Hospitals caught between patient welfare and economic viability: what role does transparency play?

German hospitals are faced with a dilemma: they are expected to provide medical care and at the same time work economically. However, many hospitals are unable to cover their costs, which increases the pressure on chief physicians. In addition to medical success, their performance is increasingly measured against financial targets such as budget compliance, occupancy rates and cost reduction - requirements that are often at odds with their medical self-image, which is centred on healing patients. The performance measurement systems frequently used by hospital management are therefore often viewed critically by doctors.

Prof Rouven Trapp from the Institute of Management Accounting and Control, together with Prof Maik Lachmann (TU Berlin) and Prof Felix Wenger (Dortmund University of Applied Sciences), investigated whether transparency in performance measurement systems can help to counter these tensions. Transparency means that chief physicians have a comprehensive insight into the economic and medical key figures of their clinic, such as patient numbers or cost structures. It also enables comparison with other departments, which offers learning opportunities but can also encourage competition.

The study, which analyses four German non-profit hospitals, examines transparency from the perspective of doctors in management positions as well as from the perspective of members of hospital management and administration. The results show that Transparency can help to unite medical and economic viability at hospital level. However, it also harbours potential for conflict if different perceptions between the administration and the medical profession clash or if the hospital's objectives are lost sight of.

The researchers' conclusion: Transparency can not only act as a bridge between the medical profession and the administration, but also as a potential trigger for new conflicts. The study therefore encourages a differentiated approach to transparency in performance measurement systems: Not every degree of openness is equally useful for all parties involved.

Literature reference:

Maik Lachmann, Rouven Trapp & Felix Wenger: Transparency in performance measurement systems: an exploration of rationales and diverging perceptions in the hospital setting. In: Journal of Management Control,https://doi.org/10.1007/s00187-024-00384-3

Further information:

Prof. Dr Rouven Trapp, Institute of Management Accounting and Control, e-mail: rouven.trapp(at)uni-ulm.de