HUMAN RESOURCES MANAGEMENT PARADIGM IN THE HEALTHCARE ORGANIZATIONS

 

 

Dr inż. Hanna Lewandowska [doctor engineer]

Pawel Wlodkowic University College in Plock

 

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Key words: contract, expertise, human resources management.

 

Abstract: The change of the human resources management paradigm in healthcare organizations arises from accepted legal regulations limiting the doctors work time. The form of employment i.e. a contract used nowadays requires that doctors register their own business which causes that they are independent economic subjects and the organization role is to coordinate its own actions with the actions of these subjects.

Purpose: the presentation of the change in human resources management paradigm in the healthcare organizations.

Methods and materials: Three testing methods were used in the presentation. They comprise the overview of the subject literature which enables to understand and to explain the reasons leading to the change in human resources management paradigm in healthcare organizations, quality method giving the answer to the question what values are the most important for the knowledge people (doctors) and the quantitative method which enabled to present the scale of the phenomenon called labor outsourcing on the example of selected healthcare organizations. The examinations which were conducted in 2011 covered 3 healthcare organizations (hospitals) and 363 doctors employed on the basis of contracts.

Test results: High independence of the external subjects (knowledge people doctors) and high rotation index influences on the increase in risk of performed activity and limits the possibility to create the organization development strategy.

Introduction

Labor organization in Polish subjects providing health services is connected with optimal use of material resources possessed by the organization and the ability to use insufficient non-material resources i.e. professional groups which comprises doctors of appropriate specialties constituting the intellectual capital of these organizations.

Taking the Directive 2003/88/EC by Poland, which introduced 48-hour week and the right to 11 hour of rest during the day for doctors at the territory of countries in the European Union. It caused that hospitals, especially the ones functioning in local structures, started to have a problem of such work organization which makes it possible to realize the organization objectives and would not infringe the provisions of the Directive and the provisions of labor law. The solution turned out to be the change of doctors employment form from so called permanent position to so called contract which occurred in 2008. Contract is such an employment form which requires the doctors to register their own business activity. It is a form to which the provisions of the Directive do not refer. Thus, permanent employees became independent economic subjects with whom the hospitals conclude short or long-term contracts based on processes i.e. remuneration for work time or on results i.e. remuneration for performed service (Davenport, 2007, p. 165). Therefore, from the organizational point of view, the hospital is the coordinator of its own activity with independent economic subjects in order to obtain mutual benefits (Obłój K., 2001, p. 7-11).

Management paradigm based on the external resources (outsourcing) caused that skillful knowledge use of acquired external employees gets a significant meaning. It requires that the organization (Tyagi R.K., Gupta P., 2010, p. 204-206): designs future events strictly connected with planning human resources, creates conditions necessary to perform planned actions by appropriate use and coordination of the organization material resources with acquired non-material resources and monitors the doctors market supply systematically.

Designing future actions is mainly connected with the surroundings in which the organization functions. The surroundings may affect the realization of organization strategic objectives and its current operating. It requires that the healthcare organization plans appropriate medical services and their types adapted to the population needs which can be predicted at the given area. Creating new conditions to realize these actions consists in appropriate and effective use of their own material resources and acquired non-material resources. Systematic monitoring of the market supply has a significant meaning in the process of building organization competences as the negligence in proper creation of remuneration and motivation systems, occurring in Polish healthcare sector for many years, affect the phenomenon of doctors migration. Surveys carried out at the area of all provinces in Poland in 2006 indicate that the lacks in the doctors profession amounted to about 4 thousand positions for healthcare organizations. These surveys covered from 80 to 86% of all healthcare organizations at the area of a given province. The main reasons for migration are conditions of the labor environment, law remuneration, difficulties in obtaining specializations and the necessity to educate permanently at their own costs. The factors in favor of migration comprise also: the recognition of Polish doctors qualifications in other countries of the EU, activity of foreign companies searching medical employees at the territory of Poland and the network of informal connections with persons who emigrated in the 80s. Other drive influencing the deficit of medical staff (doctors) in Poland is the increasing number of medical services connected with the aging of society and the increase in the number of lifestyle diseases (www.mz.gov.pl, 5.10.2011).

The mobility of doctors which is connected with their work on the basis of contracts partially compensates the lack of doctors possessing some specialties. However, mobile employees do not create social capital and do not create the network of interpersonal relationships in organizations (Cohen D., Prusak L., 2001). The fact that the organization is strongly dependent on these employees, especially of experts, causes that they may have much higher requirements regarding their work (especially the experts) that it occurs in other organizations taking advantage of external human resources. The insufficient supply of doctors also causes that it is easier for them to part from the organization and look for more profitable job (Drucker P., 1992, p. 95-104).

The aim of this work is to present the change in the human resources management paradigm in healthcare organizations.

Simultaneously, the hypothesis was taken that the contract as a form of employment agreement leads to the increase in the activity risk and impedes the construction of the organization development strategy.

Three testing methods were used in this study i.e. overview of the subject literature which makes it possible to understand and explain the reasons for the change in the human resources management paradigm in healthcare organizations, quality method giving the answer to the question which values are the most important for knowledge people (doctors) and quantitative method making it possible to present the scale of the phenomenon called labor outsourcing on the example of selected healthcare organizations.

Competences and remuneration system in the healthcare organizations

The organization is successful when it can match and use material and non-material resources possessed by it and the resources which may be acquired from the surrounding to build its own competences. Non-material resources which are the knowledge employees (doctors) constitute one of the significant elements creating the organization value. The knowledge and information possessed by them have significant influence on the innovativeness of accepted and implemented solutions the effect of which is the increase in the productivity level (Drucker P., 1999, p. 33-39), being the factor indicating whether the organization will be able to satisfy its current and future needs in the scope of provided services. Nevertheless, the use of these resources depends on organization mission and strategy, structure (communication among employees) and organizational culture (mutual relationships among employees), leadership and appropriate choice of motivators. It also influences the role which the employees play in the organization which results from the fact whether the knowledge possessed by them is useful and from the assessment of needs to use it (Drucker P., 2008, p. 431-434).

Taking advantage of the resources such as the knowledge and skills of employees, the organization may create and increase its competences which leads to the reinforcement of its image in the surroundings. The proper flow of knowledge which accompanies these actions affects the results of taken actions not only positively but also causes that the organization becomes more attractive for potential partners and customers. It happens when the scope of this knowledge / organization competences are properly formulated and made public in a proper way (Kotler Ph., 2010, p. 46-48). In the healthcare organizations they comprise among others information about appointed specialties, scope of provided services and their complexity and the equipment used in diagnostics (Lewandowska H., 2010).

The creation of the competence model (Lewandowska H., 2011) is connected with directing the recruitment activities and especially with the amount of offered remuneration which causes a significant problem for Polish healthcare organizations in case of the lack of doctors possessing rare specialties.

Thus, the remuneration system which is constructed in a right way may constitute the best and the most often used motivator. In the survey conducted in the period of May July 2011 in the group of 363 contract doctors, return at the level of 57%, 94.3% of them stated that the remuneration is significant in the motives of their behavior. The recognition in the environment (91.2%) took the second position and the professional promotion (89.4%) took the last position-table 1.

 

Table 1- Value level for doctors (%)

Value level

no

middle

high

Remuneration

1.3

4.4

94.3

Recognition in the environment

3.7

5.1

91.2

Promotion

5.7

89.4

4.9

Source: self study based on survey results conducted in the period MayJuly 2011

 

The results of the survey confirm the thesis that the role of remuneration being the motivator of taking specific actions by both the organizations and the employees cannot be undermined. The remuneration in Polish healthcare system can be divided into:

- permanent (so called salary) which is independent of the number of given advice and appointments and the level of disease severity. The advantages of this system are the easiness to manage the remuneration system, the simplicity of the information system and of the personnel cost accounting and the possibility to consider this remuneration in the planning process. The disadvantages comprise: the limited doctors motivation (low productivity), low quality of provided services, reducing costs of their provision, limited access to a patient (Getzen T.E., 2000, p. 131,138-141) and low doctors morality, which can be noticed as a fact that doctors recommend the patients further treatment in their private offices (WHO 2007).

- remuneration adequate for the number of persons covered by the healthcare i.e. so called capitation fee including persons covered by the medical care taking advantage of particular services or the medical service package. In this system the amount of remuneration is based on the remuneration determined according to the accepted algorithm considering the gender and age. In this way the doctors employed in the basic healthcare and specialist clinic are remunerated. The anticipated fee which the doctor receives before providing the service is a form of capitation fee motivating a doctor to keep the patients in good condition. It is calculated on the basis of total number of patients assigned to a given doctor. The advantages of this method comprise: high motivation to keep the costs at a low level, easy management of remuneration system, simple cost accounting and information system and easy access to the medical services for patients. Whereas the disadvantages comprise: limited motivation to provide optimal number of medical services and to increase their quality and unjustified savings on the costs of providing them against medical recommendations (Nojszewska E., 2011, p.48). What is more, capitation levels the financial impulse which is the phenomenon of inducing the demand by the supply (Kotler Ph., Shalowitz J., Stevens R.J.,2011, p.87). Other form of doctors remuneration is the fee-for-service. The fixed or variable price for each provided medical service constitutes its basis. In case of variable prices, the service providers are remunerated on the basis of currently calculated rates, whereas in case of fixed prices, the remuneration amount is determined at the beginning of each calendar year. The final remuneration depends on the number and type of services and the price taken for calculation. The advantages of this system comprise the benefits for patients such as greater accessibility to medical services and the possibility to choose service providers and the increase in the quality of provided serviced in order to attract the greatest possible number of patients. The disadvantages of this system comprise: the low doctors motivation to keep the costs at low level, difficulties with payment system management due to high variability and number of medical services, complicated cost accounting, impaired information flow between a patient, service provider and the payer and high administrative cost. The alternative way of remuneration (contracted) doctors is the remuneration for disease case. The amount of this remuneration is calculated on the basis of assumed procedures determined and confirmed in the treatment protocol. The fundamental disadvantages of this system comprise: limited motivation to provide optimal number of services, impaired patients access and limited ability to choose a doctor, difficulties in payment management due to unpredictability of disease cases and their complexity, difficulties in exact valuation of medical procedure components and complicated information system.

The properly planned remuneration system, which constitutes an important element of personnel policy in each organization, may be a tool of affecting employees. Including motivation tools such as pay rises, remuneration diversification and bonuses and rewards in this system contributes to increased employees engagement in the realization of organization aims. Simultaneously, it gives the possibility to create positive attitudes towards work and co-workers and leads to increased creativity. The employees may be also motivated when they have the possibility to decide about important issues referring to the organization, when they have the guarantee that their individual achievements are respected and recognized and they have the possibility to educate and to be promoted (Armstrong M., 2010, p. 51).

However, the occurrence of so called negative incentives is characteristic for Polish healthcare organizations. They are among others low number of motivators and no internal cohesion (Hass-Symotiuk M., 2011, p. 99-100). The accepted remuneration system does not include such significant elements as: employees achievements in short and long-run, remuneration links with group and individual aims and giving bonuses and rewards depending on obtained results. Modern remuneration system and motivation system construction and shaping in Polish healthcare system has been additionally impaired since 2008 due to the introduction of labor outsourcing (doctors) in a wide range, the feature of which is to determine the precise scope of performed activities and the remuneration amount in a strict and exact way.

Labor outsourcing. Case studies.

The existing system conditions which limit doctors labor time lead to the necessity to change the previous human resources management paradigm in the healthcare organizations (hospitals).

Doctors have existed as independent economic entities running their own businesses since 2008. Therefore, they take advantage of all rights and duties being vested to other entrepreneurs. These rights comprise among others: the right to choose the employer, negotiating the conditions of providing service and remuneration. As they are external entities towards the organization, their employers do not have rights arising from the Labor Code so such as benefits to which workers employed on the basis of employment agreement are entitled. They do not have such employee rights as: paid and scientific seminars, holidays or trade union protection. However, on the other hand, being employed on the basis of the contract is also profitable for doctors as they can work for many employers, include the costs of a car, a mobile phone and basic medical equipment in the costs of run business activity, which directly contributes to their income growth. The scale of this phenomenon may be noticed on the basis of the study. In 2010 the number of doctors employed on the basis of contracts amounted to about 25% of all active doctors, about 17% of doctors admitted to work solely on one permanent position in 2009 and about 10% stated that they work 92 hours a week i.e. over 13 hours a day (www.gazetaprawna.pl, 13.08.2009; 28.09.2011).

The studies conducted in 3 local government hospitals confirmed the use of a new model of workers employment on the basis of outsourcing (contract). The significant change in proportions of doctors employment occurred in 2010 in comparison to 2007 table 2.

 

Table 2-Number of doctor employed permanently or on the basis of contracts (%)

Year

2007

2008

2009

2010

Hospital

permanently

contract

permanently

contract

permanently

contract

permanently

contract

A

93.9

6.1

53.9

46.1

44.3

55.7

32.2

67.8

B

96.7

3.3

79.2

20.8

53.3

46.7

20.8

79.2

C

95.0

5.0

77.5

22.5

59.2

40.8

39.2

60.8

Source: self-study

In 2007 the tested organizations employed from about 3% to 6% doctors on contracts and from about 94% to about 97% doctors on permanent posts. The situation was analogical in 2008 in which from about 21% to about 46% of doctors were employed on contracts and from about 54% to about 80% on permanent posts. In 2009 it was possible to observe further increase in the contract doctors number i.e. from about 41% to about 56% and the external human resources comprised from about 61% to 80% in 2010.

The doctors employment on the basis of contracts is strictly connected with the contract duration. It arises from the information obtained from the managers of tested organizations and from the analysis of contracts that in 2007 the biggest amount of contracts was signed for the periods of 2 years (about 62%) and the periods of 3 years (about 45%). In 2008 it was from about 33% to about 45% (2 years) and from about 48% to about 62% (3 years), respectively. In 2009 the number of one-year contracts (from about 26% to about 46%) and of two-year contracts (from about 33% to about 53%) increased. Whereas in 2010 there was a domination of one-year contracts (from about 44% to about 47%) and of two-year contracts (from about 50% to about 55%). The three-year contracts amounted to only from about 4% all contracts in 2010 table 3.

 

Table 3- Number of contracts divided into the period of their validity (%)

Year

2007

2008

2009

2010

Hospital/time

1

2

3

1

2

3

1

2

3

1

2

3

A

2.5

52.5

45.0

6.5

45.1

48.4

39.8

32.7

27.5

44.6

55.4

x

B

3.0

53.8

43.2

4.6

33.8

61.6

25.9

53.1

21.0

43.4

52.2

4.4

C

3.3

61.7

35.0

7.2

32.5

60.3

31.4

48.8

19.8

47.1

49.2

3.7

Source: self-study

Short term of contracts validity contributes to the contract workers rotation index which showed a significant growth in years 2009 2010. The rotation index of permanently employed doctors, which began to constitute a certain and reliable organizational asset, remain at a low level table 4.

 

Table 4-Rotation index of permanently employed doctor and the ones employed on the contract

Year

2007

2008

2009

2010

Hospital

post

contract

post

contract

post

contract

post

contract

A

0.1

0.25

0.0

0.6

0.1

0.72

0.1

0.95

B

0.1

0.21

0.2

0.6

0.1

0.51

0.1

0.67

C

0.2

0.16

0.15

0.3

0.3

0.58

0.1

0.59

Source: self-study

In 2007 the rotation index of contracted doctors amounted from 0.16 to about 0.25, and in 2010 increased to the level from about 0.59 to about 0.95. The high rotation index of contracted doctors may constitute also the measure for the risk assessment of the labor outsourcing. It results from insufficient supply of doctors with particular specializations at the given area which leads to competition between the hospitals offering differentiated remuneration levels 57% managers of tested organizations confirm this thesis. In result some medical services are limited or stopped in a given area or there are difficulties to create organization competences 65.3% managers of tested organizations confirmed this thesis.

Summary

Introduction of the knowledge peoples outsourcing i.e. doctors in the healthcare organizations causes that the organizations providing health services have to change the management paradigm which used to be the creation of culture and organization competences based on their own resources to the management paradigm based on insufficient external resources. Nevertheless, taking advantage of the labor outsourcing and the employment form such as the contract enables higher mobility of doctors and partial compensation of the resources rareness. However, the risk of conducted activity and the possibility to create organization development strategy increase as a result of high rotation.

 

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