Abstract: The Australian public sector has recently faced a sweep of reforms. Initiatives such as National Competition Policy (NCP), economic rationalism, accrual accounting, financial management initiatives and value-based management are some of the many reforms that Australia has adopted. This renewed focus has inspired reforms in the actual operations of the public hospitals. This paper aims to investigate the production and utilization of cost information, organizational culture towards costing initiatives, and power and conflicts in the organization studied. To investigate these issues, we used a state-owned large teaching and research hospital. To inform the case study, we developed a theoretical framework in light of the insights drawn from institutional theory, organizational change, and power and conflicts.
Introduction: Traditionally hospitals had little incentive or demand for cost accounting to be used as a management control tool. Hospitals primarily reported to external funding authorities, such as the government, and hence only served as external reporting functions. Therefore, managerial initiatives for cost accounting were not dominant issues at this time, and hence service provision was considered to be a means of accountability (Comerford and Abernethy, 1999). An arms length relationship existed between doctors and hospitals with doctors possessing honorary status. However, in Australia, lack of productivity and efficiency of government services created negative social views toward to the government and as a result initiatives such as Medibank emerged resulting in professional negotiations (no longer arms length relationships) and a growing concern over the hospitals finance and management (Chua, 1995).
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