Tosemary and Rhyme Hospital (TRH) is a small hospital for the treatment of patients with only minor injuries. Patients arriving at TRH with more serious injuries are referred to a larger hospital nearby. Those with minor injuries are admitted into TRH and wait to be seen by a doctor. After treatment, most patients leave the hospital and need not return. If their treatment has failed, however, they are re-admitted for additional treatment.

Patients do not have to pay for treatment at TRH, which is a not-for-profit, public sector hospital. It is funded entirely by the government from taxation and a fixed level of funding is received from the government each year. It is up to TRH to allocate its funding to different areas, such as doctors’ salaries, medicines and all other costs required to run a hospital.

TRH’s objectives are:
– to give prompt access to high quality medical treatment for patients
– to provide value for money for the taxpayer, as measured by the ‘3Es’ framework of economy, efficiency and effectiveness
– to contribute to medical science by developing innovative ways to deliver treatment to patients.

It has been suggested to TRH that the hospital has inadequate performance measurement systems in place to assess whether it is achieving its objectives, and that insufficient attention is given to the importance of non-financial performance indicators. You have been asked for your advice, and have met with some of the doctors to get their opinions.

One senior doctor has told you, ‘I think TRH always delivers value for money. We’ve always achieved our total financial budgets. Doctors here work much longer hours than colleagues in other hospitals, often without being paid for working overtime. There is not enough government funding to recruit more doctors. At busy times, we’ve started referring more patients arriving at TRH to the larger hospital nearby. This has helped reduce average waiting times. Patients arriving at TRH are now seen by a doctor within 3 hours 50 minutes rather than 4 hours as was previously the case. So, we’re already doing all we can. I don’t know how much time we spend developing innovative ways to deliver treatment to patients though, as most of the performance data we doctors receive relates to financial targets.’

Recent performance data for TRH and national average information has been provided in Appendix 1. This is indicative of the data which the doctors at TRH receive.

Required:
(c) Evaluate the extent to which the management style at TRH can be said to be budget constrained and advise on the implications of this approach for managing TRH’s performance. (10 marks)