In many systems management is regarded as a cost to be avoided. This seems to be a mistake. The key to successfully achieving low-cost delivery is excellent management.

Partner and Chairman

KPMG in the UK


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Management is an investment not a cost

Devolved management with flat structures, the involvement of physicians and the deployment of lean techniques to eliminate waste and maximize quality makes a difference. Strong centralized management is important in areas such as procurement and information systems, while front-line managers need autonomy to make decisions supporting value for money.

Research from the London School of Economics shows that improved management practices in hospitals are associated with significantly lower mortality rates and better financial performance. The research also found a strong relationship between a number of other factors and effective management practices, in particular:

  • Competition helps to improve managerial standards
  • Having senior, clinically qualified managers improves results
  • Higher-scoring hospitals give managers higher levels of autonomy
  • When it comes to ownership, private hospitals (including not-for-profits) achieve higher management scores than public hospitals across all countries
  • Larger hospitals invest more in management and appear to be better managed – there do however, seem to be some diseconomies where hospitals are very large and complex.

Another study (Mannion et al 2006) compared a series of management characteristics across six hospitals. In the high-performing hospitals, the management orientation was corporate; middle management was strong and empowered; accountability was clear; rewards were performance-related; information systems were highly developed; and the taboo was not hitting targets. By contrast, in the poorly performing hospitals, management orientation was pro-professional; middle management was underdeveloped and disempowered; accountability was opaque; rewards were patronage related; information systems were underdeveloped; and there was a taboo that discouraged challenging senior management.

This all means that management development is very important and not just for the top leaders – middle managers and frontline supervisors are also vital. Providing mentoring and support for people to learn on the job is essential, as well as training in team management and improvement methods.


Poor governance and oversight is a feature of many systems struggling with creating low-cost models of delivery. Investment in strong governance processes and independent, knowledgeable oversight by a properly qualified board is essential. Fraud and corruption are major obstacles to creating efficient, high-value healthcare and require careful monitoring.

Effective governance needs support through measurement systems, and the ability to compare performance against others so learning can be adopted from elsewhere. Accreditation is useful, but it is unhelpful to apply standards that have been developed in other systems without adaptation.

Using information

As with all the other building blocks of successful low-cost systems, using information to understand the business, manage performance, ensure quality and hold staff to account is vital. Developing the right set of metrics and reporting standards simple enough to be effective, ensuring these are available in almost real time and having the competences to interpret and act on this information is important. The hands-on nature of management in many low-cost systems and their focus on the future also seem to mark them out as using information differently from the competition.

Experimentation and learning

Low-cost, high-quality systems often emphasize continuous improvement and are willing to prototype and pilot new ideas. One of the advantages of standardization is, paradoxically, that it makes experimentation easier as it controls some of the variation which otherwise makes testing concepts quite difficult.

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