Performance contracting at Kenyatta National Hospital
Performance contracting is one of the key planks of the new public management (NPM) reforms aimed at improving public administration and service delivery in the public sector. The NPM reforms have now become a global phenomenon as various countries have adopted them to address the bureaucratic characteristics of inefficiency, red tape, lack of flexibility, ineffective accountability and poor performance that bedeviled delivery of public service in the past. The devolved management style underpins performance contracting where emphasis is management by outcomes rather than management by processes. A performance contract defines the objectives and sets criteria and targets to be achieved by a Government agency. The Government of Kenya recognized the need to reform the public service in the late 1980's and tried various approaches including right sizing, privatization and restructuring, but achieved little success mainly due to the fact that these reforms were largely input or compliance based. Performance contracting was adopted as a results-based management system in 2003 and by 2005, most state corporations, including Kenyatta National Hospital (KNH), were put on performance contracting. This study undertook to analyze how performance contracting is being applied at KNH and bring out the successes and challenges experienced and measures being taken to address the challenges. The scope of the study covered three performance contracting cycles, 2005/06 to 2007/08. The study was conducted as a case study involving personal in-depth interviews with seven selected senior managers. A structured interview guide was used to collect primary data. - From the research findings, the broad categories of performance evaluation were identified by the national Performance Contracts Steering Committee (PCSC) based in the Office of the Prime Minister. Four generic performance criteria were identified by the PCSC for noncommercial state corporations in 2005/06, namely, financial, non-financial, operations, and dynamic/qualitative indicators. In 2006/07, the PCSC expanded the performance evaluation criteria to include service delivery as a distinct criterion. There were mixed outcomes in achievements in performance during the three years covered by this study. Both financial and non-financial indicators have had a lack lustre performance. On the other hand, good results were achieved for service delivery, operations and dynamic/qualitative indicators. The implementation of performance contracting has faced a number of challenges. These included introduction of the concept in the hospital with little or no awareness among the management and other staff, low teamwork, lack of empirical baselines for determination of performance targets and identification of performance indicators without appropriate measuring tools. Other challenges identified were resource constraints, inadequacy of management information system, inadequate incentives/sanctions system, an obstructive organizational culture, and reneging of the Government on her commitments. Some of the measures put in place to address the challenges include training of selected staff to create a critical mass to deepen the concept in the hospital, deliberate approach to improve teamwork and realign the organization structure to the new paradigm shift, prioritized activity-based resource allocation and enhancement of the management information system among others. The researcher discerns that performance contracts have the potential to overcome a substantial number of barriers to efficiency and effectiveness in service delivery. To realize this, the researcher recommends that KNH will have to deepen the performance contracting concept more widely, realign organizational culture to the new expectations and enhance management information systems. Commitment of the parties to their obligations and more rational utilization of resources through effective prioritization are critical. The main limitations of the study were resources. The time period covered by the study was short and the researcher narrowed the number of respondents for the study to fit in the available time-frame. Collaborative or divergent inputs through interviews from the other arms of Government was not obtained hence secondary data was relied on. Again the study did not control for other factors that may have affected the outcomes achieved. For further research it is suggested that a study be undertaken to determine to what extent performance outcomes relate to the implementation of performance contracting while controlling for other factors. Given that performance contracts were introduced to address the perception of customers that service delivery was not in line with their expectations, perceptual studies may be carried out in the hospital to gauge patients' views on changes in service delivery following the adoption of performance contracting.
CitationMasters of Business Administration, University of Nairobi (2009)
University of NairobiSchool of Business