How to influence physician cost consciousness? Examining behavioral antecedents and the potential of management control systems in healthcare - A multiple case study in Finnish hospitals

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Volume Title

School of Business | Master's thesis

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Date

2020

Department

Laskentatoimen laitos

Major/Subject

Mcode

Degree programme

Accounting

Language

en

Pages

91 + 13

Series

Abstract

The costs of healthcare have been increasing immensely for decades despite the plethora of reforms aspiring to contain them. Consequently, physicians’ role in cost containment has been increasingly recognized; decisions made by physicians contribute extensively to the costs of care, while a significant portion of these costs is considered avoidable healthcare waste, resulting from e.g. overtreatment. Thus, the objectives of this thesis are to (1.) identify factors that influence physician cost consciousness and (2.) determine whether hospitals currently employ management control systems (MCS) to direct it. Furthermore, based on an understanding of the factors that influence physician cost consciousness, i.e. the behavioral antecedents, the aim is to assess which MCS could potentially be employed. To meet these objectives, physician cost consciousness factors per the existing research are juxtaposed with the empirical results of this thesis, amplified, and finally compiled into a conceptual framework. Thereafter, the current control environment will be analyzed and suggested MCS derived based on the previous MCS research, specifically Malmi and Brown’s (2008) MCS as a Package -typology, finalizing in a proposed conceptual framework for MCS employment in hospital settings. This research was conducted as a multiple qualitative case study in six Finnish hospitals. Empirical data consisted of 19 interviews with respondents from both physician and administration profession employing a semi-structured interview method. The interviews were conducted in different groups to obtain a comprehensive understanding of the phenomenon. Whereas previous research on cost consciousness has mainly adopted different survey methods in single settings, multiple qualitative case study provides a method for building in-depth understanding as well as confirm the results of previous research as the data is triangulated by multiple cases’ perspectives. The findings of this research indicate that physician cost consciousness appears to be an outcome of several factors and their interrelations, thus promoting a holistic approach for studying the phenomenon. Altogether 18 factors could be identified from the existing research and this empirical study, whereas 5 of them were novel, not previously identified factors derived from this empirical study (e.g. communication with accounting personnel, sense of duty). On the other hand, this study was able to aggregate previously identified factors from several dispersed research findings as well as significantly broaden the understanding of these factors. With respect to MCS, only budget as a cybernetic control was broadly employed in all case hospitals. Drawing from an understanding of the behavioral antecedents and the previous MCS research, this study suggests distinguishing between the control of physician managers and the control of practicing physicians. Especially cultural controls are suggested for both control groups; value-based controls and clan controls for initial socialization into the organization and training controls for continuous cost consciousness education. Furthermore, administrative controls in the form of governance structure are suggested for establishing physician managers’ accountability for controlling their subordinates, i.e. practicing physicians, in terms of cost consciousness.

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Thesis advisor

Malmi, Teemu

Keywords

cost consciousness, healthcare, healthcare costs, hospitals, management control systems, MCS, physician cost consciousness, Finland

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Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202007054307

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[gradu] Kauppakorkeakoulu / BIZ