The Design and Use of Management Accounting Systems in Process Oriented Health Care – An Explorative Study

• Date: 01 August 2013
• Author: Sven Siverbo,Gustaf Kastberg
• Published date: 01 August 2013
• DOI: http://doi.org/10.1111/faam.12014

Financial Accountability & Management, 29(3), August 2013, 0267-4424

The Design and Use of Management

Accounting Systems in Process

Oriented Health Care – An

Explorative Study

GUSTAF KASTBERG AND SVEN SIVERBO∗

Abstract: Process orientation has made its entrance in Health Care Organizations

(HCOs). The purpose is to improve patients’ journeys through the health care

system. One factor that potentially affects process orientation is the design and

use of Management Accounting Systems (MAS). In the literature there are worries

that process orientation often is not supported by a well designed and used MAS

but, on the contrary, is counteracted by a MAS designed for other purposes than

supporting processes. This study contributes to the existing knowledge in that it

shows how the introduction of process orientation within health care is accompanied

by the development of horizontally oriented MAS (HMAS) which is used in different

ways and by different actors. Generally, the use of HMAS for diagnostic control is

limited. The main use of HMAS is for the purpose of mastering the events and

interactive control, and the main users are the persons connected to the processes.

The observation in earlier research that the existence of vertically oriented MAS

may be a threat to process orientation is to some extent corroborated in the paper.

Keywords: management accounting, management control, process orientation,

health care

INTRODUCTION

Process orientation has been a trend during the last decades within the

private industrial sector and more recently it has made its entrance in Health

∗The authors are respectively from the Department of Service Management, Lund University;

and Karlstad Business School at Karlstad University, Sweden. They thank two anonymous

referees for valuable comments and the Swedish Council for Working Life and Social

Reasearch (Forskningsr˚

adet for Arbetsliv och Socialvetenskap, FAS) for financing this

research.

Address for correspondence: Sven Siverbo, Karlstad Business School at Karlstad University,

651 88 Karlstad, Sweden.

e-mail: sven.siverbo@kau.se

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MANAGEMENT ACCOUNTING IN PROCESS ORIENTED HEALTH CARE 247

Care Organizations (HCOs). The purpose of the process of orientation is to

improve patients’ journeys through the health care system. In this paper, we

focus on the kind of process orientation that brings with it a formation of a

matrix organization where the traditional functional organization remains but is

complemented by processes developed for specified patient groups or diagnoses.

This form of process orientation initiative in health care could be characterized

as a post-NPM (New Public Management) movement since it downplays

organizational units’ individual responsibilities and instead emphasizes units’

common responsibilities for patients and patient flows (McNulty and Ferlie,

2004).

A review of the research on process orientation in health care indicates a lack

of substantial studies of its effects (Campbell et al., 1998; and Mazzocato et al.,

2010) but among the studies that have been done some show failure (McNulty

and Ferlie, 2004; and Bragato and Jacobs, 2003) and others report more positive

results (Graban, 2009). One factor that potentially affects the success of process

orientation is the design and use of the Management Accounting System

(MAS). In the health management literature, the accounting literature and the

prescriptive management literature there are worries that process orientation

often is not supported by a well designed and used MAS but, on the contrary, is

counteracted by a MAS designed and used for other purposes than supporting

processes (Chenhall, 2008; and Ferreira and Otley, 2009). These worries are in

line with Hopwood’s (1977) analysis of the accounting and control challenges

facing matrix organizations (cf. Chenhall, 2008).

Despite this anxiety, so far no research on MAS design and use within process

oriented (matrix organized) health care has been carried out. There has been

kindred research, but as we show in the theoretical part of this paper, the

results from this research are hard to generalize to the health care setting.

Mostly, existing research is based on studies on manufacturing settings that are

very different from service oriented health care settings. Also, in the studies

carried out it is unclear whether the companies are matrix organizations or

pure process organizations (with responsibility centers based laterally around

products or customers). Furthermore, most of the existing studies are to some

extent reductionist, that is, they only include a limited number of control tools

in their analyses.

Consequently, there is a need for non-reductionist studies on the design and

use of MAS in process oriented health care organizations. The aim of this study

is to explore the design and use of MAS in process oriented HCOs. The aim

is specified and delimited in the research questions: Are MAS that support

processes developed? How are they designed? What are the implementation

problems? How are they used and by whom? How are they affected by the

existence of MAS supporting the traditional functional organization?

The study shows that the introduction of process orientation within health

care is accompanied by the development of horizontally oriented MAS (HMAS)

as complements to the existing MAS and that these systems face technical

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