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					        OAG Review of the
     Performance Agreements
            between
    MoHS and Health Authorities


                           O F F I C E   O F   T H E

                          Auditor General
                           of British Columbia
1
        Lines of Business

       Examining financial statements

       Reviewing the quality of broader performance
        information

       Assessing how well government manages key risks



                                                   O F F I C E   O F   T H E

                                                 Auditor General
                                                   of British Columbia
2
        Reasons for the Review

       Performance agreements need to succeed as drivers of
        change

       Performance agreements are emerging as an
        accountability tool

       Provide legislators and the public greater insight


                                                       O F F I C E   O F   T H E

                                                     Auditor General
                                                       of British Columbia
3
        New Performance Agreements

       July 2002 – first performance agreements signed
       PAs part of major restructuring of regional healthcare
        system
       Mechanism to increase accountability for the 6 new
        large health authorities
       $6 billion managed through new entities


                                                     O F F I C E   O F   T H E

                                                   Auditor General
                                                     of British Columbia
4
            Background

       Purpose: to determine if the agreements are
        effective

       Scope: all 6 performance agreements

       Criteria:
        •   governance
        •   accountability
        •   performance measurement

                                                  O F F I C E   O F   T H E

                                                 Auditor General
                                                  of British Columbia
5
    Performance Agreements


             Governance


                        O F F I C E   O F   T H E

                     Auditor General
                       of British Columbia
6
            Purpose
       Clarify the agreements’ purpose
        •   Common understanding of purpose is lacking
        •   Need to consider whether agreements are:
            •   service contracts
            •   organizational performance agreements
            •   individual performance agreements
            •   business plans
            •   issues management tracking documents
        •   Recommend purpose be clearly defined and agreements
            be designed around that purpose
                                                         O F F I C E   O F   T H E

                                                        Auditor General
                                                         of British Columbia
7
            Roles and Responsibilities

       Need Consistency with Governance Roles
        •   The ministry has taken on a “stewardship” role and
            delegated responsibility for service delivery to health
            authorities
        •   However, in practice, these roles and responsibilities
            are still somewhat ambiguous
        •   Recommend that agreements be better structured to
            reflect this distinction in roles

                                                          O F F I C E   O F   T H E

                                                        Auditor General
                                                          of British Columbia
8
            Decision-Making Authority

       Clarity needed as to who can make what decisions
        •   Health authorities need the authority to make decisions
        •   Uncertainty as to who – the Minister, DM, HA Board or
            CEO – can make what decisions
        •   This uncertainty is evident across Canada
        •   Recommend developing a decision-making framework


                                                         O F F I C E   O F   T H E

                                                        Auditor General
                                                         of British Columbia
9
           Key Parties Accountable

      Signatories to the PAs should be consistent
       with governance roles
       •   Minister and Board are ultimately accountable
       •   Mixed accountabilities and reporting lines among
           the current four signatories
       •   Recommend that only the Minister and Board
           Chair (on behalf of the Board) sign the
           agreements

                                                     O F F I C E   O F   T H E

                                                    Auditor General
                                                     of British Columbia
10
             Relationship Management

        Move to greater partnership

         •   Ministry service plan for 2002/03-05/06 emphasizes
             exerting control through the agreements
         •   Relationship needs high degree of trust, cooperation
             and mutual respect to succeed
         •   Intent is to move towards a greater partnership
         •   Recommend that agreements be further developed to
             be consistent with this partnership approach
                                                        O F F I C E   O F   T H E

                                                      Auditor General
                                                        of British Columbia
11
             Board Performance

        Boards should be assessed for how well they
         are managing their key responsibilities

         •   PAs lack a board assessment provision

         •   Boards intend to self-assess

         •   Recommend moving towards an independent
             third-party board assessment


                                                      O F F I C E   O F   T H E

                                                     Auditor General
                                                      of British Columbia
12
     Performance Agreements


             Accountability


                         O F F I C E   O F   T H E

                       Auditor General
                        of British Columbia
13
             Commitment and Leadership

        Demonstrated commitment to accountability

         •   PAs reflect intent to promote a culture of
             accountability and performance management
         •   Significant leadership step towards enhancing
             accountability



                                                        O F F I C E   O F   T H E

                                                      Auditor General
                                                        of British Columbia
14
     Accountability: Elements




                                 O F F I C E   O F   T H E

                                Auditor General
                                 of British Columbia
15
             Objectives

        Need clear objectives
         •   General repository of expectations
         •   Identify, distil or prioritize from among the “givens”
             into objectives
         •   Recommend developing objectives as the single
             biggest improvement to turn agreements into the
             key accountability documents


                                                          O F F I C E   O F   T H E

                                                         Auditor General
                                                          of British Columbia
16
           Effective Strategies/Management Systems

      Progress has been made to align strategies and
       management systems with PAs
       •   Planning – short term and long-term linkages needed
       •   Operations and Capacity – internal operations and
           capacity need to be strengthened
       •   Recommend continued improvements, in particular
           long term linkages


                                                     O F F I C E   O F   T H E

                                                    Auditor General
                                                      of British Columbia
17
             Collaborative Process
        Need a more collaborative, two-way process
         •   Process to develop the agreements was rushed and
             relatively top-down
         •   Limited input by the HAs
         •   Recommend a more inclusive process that is more
             considered and strategic, so that agreements are
             fair and realistic


                                                      O F F I C E   O F   T H E

                                                     Auditor General
                                                      of British Columbia
18
     Performance Agreements


       Performance Measurement
             and Reporting

                         O F F I C E   O F   T H E

                      Auditor General
                        of British Columbia
19
             Eclectic Gathering

        Unclear Purpose Led to Eclectic Gathering
         •   Issues, processes, and results
         •   Schedule A more specific, but not balanced or
             comprehensive—focus on short-term priorities
         •   Schedule B focuses on unresolved issues - a
             tracking tool
         •   Recommend work to bring focus


                                                       O F F I C E   O F   T H E

                                                     Auditor General
                                                       of British Columbia
20
          Short-Term and Long-Term

        Need Long-Term Measures As Well As Short-
         Term Priorities
         •   Absence of long-term strategic context
         •   Measures focus on short-term improvements
         •   Recommend agreements include long-term
             measures of success


                                                       O F F I C E   O F   T H E

                                                      Auditor General
                                                       of British Columbia
21
     Guiding Principles and Framework Needed

        Health care measurement extremely complex
        Many jurisdictions struggling
        Need for careful, systematic approach
        Select a guiding set of principles
        Create a measurement framework
        Sound methods of choosing within framework
        Use logic models as a support tool

                                                  O F F I C E   O F   T H E

                                                 Auditor General
                                                  of British Columbia
22
         Conceptual Framework Suggestions

        Service levels and access
        Service quality and appropriateness/client outcomes
        Client satisfaction
        Financial results
        Efficiency/productivity
        Sustainability/ capacity


                                                   O F F I C E   O F   T H E

                                                  Auditor General
                                                   of British Columbia
23
         Targets

        Often Vague, Not A “Stretch”
         •   Current set lack clarity, lack motivational
             dimension
         •   Will need to create and assess baseline
             information, and negotiate stretch targets
         •   Ensure targets are measurable and clear
         •   Recommend clear measurable targets
                                                           O F F I C E   O F   T H E

                                                       Auditor General
                                                           of British Columbia
24
         Reporting


        Requirements Are Not Specific

         •   Agreements do not set out specific requirements
         •   Reporting requirements can become onerous,
             costly, if not managed
         •   Recommend reporting provisions based on
             decision-making, emerging technologies


                                                      O F F I C E   O F   T H E

                                                    Auditor General
                                                      of British Columbia
25
             Audit

        No provision for audit /independent review
         •   Information users need assurance
         •   Audit is traditional source of assurance
         •   Need broad scope assessments to complement
             indicators
         •   Recommend joint program of independent audits
             and evaluations

                                                         O F F I C E   O F   T H E

                                                        Auditor General
                                                         of British Columbia
26
         Incentives and Consequences

        Incentives are insufficient
         •   CEO performance pay only incentive
         •   Need comprehensive, effective incentives
         •   Variety being used in other countries
         •   Need consequences if performance problems
             persist
         •   Recommend adequate package of incentives
             graduated consequences
                                                        O F F I C E   O F   T H E

                                                     Auditor General
                                                        of British Columbia
27
         Conclusion
        Provided 20 recommendations, emphasize the
         following ones:

         •   Purpose
         •   Roles and responsibilities
         •   Objectives
         •   Performance measures
         •   Incentives and consequences

                                             O F F I C E   O F   T H E

                                           Auditor General
                                             of British Columbia
28
         Moving Forward

        Will take concerted effort, many will be complex to
         implement

        Believe commitment is there to turn the
         agreements into effective tools for a more
         transparent and accountable healthcare system




                                                      O F F I C E   O F   T H E

                                                    Auditor General
                                                      of British Columbia
29
         OAG Review of the
      Performance Agreements
             between
     MoHS and Health Authorities

                             O F F I C E   O F   T H E

                            Auditor General
                             of British Columbia
30

				
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