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Performance measurement system innovations in hospitals as translation

processes
Antonio Leotta, Daniela Ruggeri,
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Performance
Performance measurement measurement
system innovations in hospitals as system
innovations
translation processes
Antonio Leotta and Daniela Ruggeri 955
Department of Economics and Business, University of Catania, Catania, Italy
Abstract
Purpose – The purpose of this paper is to highlight how the variety of the actors involved in a performance
measurement system (PMS) innovation are spread out in time and space. Healthcare contests are examined,
where such an innovation is influenced by present and past systems and practices (spread out in time), and by
managerial and health-professional actors (spread out in space).
Design/methodology/approach – Drawing on Callon’s actor network theory, the authors describe PMS
innovations as processes of translation, and distinguish between incremental and radical innovations.
The theoretical arguments are used to explain the evidence drawn from a longitudinal case study carried out
in an Italian public teaching hospital, referring to the period from 1998 up to 2003.
Findings – The conceptual framework shows how the translation moments lead to a recognition of the
different actants involved in a PMS innovation, how their interests are interrelated and mobilized. Moreover,
it shows how the interaction among the actants involved in the process is related to the type of PMS
innovation, i.e. radical vs incremental. The case evidence offers detailed insights into the phenomenon, testing
the explanatory power of the framework, and highlights how the failure of one of the translation moments can
compromise the success of a PMS innovation.
Originality/value – This study differs from the extant accounting literature on PMS innovations as it
highlights how the introduction of a new PMS can be affected by some elements of the previous systems
“package,” which are relevant for the mobilization of the actants through the new project.
Keywords Actor network theory, Health organizations, Accounting innovations
Paper type Research paper
Introduction
Over recent decades, the need for efficiency in the healthcare sector has prompted public
sector reforms that call for a modernization of performance measurement systems (PMSs) in
use within hospitals. This modernization involves all the aspects of an innovation process.
The introduction and redesign of PMS has generated a number of difficulties caused by the
diversity of the actors involved in the process of change. Often, their different interests,
sometimes ignored, have caused the newly introduced systems to fail, so that they have
been rapidly put aside and substituted with further innovations. The different interests may
derive from different logics, managerial or health-professional, of the actors operating in a
healthcare context, and have to be satisfied by the technical characteristics of any new
system such as cost allocation method, incentive mechanism and software package.
Moreover, the logics and the technical aspects underlying the new system should be
consistent with the earlier logics and techniques already in use in the organization.
Thus, it has been argued that “the fate of a system is always in the hands of others”
(Preston et al., 1992, p. 577). According to this view, a new PMS is never a ready-made
package that can be implemented ( Justesen and Mouritsen, 2011).
The present study focuses on PMS innovations in hospitals (Chua, 1995). Considering
this context, the study aims to examine how the actors who affect the success of
Accounting, Auditing &
PMS innovations are spread out in time and space ( Justesen and Mouritsen, 2011). Accountability Journal
Indeed, in healthcare context PMS innovations are influenced by present and past Vol. 30 No. 4, 2017
pp. 955-978
systems and practices (spread out in time), and by managerial and health-professional © Emerald Publishing Limited
0951-3574
actors (spread out in space). DOI 10.1108/AAAJ-01-2014-1580
AAAJ In healthcare literature, the co-presence of managerial and health-professional actors has
30,4 already been examined (Modell, 2001; Kurunmäki, 2004; Lehtonen, 2007), but few studies
have investigated how such different actors ally with each other in a network (Chua, 1995;
Lowe, 1997, 2001a). In the management accounting literature, Malmi and Brown’s (2008)
theoretical contribution related the new management control system (MCS) elements to the
ones already in use. However, to the best of our knowledge, no other study has focused on
956 how PMS innovations are influenced by present and past systems and practices already in
use in an organization.
To address the above-mentioned point, a theory is needed which highlights how present and
past systems and practices can interact with other organizational actors for the success of a PMS
innovation. We see this perspective in the actor network theory (ANT), because it considers as
actors both humans and non-humans. ANT helps us understand how the translation of PMS
innovations is distributed in time, as it mobilizes the past systems and practices already in use in
the organization. Used as a proper method theory (Lukka and Vinnari, 2014), the ANT lens
shows how various interests become allied with previous systems and practices, in which case
we see incremental innovations. On the other hand, we see radical innovations when no such
alliance with the previous systems exists. The ANT lens shows that radical innovations can
entail a major departure from existing practices (Damanpour, 1996). In the distinction between
incremental and radical innovations, we consider a temporal sequence of PMSs so as to highlight
the possible links that a new system may have to the previous ones.
Drawing on ANT, the healthcare accounting literature has provided explanations for the
dynamics of PMS changes, highlighting the actants (human and non-human) that are
directly involved and their interactions (Chua, 1995; Lowe, 1997, 2001a). Applied to
healthcare organizations, we see that Callon’s version of ANT is appropriate to represent the
variety in healthcare actors’ interests and needs, distributed in space. The focus on the
different moments of translation highlights how the construction of a PMS innovation stems
from a progressive mobilization of the different medical and managerial interests. We thus
follow the line of inquiry proposed by Justesen and Mouritsen’s (2011) review of accounting
literature inspired by Latour’s version of ANT. In fact, even if we draw on Callon’s
perspective, we examine PMS phenomena as “distributed, a-centered objects […] spread out
in time and space towards heterogeneous elements that help to make their identity”
(Justesen and Mouritsen, 2011, p. 184). We refer to these a-centered objects through the
notion of systems package proposed by Malmi and Brown (2008).
The arguments developed in the theoretical part of the paper are used to explain the
evidence drawn from a longitudinal case study carried out at an Italian public teaching
hospital during the period 1998-2003, characterized by continuous PMS changes. The case
description shows the specifics of the phenomenon observed, highlighting that the success
or failure of a PMS innovation depends on how actors from different periods and places ally
with each other. In doing so, ANT was used as a method theory as it offers useful insights
into how some elements of previous PMS innovations influence the four moments of
translation of a new PMS innovation.
We believe that this study contributes to the accounting literature on PMS innovations,
as it examines how such innovations are influenced by present and past systems and
practices already in use in an organization. Moreover, this study differs from the extant
accounting literature based on ANT, as it highlights how the translation of a PMS
innovation enrolls the previous systems and practices, which are relevant for the
mobilization of interests through the new project. Moreover, the study contributes to
innovation literature as it offers a conceptualization of incremental vs radical innovations,
which, in line with ANT perspective, is based on the complexity of negotiations. This seems
very useful for understanding the reasons why a particular innovation may have succeeded
or failed.
The rest of the paper is structured as follows. The first part describes PMS changes and Performance
innovations in healthcare organizations moving from previous ANT-based accounting measurement
studies, and conceptualizes PMS innovations as processes of translation. The second part system
describes the research method which guided the explanatory case study, provides the field
evidence and offers an interpretation for it based on the theoretical arguments previously innovations
developed. Finally, some reflections conclude the paper.
957
PMS changes and innovations in health organizations
Many authors have followed an ANT-inspired approach to provide a better understanding of
the dynamics of change in PMS, highlighting the actants (human and non-human) directly
involved. Borrowing Latour’s (1987) arguments, Chua (1995) examined the development and
implementation of a costing system in an Australian public hospital. She related how
accounting information based on diagnosis-related groups (DRGs) was accepted and how a
network of actors progressively emerged, demonstrating how accounting numbers connected
diverse interests. Lowe (1997) emphasized that the emergence of technical artefacts was the
result of an elaborate process of translation, which relied on the ability of some actors to
convince other actors to accept their conception of the issues and validate their solutions.
He showed how the use of accounting techniques (perceived as a technology) could influence
the decision makers within healthcare institutions.
In this study, our focus is on PMS innovations as translation processes. More
particularly, we focus on main human and non-human actants involved in such innovations,
i.e. on the people following managerial and health-professional logics (human actors), and on
the socio-technical aspects of the PMS to be introduced in comparison with those of the
previous systems. In so doing, we show that the identity of a new PMS is constructed within
a systems package made up of heterogeneous elements distributed in time and space
(Malmi and Brown, 2008; Justesen and Mouritsen, 2011).
Managerial and professional actors in the dynamics of change in PMS

The healthcare accounting literature has been enriched by contributions that analyze the
processes of change, such as the introduction of DRG and practices of case-mix
accounting, in order to adapt the PMS to the emerging needs of new actants. Some studies
have highlighted that in a complex setting, such as a hospital organization, two logics
coexist: managerial and health-professional (Weiner et al., 1987; Chua and Degeling, 1993;
Covaleski et al., 1993; Doolin, 1999; Jacobs et al., 2004; Lehtonen, 2007; Conrad and
Uslu, 2011; Kraus, 2012; Leotta and Ruggeri, 2012). The latter is represented by physicians
who are under pressure to comply with a set of norms and rules developed by professional
groups, as stated by Carruthers (1995): “the experience of a specialized education, and the
involvement in professional networks, influences how professional personnel undertake
their activities within the organisation” (p. 317). Traditionally, decision making in
hospitals was dominated by the power and interests of physicians (Perrow, 1965).
The power of physicians within hospitals exacerbates goal conflict and is potentially
problematic for implementing effective MCSs (Abernethy and Vagnoni, 2004).
This conflict arises when physicians’ goals are not congruent with the organizational
goals that are critical to maintain the resource base of the hospital (Abernethy and
Stoelwinder, 1995). However, nowadays the economic, political and social environment in
the hospitals is changing the power base of physicians. The increasing financial, legal and
regulatory complexities associated with hospital management have resulted in a shift
from physicians’ dominance in hospitals toward administrative management (Alexander
and Morlock, 2000). The values and rules dictated by managerial logic often conflict with
those of the professional one, hindering the acceptance of PMS. Several studies have dealt
with the phenomenon of the so-called “accountingisation,” defined as “the displacement of
AAAJ core values within the (public) sector of the economy by the invasive influence of financial
30,4 measures and imperatives” (Lapsley, 1998, p. 117), cited in Kraus (2012, p. 1081).
These studies have shown different evidence on the interaction between managerial and
professional logics. They have underlined the “accounting-induced disturbances and their
effects on front-line professionals’ core values and work practices” (Kraus, 2012, p. 1083).
This evidence can be summarized as follows: physicians’ resistance to change, in which
958 conflicts are never overcome; the prevalence of managerial logic; and finally the
phenomenon of “hybridization” between the two logics.
Some studies have analyzed the resistance of professional logic to the changes required
by managerial logic. Examining the introduction of indicators of health service quality,
Modell (2001) pointed out that, although quality management regards not only technical
aspects but also medical concerns, medical staff expressed the need to monopolize
everything related to health and medical aspects. In particular, a source of conflict between
managerial and professional logics was “what” was meant by acceptable quality
management techniques. In this case, the resistance expressed by medical staff to the use of
quality indicators was the result of different interests: whereas professionals were oriented
toward values and rules of professional conduct, administrative managers were interested
in efficiency and economic results.
In other studies, the evidence shows the prevalence of managerial logic in the
introduction of changes in PMS (Abernethy and Chua, 1996; Lehtonen, 2007). In particular,
some institutional changes in the healthcare sector have involved the type of control used in
hospitals, changing the informal controls into formal and bureaucratic controls. In such
contexts, the influence of medical staff has proved weaker than the influence exerted by
administrative staff and institutional leaders (Chua and Degeling, 1993; Jones, 1999). In some
cases, the reduction of professionals’ power, due to the introduction of DRGs in hospitals,
made physicians more cost-conscious, recognizing the need to make an efficient use of
hospital resources (Lehtonen, 2007).
Finally, some contributions have highlighted the convergence of the two logics, for
example, when medical professionals encounter calculative practices of managerial
accounting, adopting management accounting techniques, thus giving rise to a
“hybridization” phenomenon. Kurunmäki (2004) showed by a case study how PMSs were
perceived as communication tools and techniques which facilitated the “hybridization” of
physicians who acquired managerial skills (Preston et al., 1992; Covaleski et al., 1993;
Harrison and Pollitt, 1994; Kurunmäki, 1999). Specifically, the authors analyzed the response
of medical professionals to attempts to make them financially responsible through the
introduction of delegated budgets. The delegation of financial responsibility,
cost-accounting systems and performance assessment were all considered elements that
allowed medical personnel to acquire managerial skills. The combination of medical and
accounting skills enabled a satisfactory outcome. In another contribution, Lehtonen (2007)
underlines that the effects of new reforms (i.e. DRG-based perspective pricing and case-mix
accounting systems) on hospital management control are successful when accounting
information penetrates the organization deeply, making health professionals cost-conscious
and increasingly aware of their limited financial resources.
Reinterpreting the radical and incremental PMS innovations from ANT perspective
The roles of the representatives of managerial and health-professional logics (human actors)
in the dynamics of changes in PMS are played over time. This suggests examining the socio-
technical aspects of introducing PMS innovations in comparison with those of the previous
systems (non-human actants) already in use. The relevance of this issue was highlighted by
Justesen and Mouritsen (2011), who qualified accounting phenomena as distributed,
a-centered objects spread out over time and space. We see this consistent with studying
PMS as a “package,” which “points to the fact that different systems are often introduced by Performance
different interest groups at different times” (Malmi and Brown, 2008, p. 291). In fact, as measurement
argued by Malmi and Brown (2008), one of the reasons for studying MCS as a package system
comes from the fact that any MCS innovation should not be studied in isolation “if the use
and impact of a new MCS element is related to the functioning of the existing broader MCS innovations
package” (Malmi and Brown, 2008, p. 288).
Drawing on Damanpour and Evan (1984), we define PMS innovations as a type of 959
administrative innovation, namely “as those that occur in the social system of an
organization. The social system here refers to the relationships among people who interact
to accomplish a particular goal or task […]. It also includes those rules, roles, procedures,
and structures that are related to the communication and exchange among people and
between the environment and people […]” (Damanpour and Evan, 1984, p. 394). In addition
to that, we qualify PMS as a socio-technical innovation because its translation in an
organization depends on how social and technical aspects interrelate to each other. So, we
draw on ANT because it helps in understanding how the different actants, human and
non-human, involved in a PMS project, are connected to each other, which relates to
“the chain of translation of the interests and identity of members who are asked to join the
network” (Harrisson and Laberge, 2002, p. 498). We expect that the length of the chain of
translation of the members’ interests and identity is linked to the radical vs incremental
nature of the innovation.
Innovation literature has conceptualized the radical vs incremental typology (Chandy
and Tellis, 1998, 2000; Veryzer, 1998; Lynn and Akgün, 2001; Garcia and Calantone, 2002)
referring to the newness of market and technology (Harmancioglu et al., 2009).
Radical innovations are defined as “those that produce fundamental changes in the
activities of the organization and represent a large departure from existing practices”
(Damanpour, 1996), whereas incremental innovations are defined as “those that result in a
lesser degree of departure from existing practices” (Dewar and Dutton, 1986; Ettlie et al., 1984,
cited in Damanpour, 1996, p. 699).
Keeping this in mind and assuming the symmetry of human and non-human actants,
the ANT lens can be useful because it reduces the newness of the market and technology
into the newness of the socio-technical features, i.e. of the human and non-human actants
involved. Indeed, as argued by Harrisson and Laberge (2002, p. 501):
ANT is original because it views technical objects, scientific and natural facts and, by extension,
knowledge, as network elements (Michael, 1996). ANT shows how one actor constructs the identity
of the other actor by trying to make the latter act in accordance with his wishes.
And they continue (pp. 501, 502).

[…] there can also be resistance, for example, as the network becomes more complex and identities
more ambiguous. Alternative, unforeseen translations may then take place.
The latter argument derives from the assumption that, given a change in the identities of the
actors, more complex negotiations are required to construct a network. Then, an alternative,
unforeseen translation may come out: an innovation that produces fundamental changes
and entails a major departure from existing practices, i.e. a radical innovation.
This assumption stems from a processual view of innovation, related to the
post-modernist notion of change, i.e. “drift.” The concept of drift was introduced by
Quattrone and Hopper (2001) to represent change in a-centered contexts, characterized by
loosely coupled assemblages of actions and viewpoints (Andon et al., 2007). As a consequence,
they suggested replacing the modernist concept of change, as a linear movement toward a
predefined state, with the post-modernist concept of “drift.” Andon et al. (2007, pp. 277-278)
point out that “drift reflects the inability of change agents to sufficiently control all contextual
AAAJ elements to achieve desired ends. Drift also conveys the co-produced nature of change by
30,4 arguing for the interdependent nature of organizational actions, knowledges and
rationalities.” Thus, asking new actors to join a network makes negotiations more complex,
because it reduces the ability of change agents to sufficiently control all contextual elements
and achieve desired ends. This entails an innovative solution that drifts away from the
existing practices.
960 In summary, given an established network of actors whose negotiations sustain their
everyday practices, if a new project entails new actors joining the network, it increases the
number of negotiations in the various moments of the translation process. The latter can
produce a large departure from existing practices. By radical, we mean this type of
innovation. On the other hand, if a new project stems from new emerging needs or interests
of the same actors involved in everyday practices, their negotiations can lead to a refinement
of the existing practices. We call this type of innovation incremental.
Applying this dichotomic definition of radical vs incremental innovations to a new PMS
requires the consideration of the previous system. In fact, the exit of the new PMS project
can be influenced by the characteristics of the previous PMS, which should be recognized as
further actants. Keeping this in mind, we examine the process of translation considering the
four moments of problematization, interessement, enrollment and mobilization of allies, not
necessarily separated in time (Callon, 1986). This theorization addresses the line of inquiry
proposed by Justesen and Mouritsen (2011) reinterpreting the concept of control package
from the perspective of ANT[1] and considering each element of the package as an actant to
be mobilized in the introduction of a PMS innovation. To the best of our knowledge, this
point has not been closely examined from ANT perspective, so we have interpreted the
results of innovation studies with the lenses of ANT and defined a PMS innovation as a
process of translation.
As can be noticed, given the scant literature on the subject, we have simply interpreted
the distinction between radical and incremental PMS innovations by examining the related
processes of translation. Further analysis of this subject needs to consider how
organizational actors get allied during a translation process related to a PMS innovation.
We do that by focusing on healthcare context, which is characterized by professional and
managerial interaction. We assume this interaction is as a socio-technical one, as it affects,
and is affected by, both the social dimension of the actants involved and the technical
(medical and administrative) aspects of their knowledge and instruments. Thus, in order to
gain a richer understanding of the phenomenon, we conducted a longitudinal case study at a
large teaching hospital, which is described and discussed in what follows.
Research methodology and methods

In order to improve our understandings of the processes of translation involving a flow of
PMS changes, we carried out a longitudinal case study at a large teaching hospital located in
the south of Italy, where we examined the dynamics of changes in PMS from 1998 up to
2003. We focused on this research period for the following reasons: the corporatization
process was introduced into Italian hospitals in the nineties and produced its effects at
the end of this decade; and, since 2004 various institutional changes have involved the
governance of hospitals, maintaining the status quo in all organizational procedures.
An Italian hospital was chosen on the basis of a continuous process of modernization
which has characterized the Italian healthcare system; the reason for focusing on a teaching
hospital was the heterogeneity of the actants involved in it, such as Region, university,
administrative managers, physicians and physicians’ unions. As will be shown in the case
description, a further source of variety in actors’ interests and needs relates to the nature of
medical activity, which has been described as a “diversified professional federation”
(Lamothe and Dufour, 2007). The specific hospital was chosen for two main reasons: first, as
a large teaching hospital, characterized by a high organizational complexity; second, for the Performance
relevance of PMS changes which took place during the research period. measurement
The case research followed was intended to grasp subjects’ perceptions of the PMS system
changes under study ( Jönsson, 1998; Scapens, 2004; Walsham, 2006). In our construction of
these perceptions, we tried to direct the attention of the people in the field to the aspects they innovations
perceived relevant as both causes and consequences of the examined PMS changes.
Moreover, we formed our own perception of the story drawing on archival data 961
(Lowe, 2001b). This is consistent with the ANT principle of symmetry between humans and
non-humans, because we consider inscriptions such as cost and performance reports,
budget forms and internal letters as relevant to the success of PMS innovations.
As the data were gathered for a different research project, the theoretical perspective we
outlined earlier did not influence our research design. Indeed, when the original research
project was over, we decided to reinterpret the data through the lenses of ANT. The choice
of this perspective derived from some specifics emerging from the interviews; these specifics
include the following: how the different interests and aims explained the introduction of a
new PMS; how the successful implementation of a new PMS depended on the alignment
among those aims; how the relations amongst actants such as managers, physicians
(human), elements of the PMS package in use and normative reforms (non-human) were
constitutive of PMS innovations. The latter appeared to be influenced by people’s
perceptions of the characteristics of the new PMS with respect to the previous system.
Data sources
Data were gathered over the period November 2010-May 2011. Thus, as the longitudinal
nature of the case study refers to the research period 1998-2003, we followed a retrospective
approach, which limited our data sources to archive data, mainly documents, the hospital
website and newspaper articles, and to field data coming from interviews with
administrative managers, medical managers and physicians.
Data sources were selected in order to represent the main interests and thereby actors’
identities. First, we contacted the internal control manager who made available the main
documentary sources. The latter helped us identify the relevant actants. Second, the actants’
interests and their identities guided us in selecting our interviewees and defining the content
of each interview. So, we included among interviewees all actors who played an active role
in the hospital, both as hospital employees and as union and university representatives. For
the same reason, Region was not included among the interviewees and its interests were
investigated by means of documents only. More specifically, we collected archive data from
the following sources: private sources, i.e. budget forms, cost and performance reports,
internal letters, protocols between the hospital and other public administrations, such as
Region and University, and protocols and agreements with trade-unions; public sources,
i.e. hospital website and newspaper articles. All these data were collected during a first-
round visit, in the period November 2010-February 2011, in close collaboration with the
internal control manager.
Field data came from semi-structured interviews conducted with various subjects, who
were selected from the personnel working at the hospital from 1998 to 2003, classified as
administrative managers and staff, medical managers, physicians and clinical staff. The latter
were selected from medical units such as cardiology, surgical oncology and Digestive System
Surgery, which were considered because of their task and organizational complexity, and cost
level. Among medical personnel, we further considered the hierarchical level, i.e. whether the
doctor was a top clinician or not, and the institutional role, i.e. whether the interviewee was
unionist or not (this was the case for the manager of Digestive System Surgery unit) and
whether the interviewee was academic or not (this was the case for the physician from
cardiology unit). We considered this selection criteria consistent with the need to map
AAAJ individual perceptions on various coordinates, such as organizational area, hierarchical level,
30,4 professional characteristics and institutional or social role. For the aim of the present paper,
we see this selection as very appropriate for highlighting the different actants and their
interests involved in each of the various PMS.
All interviews were conducted during the period April-May 2011. They aimed
principally to gather individual perceptions of the appropriateness of the various
962 PMSs, which we referred to as “procedures” in line with the terminology used in hospital
documents. All interviews were preceded by a phone call followed by an e-mail to the
selected subjects. In the e-mail, we enclosed a sheet containing a brief chronological
description of the performance measurement procedures we drew from documentary
analyses, after reviewing it with the internal control manager. In this brief description,
we relied strictly on hospital documents so as to avoid any influence of the researchers on
interviewees’ judgments and perceptions. The interviews, which lasted an hour and
20 minutes on average, focused on the following: the perceived objectives of each of the
past procedures; the extent to which each procedure is perceived to be put into
practice; the perceived advantages of each procedure and its main limits; the extent
to which each past procedure is perceived to have influenced the following procedure and
current practice.
Data analyses
We analyzed data by chronologically summarizing the content of the documents over the
years. Further data were gathered from newspaper articles and the hospital website, which
were coupled with the annual summaries mentioned above, so as to improve our
understanding of each procedure and practice. This also allowed us to map the actor
networks related to each procedure. Field data were drawn from the interviews, which were
not type-recorded because of the confidential nature of the issues discussed (Kajüter and
Kulmala, 2005), and were conducted in an informal style; all were written down in a draft
report and e-mailed to the interviewees.
Data triangulation derives from relating archive and field data to the same object
(PMS changes and innovations). Furthermore, within archive data, we examined each
procedure relying on two different sources: private and public. These multiple sources, at
least partially, compensate for the limit of relying on retrospective approach: we asked
managers to describe, explain and reflect on events they had experienced in the past
(Kasim Nor-Aziah and Scapens, 2007). A retrospective bias has been noticed, for example, on
studies of voting choices, which show that respondents misreport their past choices in order
to appear more consistent with their current choice (Shachar and Eckstein, 2007). We do not
see such a bias as a limit to the validity of this study: first, because we contain it through
data triangulation, as explained above; second, we see retrospective data as opportune, as
only retrospectively can interviewees develop a perception of the extent to which past
procedures influence the following procedures and current practices and, very importantly
for the present paper, recognize the relevant actors involved in the introduction of each
procedure, interpreting their different interests and aims.
An important aim of data analyses was distinguishing between, within the
actor network recognized for each procedure, human and non-human actants, and then
classifying them between managerial and health-professional logics. To do that, we first
identified the main interest for which each actant was perceived to be involved in the
procedure, and then we classified the various interests into managerial and health
professionals’ concerns, in line with people perceptions emerging from the interviews.
We then revised the story we had constructed on the introduction of each procedure,
in order to describe it as a translation process, distinguishing the four moments of
problematization, interessement, enrollment and mobilization. Drawing on our data, we
further attempted to qualify the different performance measurement procedures as Performance
radical vs incremental innovations, according to the criteria proposed in the theoretical measurement
part of this paper. system
innovations
The teaching hospital: organizational profile
The teaching hospital under observation is one of the largest university hospitals in
Southern Italy, with a very articulated organizational structure, currently composed of five 963
departments and 33 medical units. This organizational complexity increased during the
corporatization process, which was enacted in 1998 in response to a reform in the public
healthcare sector. For the sake of clarity, it should be remembered that the Italian healthcare
system is funded by the regional governments. This means that, as well as normative
changes and reforms, changes in hospital management systems can also be due to the
dynamics of regional finance.
Within the hospital under study, the above-mentioned institutional phenomena stimulated
the introduction of different performance measurement procedures. In particular, referring to the
period from 1998 up to 2003, three main procedures were identified, which were labeled as
follows: “Budget negotiation,” in 1998; “Pool competition,” in 2001; “Department projects,”
in 2003. For the purpose of this study, we consider performance measurement procedures as
potential administrative innovations, examining the underlying processes of translation. For this
reason and because the available data referred to the period from 1998 up to 2003, we assume
“Budget negotiation procedure,” implemented in 1998, as the starting context from which the
process of translation began, and thus examine the translation processes related to the following
two procedures.
PMS changes and innovations

This section aims to offer empirics on how the success of a given PMS innovation is
influenced by a variety of actors spread out in time and space. To do so, we selectively
describe PMS changes interpreting them as processes of translation. In particular,
we observe the four moments of the process of translation (problematization, interessement,
enrollment, mobilization) from the managerial and the health-professional points of view,
recognizing the actors involved in the construction of the network. In problematization,
some enrolling actors identify the other actors to be involved in a project by defining their
problems and presenting the project as the right solution to their problems, i.e. as an
obligatory passage point (OPP) (Callon, 1986; Lowe, 1997). In interessement, the enrolling
actor seeks to lock the other actors into the roles that are proposed for them. Enrollment
consists of negotiations aimed at the establishment of a set of roles for each of the actants
involved. Finally, the forth moment, mobilization, “refers to how the enrolling actants
control the enrolled actants or ensure that representations of interests remain fixed”
(Lowe, 1997, p. 442). Another moment is pointed out by Callon (1986), referring to dissidence,
as betrayals and controversies. For the purpose of our study, it relates to all the possible
impediments to the continuation of the introduced PMS, stemming from whatever reasons,
such as accidents, the emergence of new needs or the interference of new actors that can be
in contrast with the result of the previous mobilization. Keeping this in mind, our analysis
leads us to define a PMS innovation as a successful process of translation.
1998-2001: from “Budget negotiation” to “Pool competition”

Over the years, the teaching hospital was influenced by many different agencies, such as
local government and political pressure, resulting from the links between the teaching
hospital and the university. This aspect was also confirmed at management level by
frequent changes in the hospital board that indirectly conditioned the PMS. Particularly,
AAAJ before 1998 the mission of the hospital consisted of teaching, scientific research and
30,4 healthcare services. Whereas, after the corporatization process, the hospital was required to
give precedence to the healthcare service within its mission. The process of corporatization
was stimulated by a public reform directed at increasing efficiency in the healthcare system,
which was then promoted by the university in order to contain hospital expenses.
This process was accompanied by the introduction of a new procedure, called “Budget
964 negotiation.” According to the internal control manager:
Within the new procedure, PMS aimed to account for individual contributions to organizational
productivity and, thereby, to increase productivity of each individual and the medical unit where he
or she worked.
In line with this aim, a large amount (70 percent) of resources was allocated through this
new procedure. Compared to the previous more bureaucratic logic, the new procedure
stressed the following points:
(1) the adoption of budgeting process in defining specific organizational targets;
(2) the introduction of a responsibility accounting system in order to clearly identify the
results each subject was made responsible for, and how each medical manager
evaluated his/her staff; and
(3) the institution of an evaluation committee, with the aim of assuring the reliability of
the whole evaluation process.
The “Budget negotiation” procedure was enacted in June 1998, when budgets from single units
were consolidated in various meetings in which medical managers negotiated specific targets
with the general manager and the controller. Budget forms were prepared by an external
consultant and used as the main documents during the negotiation process. To support
management control, a management accounting system was implemented, based on cost center
accounting and performance indicators (quality targets, in terms of commitment,
professionalism, working days and extra hours as percentage of the monthly budget), which
were to be used by medical unit managers to evaluate the individual productivity within their
team. Referring to this context, physicians recognized the initial enthusiasm amongst health
professionals for the new procedure, but highlighted some side-effects of the use of quantitative
indicators for bonus distribution. The manager of Digestive System Surgery unit argued:
Speaking about bonus distribution, the differentiation among units increased, especially when
quantitative criteria were adopted for incentive purposes. One year some medical units had zero
incentives and other units obtained 200% of the incentives.
The problem reported by the manager of Digestive System Surgery unit was explained by a
physician of cardiology unit as follows:
A limitation of using quantitative indicators was that not all medical managers put them into practice
in all units. This lack of uniformity in the evaluation process represented a weakness of the system.
This was perceived as a very critical point and was explained by some medical managers
who avoided the use of quantitative evaluation criteria, as described by the manager of
surgical oncology unit:
I’ve never made distinctions between members working in my team, because it is difficult to
identify individual contributions with respect to team performance. I think that individuals may be
differentiated by their organizational position, in this case they can be objectively evaluated on the
basis of responsibility assigned to their position.
Even if some other physicians acknowledged the improvements in incentive allocations
stemming from the use of quantitative indicators, they expressed dissatisfaction arising
from the awareness that performance dimensions were not “perfectly” measurable. Performance
Referring to this aspect, the manager of Digestive System Surgery unit, after highlighting measurement
his role as unionist, argued: system
Objectivity of performance measures can lead to satisfactory results in terms of individual innovations
evaluation […] but if the general manager keeps using these measures, the current performance
evaluation system should include ex-post adjustments to take uncontrollable factors into account.
965
Speaking about uncontrollable factors, the interviewee referred to the specifics of care
services and required resources, and explained that any attempt to increase competition
among physicians should have considered the peculiarities of healthcare activities
accomplished by different physicians.

Problematizing the evaluation of organizational and individual productivity referred to
actors’ efforts to make other actants subscribe to their own conceptions by demonstrating
that they have the right solutions to, or definitions of, the problems of others.
So, problematization is shaped by the different interests distributed in the hospital space
showing how important it is to take into account the heterogeneity of healthcare activities in
the evaluation process. Problematization uncovered the main actors who do not feel fully
represented by “Budget negotiation” procedure, such as the medical managers and the
unionist mentioned so far.
In 2001, an increase of 7 percent in the regional funding entailed a growth of the same
amount in the total healthcare revenues. Several meetings between healthcare unions’
representatives and hospital’s top management sought to understand how to represent the
aims of growth of hospital’s revenues through proper performance measures. Besides this
new issue, the above-mentioned problems were still open. Thus, problems are distributed
over time and should be solved through a common solution. Some OPP had to be found
and hospital’s top management was in charge of looking for it, “(attempting) to impose
and stabilize the identity of the other actors […] (This phase of the translation process
represents) the interessement, (which) is the group of actions by which an entity attempts to
impose and stabilize the identity of the other actors it defines through its problematization.
Different devices were used to implement these actions” (Callon, 1986, pp. 207-210).
Union representatives underlined the opportunity to include day hospital and day
surgery activities in the appraisal of the hospital revenues. This point was considered
important for a better definition of the contribution coming from the different activities
carried out within each healthcare unit, as pointed out by the manager of Digestive System
Surgery unit. Besides the different contributions of healthcare activities, performance
measures had to quantify the volume of the healthcare service considering the different
sizes of the healthcare units. This avoided giving the larger healthcare units more
advantages than the smaller ones. Thus, an average revenue per day-bed was introduced as
a performance measure.
Another important issue was related to the comment made by a physician of cardiology
unit, mentioned above. She referred to the availability of quantitative data to be used by the
medical unit managers in order to evaluate the individual productivity of the physicians
working in their team. This lack of data availability had entailed a “lack of uniformity in the
evaluation process,” and required the controller being enrolled in the regular transmission of
such data to the units.
The general manager also acknowledged the Digestive System Surgery unit’s argument,
mentioned above, that any attempt to increase competition among physicians should have
taken into account the peculiarities of healthcare activities. Then, the general manager
highlighted how some medical units, which carried out similar activities, were sometimes
evaluated applying different performance indicators. These non-homogeneous
evaluations were presented as a critical aspect, which spread dissatisfaction among
AAAJ physicians justifying the health professionals refusal to use the performance measures.
30,4 This point had been already stressed by the Digestive System Surgery unit manager as a
union representative.
In order to deal with the above-mentioned problems, an agreement was signed by union
representatives and hospital’s top management. In this sense, the interessement helped the
entities to be enrolled, reducing behavioral uncertainties, and resistance to change, through
966 the continuous interactions among network members in the search of a common solution
(Masquefa, 2008).
The agreement proposed to redefine the “control package” so as to combine some
elements of the previous procedure with the new performance indicators. “Pool competition”
procedure was the name of the new control package, which was a distributed, a-centered
object spread out over time. It assigned the hospital objectives to each healthcare unit
through the same negotiation process that was adopted in the previous procedure.
The achievement of these objectives by each single unit had to be stimulated by making the
different units compete with each other. This, however, was not possible during
the previous procedure as the competing units were not homogeneous with respect to their
activities. Thus, the new control package was intended as a distributed, a-centered object
spread out in space, as it needed to represent the different activities among the units. In the
beginning of July 2001, two forms of incentive mechanisms were introduced. The first was
characterized by pooling homogeneous units, making them compete on three main
dimensions: turnover; direct cost; DRG complexity. The second form of incentive
mechanism involved the units which, being heterogeneous, could not be pooled. It consisted
in assigning each healthcare unit an increase of its turnover of at least 7 percent with respect
to the previous year. In doing so, an increase of direct cost not higher than the increase of
turnover was required. The above-mentioned mechanisms were discussed in some meetings
between the top management and the chiefs of the healthcare units.
The “Pool competition” procedure was illustrated by the general manager in a letter
addressed to each medical unit manager, where, quoting the trade union agreement, he
specified that this agreement:
[…] has established that some medical units performing similar activities should pool resources
that would normally be allocated to single units. This system allows the evaluation of the activities
of single units by comparing them with those of other units within the same pool.
And, referring to medical unit managers themselves, he continued:
[…] the comparison among different units gives each single unit participating in a specific pool the
possibility to improve its initial budget with respect to the following performance indicators: […].
Some interessement devices were designed in terms of incentive mechanisms. Interessement
achieves enrollment if it is successful. “To describe enrollment is thus to describe the group
of multilateral negotiations, trials of strength and tricks that accompany the interessement
and enable them to succeed” (Callon, 1986, p. 211). Referring to the pooled, homogeneous
units, specific targets were identified with respect to the turnover, as can be drawn from the
letter by the top manager:
The healthcare unit which reaches a value between the first quartile and the median, is assigned
50% of its incentive, while the remaining 50% is assigned to the other units which have met this
objective. The healthcare unit which reaches a value lower than the first quartile but higher than
the previous year performance, is assigned 25% of its incentive, while the remaining 75% is
assigned to the other units which meet this object. Otherwise, the healthcare unit incentive is
completely assigned to the other units.
In respect of other two performance dimensions, direct cost level and DRG complexity,
a specific breakdown was proposed by the top manager, who specified that “the direct cost
level is measured by drug consumption, the number of diagnostic check-ups, and the Performance
number of occupied beds; the DRG complexity includes both ordinary and surgery DRG.” measurement
Regarding the non-pooled healthcare units, the top manager specified how the incentive system
could be assigned to those units:
innovations
80% of incentive is assigned to the units which have reached the same turnover level as in the
previous year. 100% of incentive is assigned to the units which have s increased by 7% their turnover
level with respect to the previous year. A percentage between 80 and 100 per cent is assigned when 967
the increase of turnover is lower than 7%. Finally, in case of a 10% decrease of the turnover with
respect to the previous year, the incentive assigned will be lowered by 50%; if the decrease of the
turnover is higher than the 50% with respect to the previous year, no incentive will be assigned.
The two incentive mechanisms mentioned above, adopted for the pooled and non-pooled units,
were introduced in the evaluation process as interessement devices distributed in space which
highlighted the differentiation on targets fixed, respectively, for pooled and non-pooled units.
At the beginning of December 2001, the controller informed the top manager, through a formal
letter, that the performance evaluation reports were provisional because of a delay in processing
DRG data from some healthcare units. According to the reported data, the controller noted that
some units might not manage to reach their targets. In fact, the turnover had increased by an
amount lower than the target of 7 percent. This probably stemmed from some programmed
activities, such as radiotherapy, being unaccomplished, whereas direct costs, such as drug
consumption, had increased. The controller prepared the evaluation reports for the performance
of each healthcare unit in order to transmit them to the evaluation committee.
In the beginning of 2002, before the distribution of the incentives, the top manager
invited the chiefs of the healthcare units to submit a report on the achieved performance
level, underlining some consideration about their activities and the performance
measurement procedure.
Among the pooled units, the chief of the General Surgery Unit, referring to the objectives
on turnover and DRG complexity, complained about the lack of non-financial parameters
regarding the clinical processes. Particularly, he argued:
About the high number of DRG produced in my unit, I would underline a lack of parameters for
monitoring repetitive DRGs, namely the cases where the same patient produces the same DRG
many times. This reveals a low medical efficiency and a high cost per patient.
Another critical point was common to both pooled and non-pooled units. It was noticed by
the chief of the cardiology unit, who specified in his report that:
The achieved performance is the result of the effort of all the members of my staff, who have
equally contributed to reaching the fixed target. From my point of view, I would suggest an equal
assignment of the incentive.
Having received and examined the reports transmitted by the controller, at the beginning of
May of 2002, the evaluation committee wrote a note highlighting the positive and negative
aspects of the evaluation procedure. As one of the main positive aspects, the evaluation
committee emphasized the increased competition among the healthcare units belonging to
the same pool.
Overall, the “Pool competition procedure” was actually practised within the hospital
during the period 2001-2003. This was possible thanks to an effective mobilization of all the
actants’ identities and interests by designing, implementing and practising the “pool”
principle. According to Callon (1986, p. 216), “[…] the chains of intermediaries which result
in a sole and ultimate spokesman can be described as the progressive mobilization of actors
who render the following propositions credible and indisputable by forming alliances.”
The pools were recognized as the main result of the mobilization mechanisms enacted
within this procedure. They were the way to fix the representation of the actants’ interests.
AAAJ As such, the sequence of displacements characterizing mobilization referred to the action of
30,4 the top management as the spokesman for managerial actants, such as normative reform,
university, administrative managers, aiming at increasing efficiency and physician
competition, and for the health professionals and unions, aiming at aligning rewards to
medical activities and diffusing a sense of fairness. The top management mobilized the
distribution of these interests by means of the pool mechanism.
968 This point was actually noticed by the evaluation committee which, one year after the
procedure had been implemented, referring to the pool mechanism, specified in its report:
The specifics of the incentive mechanisms adopted for every pool […] are to enhance competition
among the medical units within each pool in order to improve performance in terms of volume of
revenues, accounting for direct costs and care-service complexity.

Moreover, the evaluation committee appreciated “Pool competition” by recognizing its
consistency with the previous procedure in terms of both budget forms and bonus
distribution. The latter tended to stimulate an increase in the operational volumes, taking
account of cost containment.
Even if budget forms and bonus distribution introduced through the previous
“Budget negotiation” procedure were maintained, the “Pool competition” procedure
was considered by all the subjects interviewed as an innovation with respect to the
previous procedure. It “drifts” away from the existing practices (Quattrone and
Hopper, 2001). In fact, it solved the problems that had emerged during the adoption of the
“Budget negotiation,” such as medical units’ evaluation and the measurement of units’
operational volumes. Besides, with respect to the previous procedure, no new actor was
involved in the “Pool competition.” The network constructed before was not enlarged as
the new procedure was perceived as a means of satisfying new emerging needs that
managerial and health-professional actors had perceived while putting the previous
procedure into practice. Thus, the negotiations around “Pool competition” procedure
entailed a refinement of the “Budged negotiation” practices. So, with respect to “Budget
negotiation,” “Pool competition” procedure is an incremental innovation, as it results in a
lesser degree of departure from “Budget negotiation” practices (Dewar and Dutton, 1986;
Ettlie et al., 1984, cited in Damanpour, 1996, p. 699).
A simplified description of the translation of pool competition procedure is summarized
in Table I. It describes the distribution over time and space of the actors and agencies
involved in the different translation moments and thus explains this procedure as an
incremental innovation.
2001-2003: from “Pool competition” to “Department project”

While it was put into practice, “Pool competition” procedure generated some dissidence
amongst physicians, as physicians working in the same organizational position, but in
different pools, perceived unequal treatments. In fact, physicians operating in pools with a
higher performance were more advantaged in incentive allocation than others working in
less productive pools. The pool performance depended not only on physicians’ productivity
but also on the DRG threatened within each pool. Physicians, who processed low levels of
healthcare services, with a high DRG index, could appear more productive than others who
processed higher levels of service with lower DRG index. The manager of Digestive System
Surgery unit clarified this aspect. He, as union representative, specified:
[…] it's like in athletics races […] considering two individuals, A and B, running in different heats.
Subject A, racing in the first heat, arrives first while B, racing in the second one, reaches the third
position. If the race ended at this point of the competition, we would say that subject A is better
than subject B. However, in real athletic competitions the overall outcome is not decided until the
final, where the best performer wins […] in 2001 we were missing the final race!.
Translation process PMS procedure as a-centered object
Performance
Moments Description Distributed in time Distributed in space measurement
system
Problematization The lack of uniformity of Problems referred to the Aspect related to medical
the evaluation process previous budget negotiation activity innovations
Heterogeneous healthcare procedure
activities accomplished by
physicians 969
Interessement Incentive mechanisms Assigning objectives to each The different activities
based on turnover, direct healthcare units through the among the units needed to be
cost level and DRG negotiation process adopted represented
“the comparison among
complexity in the previous procedure

different units gives each
single unit participating in a
specific pool the possibility to
improve its initial budget
with respect to the following
performance indicators: […]”
(Medical unit manager)
Enrollment Top manager defined Targets were differentiated
specific targets with respect to pooled and
Control manager prepared non-pooled units
evaluation reports for each Medical units’ reports
healthcare unit highlighted critical points
Medical unit managers which were different between
prepared performance pooled and non-pooled units
reports
Evaluation committee
wrote a note highlighting
the positive and negative
aspects of the procedure
Mobilization Designing, implementing The consistency of the pool The top management
and practising the “Pool” competition procedure with mobilized managerial and
principle the previous one in terms of medical interests by means of
both budget forms and bonus the pool mechanism
distribution
Kind of Incremental innovation: The network constructed The new procedure was
innovation the new procedure entailed before was not enlarged perceived as a means of Table I.
a refinement of the satisfying new emerging The translation of
“Budged negotiation” needs of managerial and “Pool competition”
practices health-professional actors procedure
Pool competition practice was also made difficult by a delay in the budgeting process.
As the general manager decided to introduce new evaluation criteria in the middle of the
year, as reported in the previous section, the physicians did not have time to reach the
targets. So, a physician from Cardiology unit argued:
The pool evaluation procedure was a competition within pools but this competition was seriously
affected by a seasonal effect. It means that our productivity, for example, was concentrated in the
first part of the year […]. When we were told about the pool procedure, we could not do anything to
enhance our performance!.
Even the evaluation committee, in reporting on the appropriateness of “Pool competition”
procedure, expressed some reservations, noting:
[…] the possibility that, within a pool, one unit may receive an amount of resources higher than the
theoretical amount, because of restrictions faced by other units within the same pool, the
AAAJ performance of which did not reach the predefined threshold. A similar mechanism is not
30,4 prescribed for medical units that, for organisational reasons, do not participate in any pool. Such an
unequal treatment may have negative consequences.
Thus, the evaluation committee noticed two main critical points that regard how
“Pool competition” procedure is distributed in the hospital space: first, the presence of two
different incentive mechanisms, respectively, applied for pooled and non-pooled units;
970 second, the necessity not to consider objectives in terms of turnover and costs separately,
but to define objectives in terms of the economic result stemming from the difference
between revenues and costs. The evaluation committee also observed that the stimulus to
overcome predefined thresholds with respect to revenue volume could entail an increase in
direct costs higher than the incremental benefits.

The above-mentioned arguments explained a growing dissidence among medical
managers, union representatives and even the evaluation committee, who problematized the
“Pool competition” procedure. Such a dissidence became more relevant after a new public
sector reform was enacted. This reform concerned the need for the public organizational
structure to become aligned to the business structure of departments. Based on new public
management philosophy, this reform was an attempt to introduce the principles of efficient and
rational organizations into the public context through managerial systems such as department
structures and project management. Moreover, another requirement was imposed by regional
financial constraints, which acknowledged the concept of “economic equilibrium” as a focal
point for project management. Problems thus came from different periods highlighting how the
interests were distributed in time: from the previous “Pool competition” procedure, from the
new public sector reform and from Regional financial constraints. All called for a common
solution. Problematization was also shaped by different interests distributed in space, referring
to the unequal treatments among physicians adopted in the evaluation process and derived
from the strong competition within the same pools.
The new departments were formed on the basis of institutionalization of the previous
pools of medical units (keeping the criterion of homogeneity within each pool). Several
departments, however, encompassed medical units not included in the previous pools
because they were not homogenous with respect to the other pooled units. This was the case
for anaesthetic unit, which, even if not included in any other of the previous pools, was
included in the General Surgery Department.
Another element of innovation stemmed from the adoption of “Department projects”.
These were institutionalized by regularly devoting a given amount of resources to the
specific projects presented by each department.
Each department project had to be submitted to the top management within a given
deadline and had to specify the project objective, the economic analysis underlining the
expected costs and revenues, the performance measures used to evaluate the achievement of
the objectives, the number of participants and the benefits expected from the project.
The top management approved six departmental projects: medical oncology (surgery
department); ultrasound surgery (surgery department); thalassemia (pediatrics department);
reduction of the Cardiology unit’s waiting lists (Medicine and Cardiology Department);
reduction of hospital waiting lists and the improvement of the number of radiology and
laboratory activities (department services); the improvement of the use of hospital beds
(common project for all departments). The departments had to finance their projects by
devoting an amount of their budget.
At the end of July 2003, the top management signed an agreement with the unions of
professionals and physicians in order to make the performance evaluation system
consistent with both the new department structure and the regional economic constraints.
This agreement represented an interessement device, which redefined the “control package”
in order to combine some elements of the previous procedure (pool criteria) with the new
department structure imposed by the new public sector reform. This agreement defined the Performance
economic equilibrium criteria and predicted the impact of economic equilibrium choices on measurement
the daily productivity, as will be described in what follows. system
The top and administrative managers justified the introduction of the new
agreement arguing: innovations
It was necessary to pursue a harmonization of the hospital incentive system with the new principles
coming from the public sector reform. In doing so, we saw the new agreement as a means to 971
reinforce our roles within the hospital.
Whether the new agreement became an OPP, however, depended on its development in
practice, the power of the actors who introduced it and the appeal it had for other actors and,
thus, if they chose to put it into practice or not. The new agreement, indeed, proved
to be attractive for physicians as it recognized the distribution of medical activities in the
hospital space. As argued by the manager of Digestive System Surgery unit:
The new agreement introduced financial and organizational mechanisms, such as project
management and department structure. They were very beneficial for us, because they allowed us
to differentiate the evaluation of our activity.
Another important contribution of the new agreement was pointed out by the physician
from Cardiology unit:
The very advantage of this agreement was to show how each physician contributed to department
productivity.
Since the new procedure was enacted at the end of July 2003, the top management decided to
recognize the healthcare units’ productivity stemming from the first semester. To do so, the
top management allocated an amount of the overall budget of the hospital to healthcare
units following the performance evaluation criteria adopted during the previous
“Pool competition” procedure. Thus, the evaluation system applied at the end of July
2003 was distributed over time as it combined different principles stemming from different
periods. The previous “Pool competition” principle was enrolled for the success of the new
procedure, called “Department projects.” The relevance of the “Pool competition” principle
was explained by the controller who recognized the pool principle as an aim to be pursued
through the new procedure:
The Department projects procedure was to be recognized as the right solution to apply the main
principle underlying the previous pool based incentive system, as it maintained a high level of
competition among physicians.
Having recognized the healthcare units’ productivity deriving from the first semester, the
remaining budget was distributed among the six departments: services department, surgery
department, internal medicine and cardiology department, neurology department, paediatrics
department, healthcare department. The overall budget was allocated among the departments
on the basis of two parameters: the number of physicians working at the department at the end
of January, and the theoretical per capita value. The amount of hospital budget allocated to
each department corresponded to the achievement of the economic equilibrium. Specifically,
five levels of economic equilibrium achievement were identified. Each level corresponded to a
percentage of allocated department budget. For the sake of simplicity, we describe the
budget allocation mechanism for the first and the fifth levels only.
The first level was characterized by departments which obtained a revenues/costs ratio
no smaller than “1,” reaching 100 percent of the allocated department budget.
The fifth level was represented by departments characterized by a revenues/costs ratio less
than 0.75, which had not improved at least 5 percent of the total revenue/total costs with respect
to the previous year. In this case, the share of the allocated department budget was zero.
AAAJ If the departments did not reach the economic equilibrium, the relative amount of
30,4 hospital’s overall budget was not allocated. This was shared among the departments as
follows: 30 percent to the departments that had reached the first level, proportional to the
percentage of exceeding the economic equilibrium; 70 percent to the departments that had
increased the hospital’s overall budget for next year.
Various actors were enrolled to put the new procedure into practice. The controller sent
972 the top management, the evaluation committee and the department chiefs the reports related
to the achievement of department objectives. Every 30 days the controller sent to each
department a report on the achievement of objectives by each healthcare unit. The chiefs of
departments were required to let the members of their departments know the new
evaluation criteria with the support of the top management.

The successful implementation of the “Department projects” procedure was possible because
all the actors involved acknowledged the set of principles and mechanisms underlying this
procedure. The latter referred to managing projects at department level and introducing
mechanisms based on responsibility accounting which used objective and financial measures
for performance evaluation. In this sense, the new procedure represented a mechanism by which
the top management mobilized all actors’ identities and interests and was the result of
cumulative delegations. In fact, summarizing the above description, managerial and
health-professional actors delegated pool-based incentives as new actants for representing
their interests; pool-based incentives designated the top management as a new spokesman; the
latter was representative of a further new actant, i.e. the new normative reform, and mobilized all
these identities and interests by means of “Department projects” procedure. The requirements of
the normative reform, introducing “Department projects” procedure, were consistent with
regional financial constraints. From this point of view, the procedure was intended as an
administrative innovation aimed at satisfying the emerging needs of both the region and the
normative reform, as new actants, related to economic equilibrium, department organization and
project management. In doing so, such an innovation should take into account the requirements
of the actors already involved in the previous “Pool competition” procedure, considering their
needs that emerge from the adoption of that procedure. Specifically, Pools were considered as
such a relevant element of the previous “control package” that new departments came out from
the institutionalization of the previous pools.
Hence, the “Department projects” procedure was a “distributed, a-centered objects […]
spread out in time and space towards heterogeneous elements that help to make their
identity” ( Justesen and Mouritsen, 2011, p. 184). It appeared to be a very complex
innovation, matching the new emerging needs of the same actants involved in the previous
procedure with those of new emerging actants. The introduction and implementation of
“Department projects” represented a large departure from the previous practices. It required
the introduction of financial measures for the control of economic equilibrium at department
level, the introduction of the project management and the institutionalization of the previous
pools into departments. Such new practices resulted from a process of drift stemming from
complex negotiations among the different centers (previous and new actants) involved in
the construction of the new network. For these reasons, the procedure under discussion
appears as a radical innovation with respect to “Pool competition.” A simplified description
of the translation of pool competition procedure is summarized in Table II.
Conclusions and implications for future research

On the basis of the arguments developed in the theoretical part of this paper, the field
evidence offered specific insights into the phenomenon under study. The longitudinal
approach was appropriate to the theoretical suggestion of examining the sequence of
different PMS innovations as related translation processes. Indeed, it showed the different
links between the subsequent procedure innovations and, in doing so, it presented an
Performance
Translation process PMS procedure as a-centered object
Moments Description Distributed in time Distributed in space measurement
system
Problematization Two different incentive Problems referred to the Possible unequal treatments innovations
mechanisms previous poll competition Competition within, and not
Distortion in the allocation of procedure among, pools
resources New public sector reform 973
Allying public organization Regional financial
structure to the business constraints
structure of departments
Regional and financial
constrains
Interessement An agreement was signed The agreement combined The agreement made the
pools principle with new performance evaluation
department structure system consistent with both
the new department
structure and the regional
economic constraints;
the agreement was a way to
support the harmonization of
hospital incentive system
with the new public
management principles and
to reinforce managerial roles
within the hospital
Enrollment The controller wrote reports All the actors involved
on the achievement of acknowledged the set of
departments and medical principles and mechanisms
units’ objectives. The chiefs underlying this procedure
of departments let the
members of their
departments know about the
new evaluation criteria with
the support of the top
management
Mobilization Cumulative delegations Pool-based incentives Managerial and health-
designated top management professional actors delegated
as a new spokesman; pool-based incentives as new
the latter was representative actants, for representing
of a further new actant, i.e. their interests
the new normative reform,
and mobilized all these
identities and interests by
means of “Department
projects” procedure
Kind of Radical innovation: The introduction of financial Matching the new emerging
innovation Department projects measures for the control of needs of the same actants
procedure was a large economic equilibrium at involved in the previous
departure from the previous department level, the procedure with those of new
practices introduction of the project emerging actants
management and the
Table II.
institutionalization of the The translation of
previous pools into “Department projects”
departments procedure
AAAJ overview of all innovations, providing a richer understanding of the motivations and the
30,4 implications of a given PMS innovation. Particularly, we noticed that PMS innovations
emerged from two main points: the dialectics between managerial and professional agencies;
and the variety in actants’ interests and needs related to the nature of medical activity,
described by Lamothe and Dufour (2007) as a “diversified professional federation.” In both
these points, the case highlighted how the elements of the previous PMS “package” (Malmi
974 and Brown, 2008) behave as actants (Lowe, 2001a) in the translation of a PMS innovation.
Specifically, the case description shed more light on the difficulties that each innovation
may encounter during the different moments of its translation process, showing how the
type of innovation, namely, radical vs incremental, is relevant for such an understanding.
In fact, the “Pool competition” and “Department projects” procedures represent examples of
incremental and radical innovations, respectively, which effectively mobilized all the
actants’ interests.
The present study has focused on how PMS innovations are influenced by present and
past systems and practices already in use in an organization. To the best of our knowledge,
no previous study has addressed this point, which we consider relevant for understanding
the reasons why a particular innovation may have succeeded or failed. In addressing this
point, we chose the healthcare context, where relations between PMS innovations and
present and past systems and practices are mediated by a variety of actors following
different logics (managerial and health-professional). This suggested analyzing PMS
innovations as processes leading to the construction of a network of allies among different
actors distributed in time and space.
We believe that the contribution of this study is threefold. First, it highlights the
usefulness of examining an innovation considering its interrelations with the other
innovations that have preceded or have followed it. In doing so, this study follows the line of
inquiry proposed by Justesen and Mouritsen (2011) in qualifying accounting phenomena as
distributed, a-centered objects, spread out in time and space. The case evidence outlined
how the aspects related to a given PMS influenced the various actants’ interests and
identities to be mobilized in the introduction of a new one. This was evident in the
introduction of Department projects procedure, where pool-based incentive system,
developed in the previous procedure, was recognized as a relevant actant aimed at
maintaining a high competition among physicians. Drawing on ANT, this study offers an
in-depth application of the concept of MCSs package. In fact, ANT lens highlights that any
MCS innovation should not be studied in isolation, as it requires the alliance of different
actors (human and not) coming from different periods and places. It also highlights how
“the use and impact of a new MCS element is related to the functioning of the existing
broader MCS package” (Malmi and Brown, 2008, p. 288). Moreover, the longitudinal
approach, examining subsequent PMSs, points out how the emergence of some dissidence
on a given procedure can explain the translation of a new one.
Second, analyzing how a new MCS element is related to, or departs from, the existing
broader MCS package, the study offers a conceptualization of incremental vs radical
innovations that, drawing on ANT perspective, is based on the complexity of negotiations.
This provides a deeper understanding of the reasons why a particular innovation may have
succeeded or failed. Specifically, reasons for the success or failure of a PMS innovation have to
be searched for by looking at how the single elements of the PMS package ally with each other,
even though they come from different periods and places. The case provides evidence of an
incremental PMS innovation referring to “Pool competition” procedure. It was perceived as a
means of satisfying new emerging needs of managerial and health-professional actors. Thus,
the negotiations around “Pool competition” procedure entailed a refinement of the previous
“Budged negotiation” practices. A different story was described for a more complex PMS
innovation, namely the “Department project” procedure, which we called “radical innovation.”
The “Department project” procedure was successfully introduced for it matched the new Performance
emerging needs of the same actants involved in the previous procedure with those of new measurement
emerging actants. The new practices of “Department projects” and the related new financial system
measures represented a large departure from the previous practices. Their acceptance was a
process of drift which resulted from complex negotiations. The radical nature of this latter PMS innovations
innovation highlights how the dynamics of its success were more complex than the previous
one, for it enrolled a larger network of allies. 975
Third, focusing on healthcare context, this study offers a very rich description of how an
alignment between the administrative managers and health professionals can promote a
successful innovation. This is accomplished by describing a well-executed translation
process where actants are afforded appropriate voices and roles. In that, we see a relevant
contribution to the subjects in the field, which should consider all the aspects relating to the
introduction of a new procedure, not necessarily human and often influenced by the
previous procedures. In doing so, the study shows the appropriateness of ANT in offering
such explanations because it gives the same relevance to human and non-human actants,
and highlights the construction of allies by the actors involved.
Finally, our results suggest some lines for future research: specifically, a further analysis
of the roles and responsibilities of the enrolling actor is needed. The latter guides the
definition of the PMS, and directly shapes the configuration of the network to be constructed
by involving the actants whose interests and needs are to be satisfied. In particular,
examining different forms of organization in the private and public sectors, the enrolling
actor could have different hierarchical positions and responsibilities, which could change
the shape of the actor network and the interests and identities to be mobilized.
Note
1. In what follows, we will refer to actor network theory (ANT) rather than to sociology of translation,
as we are interested in the construction of a network coming from processes of translation. In this
paper, we draw on Callon’s (1998) ANT version of the process of translation without dealing with
the concepts of framing and overflowing. The focus on ANT allows us to deal with the issues
posited by Justesen and Mouritsen (2011) relating to ANT-inspired literature, which is mentioned
in the introduction to the present paper.
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About the authors

Antonio Leotta is an Associate Professor in Accounting and Business Administration at the University
of Catania, Italy, where he received his Master Degree and PhD Degree in Business Economics and
Accounting. He teaches undergraduate and master courses in Management Accounting. He was a
Visiting Scholar at the University of Illinois at Urbana Champaign. His research interests include
management control in strategic networks and management control in healthcare and in public
organizations. Antonio Leotta is the corresponding author and can be contacted at: leottant@unict.it
Daniela Ruggeri is a Teaching Assistant in Accounting and Business Administration at the University
of Catania, Italy, where she received her Master Degree and PhD Degree in Business Economics and
Accounting. She was a Visiting Scholar at the University of Illinois at Urbana Champaign. Her research
interests include management control and incentive systems in healthcare organizations.
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Performance measurement system innovations in hospitals as translation

Antonio Leotta, Daniela Ruggeri, (2017) "Performance measurement system innovations in

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Managerial and professional actors in the dynamics of change in PMS

And they continue (pp. 501, 502).

Research methodology and methods

PMS changes and innovations

1998-2001: from “Budget negotiation” to “Pool competition”

accomplished by different physicians.

revenues, accounting for direct costs and care-service complexity.

2001-2003: from “Pool competition” to “Department project”

complexity in the previous procedure

direct costs higher than the incremental benefits.

evaluation criteria with the support of the top management.

Conclusions and implications for future research

Kurunmäki, L. (2004), “A hybrid profession – the acquisition of management accounting expertise by

About the authors

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