
obtaining strategic information. In addition, by providing concrete and
contextual empirical results from the case study analysis, the research
contributes to improving knowledge of the specific characteristics of
Italian THs, offering managers and policy makers useful information
regarding programmes and controls.
Field of Research: Performance Measurement; Teaching Hospitals; Italian Healthcare
System
1. Introduction
A health system is a complex web of accountability relationships involving several
stakeholder groups, particularly patients, citizens, clinicians, regulators, government,
managers and taxpayers (Smith 2005) and, additionally, is characterized by elements
that require continuous change. These factors include increased patients expectations,
demographics changing and an intense government authorities pressure finalized to
rationalize resources. Healthcare organizations, to meet on these challenges, are driven
to constantly seek new ways and tools to measure and create value.
In the literature, the traditional performance measurement systems, that focus only on
accounting and financial measures, appear to be inadequate in the context of THs due
to the complexity that characterizes them, while the application and implementation of
*
Marianna Mauro, Aggregate Professor of Business Economics, Department of Clinical and Experimental
Medicine, Magna Græcia University of Catanzaro – Italy. Email: mauro@unicz.it
**
Emma Cardamone, PhD doctor in Health Care Management and Economics, Department of Legal,
Historical, Economic and Social Sciences – DSGSES, Magna Græcia University of Catanzaro – Italy.
Email: cardamone@unicz.it
***
Giusy Cavallaro, PhD doctor in Health Care Management and Economics, Department of Legal,
Historical, Economic and Social Sciences – DSGSES, Magna Græcia University of Catanzaro – Italy.
Email: cavallaro@unicz.it
****
Giovanna Talarico, PhD student in Health Care Management and Economics, Department of Legal,
Historical, Economic and Social Sciences – DSGSES, Magna Græcia University of Catanzaro – Italy.
Email: g.talarico@unicz.it
*****
Annarita Trotta, Full Professor of Banking and Finance, Department of Legal, Historical, Economic and
Social Sciences – DSGSES, Magna Græcia University of Catanzaro – Italy. Email: trotta@unicz.it
Mauro, Cardamone, Cavallaro, Talarico & Trotta
multi-dimensional instruments, such as the Balanced Scorecard (BSC) model, can
contribute to optimising the efficiency of THs.
In fact, THs are structures able to combine clinical care, teaching and research and,
currently, must meet important challenges due to development of financial systems and
their particular production process to which it relates a less efficiency and a difficulty to
attribute costs to individual functions.
The characteristics and problems of Italian Teaching Hospitals are similar to those of
advanced economies.
In particular, although performance management has grown in the Italian National
Health Service (INHS) over the last fifteen years, it can still be considered a work in
progress (Lega & Vendramini 2008), especially in some regions (such as those in the
South), where the managerialisation of the health system has begun after much delay
and there is an urgent need for a wide evaluation.
Based on the above considerations, we believe that Italy represents a remarkable case
for the study of the performance measurement of THs because, considering their
threefold function of traditional healthcare, teaching and research (Bevan & Rutten
1987), have specific characteristics in terms of costs, revenues and activities, and, also,
for the issues and vulnerabilities that characterise different health care systems due to
high costs and inefficiencies, which threaten the survival of these hospitals (Lega &
Vendramini 2008).
Moving from these considerations, the study/research aims to propose and test an
original multidimensional framework for measuring the performance, realized ad hoc on
THs’ threefold activity, by providing prior empirical evidence, through a survey in two
THs, Mater Domini and Martino, which are located in two regions of South-Italy
(Calabria and Sicily, respectively).
The research interest in the evaluation of the performance of the Mater Domini and
Martino hospitals is primarily the result of regional actions related to the reorganisation
of hospital networks. Such reforms result in agreements (deficit recovery plans) with the
Italian government, which aim to eliminate deficits in health service. The THs
investigated are part of these programmes.
Consequently, the study contributes to the current debate on the use of a
multidimensional method for measuring the performance of teaching hospitals.
In particular, by providing concrete and contextual results for the case studies, the
research contributes to improving knowledge of the specific characteristics of THs. Also,
although performance evaluation studies can offer useful information for all stakeholder
groups, our findings are specifically intended for hospital managers, because they need
information to ensure that their organisations are able to meet their objectives, and for
policy makers, because they require performance information to ensure that the
management is performing in accordance with the stated intentions.
The paper is organised as follows. In the next section, the literature review is presented.
The third section presents the research methods and THs performance measurement
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model; the fourth section provides the empirical results and the final section shows
some conclusions also highlighting the limitations of the study.
2. Literature Review
Performance Measurement (PM) has generated significant interest over the years. Most
scholars (Adair, Simpson & Casebeer 2006; Smith & Goddard 2002) generally identify
four stages of the PM process (Figure 1).
Figure 1: Performance Measurement Process
Most studies are unanimous to recognize that the critical phase of this process
concerns the criteria for selecting measures.
Several portfolio approaches, which include both non-financial and financial measures
(Kueng 2000), have been developed, but the most popular framework in business is the
BSC proposed by Kaplan and Norton (1992). Guidelines pertaining to the criteria for
index selection are numerous, and the literature is inconsistent (Adair, Simpson &
Casebeer 2006). Greater emphasis is given to meaningful, strategic and most
importantly evidence-based topics (Gross et al. 2000).
However, some major issues must be considered with regard to measure selection: the
growth in the number of indicators (Simons 2010) and the types of measures and their
limitations (Adair et al. 2003). Moreover, scholars and professionals are in line with the
suggestions by Brown (1996), according to which an ideal number of measures is
between 15 to 20 to avoid information overload. An ideal indicator should have several
key characteristics (Adair et al. 2003; Mainz 2003) (Table1).
Table 1: Indicator Key characteristics
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Several authors (Kaplan & Norton 2001; Zelman, Pink & Matthias 2003) agree with the
need to articulate a multidimensional framework and to consider process dimensions as
complementary to outcomes or results to measure non-profit organisations. Therefore,
all of the indices should be chosen to fulfil specific measurement objectives in specific
hospitals (Yap et al. 2005).
Finally, regarding teaching hospitals, the literature highlights governance complexity,
coordination issues (Smith & Whitchurch 2002) and lower efficiency compared with nonTHs (Schreyögg & Von Reitzenstein 2008).
The growing number of BSC applications to THs (Kaplan & Norton 2001; Meliones et al.
2001) confirms the significance of the application, the potential of the instrument that
needs, however, of ad-hoc adjustments.
About this and, also, considering the need to extend the empirical evidence in the
context of THS, this research contributes to corps of knowledge for a deeper
comprehension of performance in the specific area of teaching hospitals that, in the
broader context of health system, represents an underdeveloped area in the field of
performance measurement. In addition, provide evidence of the application of a model
of performance measurement may represent a teaching tool for other organizations and
will contribute to better interpretation and use of performance information in order to
improve and guide future actions.
3. Methodology
The purpose of the research is to support hospitals (THs) in assessing their
performance providing them:
- A multidimensional instrument for measuring the performance, composed by an
original and specific set of indicators focused on THs’ threefold activities, through which
translating results into actions for improvement.
- Evidence of the application model of performance measurement in two Italian case
studies that can represent a teaching tool for other THS.
In order to latter point, we have realized an empirical study testing a multidimensional
framework, for 2009 and 2010, in two Italian THs that are located in South-Italy: Mater
Domini hospital and Martino hospital.
3.1 Research Method
Considering the approach exploratory of the research, the survey methodology is based
on case studies. The cases can be used to describe a phenomenon that contributes to
proposals of possible explanations of general order.
There are differing opinions regarding the effectiveness of the case study method.
Some authors emphasise the limited extent of a case study to supply explanations that
can be generalised; other authors (Yin 1994; Patton 2002) claim that a single case
study can be generalised because it can be assimilated into an experiment. Because
this research aims to describe phenomena through the representation of organisational
reality, the case study methodology is appropriate.
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The selection of case studies is one of the most important aspects to consider. Patton
(2002) has suggested several theoretical sampling strategies, but according to Yin
(1994), the analysis can be based on a single case or on multiple cases. A single case
can be used to confirm a theory or to represent a unique or extreme situation. The
choice of different cases indicates the preference for a logical replication of the results.
The cases that are the objects of this survey, Mater Domini Hospital (in Calabria) and
Martino Hospital (in Sicily), have been selected to guarantee both methodological
severity because similar cases for some aspects have been analysed and scientific
involvement because both of the regions suffer from the typical development defects
observed in North and South Italy.
3.2 THs Performance Measurement Model
The framework has been developed by the research group and has involved hospital
management teams through the following logical process.
In the first process step, to ensure its applicability to non-profit organisations, the BSC
framework has been modified beginning with the hospital missions (Kaplan & Norton
2001) and by identifying the critical performance perspectives and the relations among
perspectives (Figure 2).
Figure 2: The relations among perspectives
According to their threefold mission of care, teaching and research, the THs influence
the effectiveness of care activities (effectiveness perspective) and focus on the
efficiency and productivity of care activities (efficiency and productivity perspective).
Both in clinical and in economic terms, they also ensure appropriate levels of care in the
quality of service provided (patient perspective), develop research and training for future
doctors (teaching and research perspective), and pursue operational efficiency
objectives (economic and financial perspective). Moreover, by creating value for
patients, THs become more "attractive", increase the volume of care delivered and
improve their competitive position (competitive perspective).
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In the second process step, for each dimension, an appropriate set of performance
indicators is defined. Regard this, in Section 2, we compared various alternative criteria
for the selection of measures. In according with the suggestions from Veillard et al.
(2005), we proposed key performance indicators on the basis of the main guidelines
outlined by the doctrine and calibrated for the specifics of certain cases and on the
basis of discussions with local professionals.
Table 2 presents the data collection of the indicators used to measure THs’
performance. Several indicators that we used are based on the Italian Commission‘s
guidelines (Commission for the Guarantee of Statistical Information 2002) or on
research identifying the hospitals that have realised the best performance (Thomson
Reuters 2008), other indicators provide relevant information to major stakeholders
(Table 2.1).
However, some additional clarifications on the framework should be provided.
Regarding the patient perspective, the following questionnaire tools were used. For
Mater Domini Hospital, the questionnaire was administered to inpatients and users
awaiting outpatient care.
For Martino Hospital, patient satisfaction was analysed by examining data from a survey
that was conducted in 2009 by TH management; 427 questionnaires were administered
and completed at three Operating Units (OUs).
Concerning the teaching and research perspective, some proxies have been chosen,
and the Impact Factor (IF) was used specifically as a measurement tool for research
activities. The IF was calculated by considering all of the publications of the directors of
OUs at Mater Domini TH and all of the publications of the directors of the Departments
of Integrated Care Activities at Martino Hospital and then scoring each article according
to the magazine that published it (based on the database for the Journal of Citation
Reports of 2007, 2008 and 2009). These scores are subsequently summed for each
item to obtain the total IF of the articles that have been published over the years for
each university hospital.
Finally, Figure 3 highlights the data sources.
Figure 3: The data sources
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Table 2: The Data Collection Framework
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Table 2 (Continued)
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Table 2.1: Relevance factors of the indicators
Several factors make us believe that this model can contribute to generate substantial
and incremental value in the context of THS.
First, considering that the context of THS appears underdeveloped for the application of
an integrated model for performance measurement.
Second, to the peculiarity of THS for which the application of a multidimensional model
of performance measurement, considering the tripartite mission of healthcare, teaching
and research, can lead to formulate interesting conclusions and, at the same time, can
be considered as a potential support and guidance to other organizations in the sector.
Therefore, for scholars, this framework contributes to the ongoing debate on THs’
performance measurements by proposing an original set of indicators focused on THs’
threefold activities.
Finally, this contribution can be a good base for future potential research to be
conducted in the area and offers suggestions about as THs can effectively undertake a
multidimensional development process.
4. Findings: The Case Studies of the Mater Domini (Calabria) and
Martino (Sicily) Hospitals1
The Mater Domini Hospital, established in 1995, is the only TH in Calabria, while the
Martino university hospital, in Messina, is considered to be one of the most important
hospitals in Sicily.
The first economic and financial measurements have determined the conditions of the
profitability of the organisation during the production of hospitalisation services (day
hospital and ordinary hospitalisation) and ambulatory care activities (Table 3).
In the following section, Mater Domini hospital is identified as THa, and Martino hospital
is identified as THb.
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Table 3: Economic and Financial Perspective
According to the index of economic independence, we can observe a partial ability of
THb to reintegrate traditional management costs from patient assistance; these costs
decreased slightly in 2009. However, although THa records an increase in the number
of discharged patients (approximately 700 units) and in outpatient activity
(approximately 16,000 operations), the hospital is unable to cover its operating costs
with typical revenue. For the calculation of cost of sales see Table 3.1.
Table 3.1: Calculation of cost of sales
With regard to the second indicator, the main revenues of THb are derived from
operating activities; the revenues for THa are essentially derived from operating grants,
which are resources transferred by the local governmental bodies for activities and for
which the DRG cannot be calculated. For the calculation of the production value see
Table 3.2.
Table 3.2: Calculation of production value
With regard to the competitive perspective (Table 4), the THa data show a low inward
mobility and an index of attraction that almost doubled from 2008 to 2009; this result
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arises because of the increase in the number of discharged patients outside the region
(48%) and the decrease in the total number of discharged patients (approximately 5%).
Table 4: Competitive Perspective
The competitiveness of the Calabria THa presents contrasting elements: the hospital
seems to be rising with regard to the volume of business conducted in terms of its
market share, whereas it shows a decrease in the volume of health care services
provided, including both hospitalisation and ambulatory care activities. The increase in
the index is primarily the result of a reduction of approximately 54,000 units of inpatients
in the region rather than the slight increase in the volume of services provided by the
university hospital. In the case of THb, the analysis of the competitive profile indicators
indicates a steady capacity of the hospital to attract patients from outside the catchment
area. This result seems to follow an opposite trend compared to that of the regional
situation, which is characterised by extremely high levels of passive patient mobility; the
nature of the university structure would be expected to bring a higher capacity of ‘extracatchment’ attraction. The slightly decreasing trend in discharges—and therefore in
admissions—is probably a result of fewer hospital admissions for all outpatient and/or
day hospital services because of the stricter healthcare assistance controls that were
enforced from 2007 to 2009 within the re-entry plan.
With the aim of assessing the ability of the THs to provide appropriate responses to
patient needs, we propose the performance indicators listed in Table 5.
Table 5: Effectiveness Perspective
To measure the patient response to the treatment performed in the hospitalisation
regime, we used a proxy variable that considers the response to treatment as positive if
a patient does not return to the hospital within a period of 30-45 days after discharge.
For both hospitals, attention should be focused on lowering the rate of returns (the
response to treatment index remains high, with values of more than 90%), which is
considered here as a positive response to treatment. However, fewer returns could
indicate non-positive outcomes, such as death, or could indicate that a patient has
chosen to go to another hospital because he/she has unfavourably judged his/her stay
in the hospital. As shown in Table 4, there is a substantial consistency in the value of
the indicators of the THb in terms of effectiveness; rather, the incidence of health
treatment complications has increased in the THa during this period. In 2009, such
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complications have again increased for complex diagnoses, especially for
cardiovascular and liver diseases. In accordance with this change, the mortality rate is
also increasing; in 2009, it reached 0.66%.
The evaluation of hospitals efficiency was conducted using two sets of indicators: one
set for efficiency and clinical healthcare productivity profiles and another set for
efficiency and economic productivity profiles. Based on our analysis of the first set of
indicators, we observed a slight increase in the overall clinical healthcare productivity of
THb (Table 5.1).
Table 5.1: Efficiency and Productivity Perspective: Clinical Perspective
With regard to the THa, the analysis highlights that the average length of stay showed a
slightly upward trend from 2008 to 2009. The average weight of the performance
indicated an average value that is higher than one unit per year and failed to reveal
substantial differences in the heaviness of the series during the period of observation.
The second set of indicators, relative to economic productivity, shows a general
maintenance of hospital efficiency levels and higher utilisation of available beds (Table
5.2).
Table 5.2: Efficiency and Productivity Perspective: Economic Perspective
For the THb, the joint observation of the turnover index-OH and the average hospital
stay shows a slight increase in the efficient use of beds with a higher number of
admissions and shorter hospital stays. However, the improvement of the indicators is
not determined by an increase in the levels of services provided; rather, it is determined
by a reduction in day hospital beds.
The turnover index-OH for hospitalisation at the THa has increased as a result of the
volume of discharged patients (because the number of beds remains constant); in
contrast with day hospital/day surgery admissions, the number of DH beds has been
reduced by six units. Specifically, three units have been eliminated, and three units
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have been moved to the DS system. From 2008 to 2009, the total allocation (OH, DH,
and DS) of beds has decreased from 166 to 163 units.
The facility utilisation rate indicates an adequate capacity of hospital utilisation. When
we observe that the turnover index increases and the average stay remains constant,
we can conclude that the hospital appears to be properly used.
However, such analysis must also account for values that are not negligible, such as the
average weight: more weight leads to more complex diseases and, therefore, to greater
use of the structural and human resources.
Regarding the patient perspective and the questionnaire submission for Mater Domini
Hospital, the preliminary findings currently allow us to draw a positive conclusion
regarding the professionalism of the medical and nursing staff and the
hygiene/environmental conditions of the TH. The following considerations may be
presented with respect to Martino Hospital (Table 6).
Table 6: Patient Perspective
As for the teaching and research perspective (Table 7), the teaching values remained
fairly constant during the three-year period for both of the observed hospitals in terms of
research data. Due to a steady increase in the number of scientific publications, the
impact factor of THa improved significantly during the study period.
Table 7: Teaching and Research Perspective
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6. Conclusion
This study aims to test, with an exploratory approach, an original multidimensional
measurement model for assessing teaching hospitals’ performance. To test the
framework, a survey was conducted of two case studies located in the South of Italy.
The cases are particularly relevant for the research because both of the regions suffer
from the typical development differences between the North and the South of the
country, and they are characterised by significant economic and financial burdens.
Considering the prior results from empirical analysis, we can conclude that the
application of BSC model highlights, immediately, the crucial points of the THs'
production process. In particular, THs are inefficient due to the high costs of teaching
and research activities combined with a low level of competitiveness; thus, they are
currently less attractive based on their scarce growth perspectives. However, they are
clinically effective because they show a high rate of response to treatment and are used
properly. Their activity is characterised by a high level of complexity with respect to
diseases and by a low level of medical staff productivity, which is probably associated
with their research and training activities.
Therefore, performance measurement allows focusing on the strengths and
weaknesses that may become a starting point for improve results in future perspective.
Moreover, the analysis of cases has highlighted assets and limitations of the proposed
framework. As mentioned in section 3, we tested a framework that is the result of the
first phase of our study and will be subjected to further adjustments and integrations.
The limitations primarily concern three issues:
First, it is necessary to incorporate insights regarding risk management, funding
systems, financial aspects of innovation, and learning and growth perspectives.
Second, the level of analysis should be enhanced because some indicators may be
more significant for a particular operating unit level or for a specific disease.
Third, an important limitation concerns the reliability and validity of the indicators. In fact,
many indicators may be more significant considering the hospital development policies.
However, because the performance dimensions must be adapted in ways that are
specific to each hospital (Yap et al. 2005), the model design and measure selection
requires the consideration of specific characteristics of the observed hospitals, their
sizes, their main specialties and features relating to the external environment in which
they have been operating. Therefore we can conclude that although some indicators
could have low validity in general terms, the proposed model and the selected
measures are consistent with the specific characteristics of the analysed THs and with
the main stakeholders of the hospitals.
Endnotes
1. Some of the data related to Martino Hospital are derived by Barresi et al. (2010).
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