Use and users of cost accounting data in a Government hospital: new public management, institutionalism, power and conflicts

The Australian public sector has recently faced a sweep of reforms. Initiatives such as National Competition Policy (NCP), economic rationalism, accrual accounting, financial management initiatives and value-based management are some of the many reforms that Australia has adopted. This renewed focus has inspired reforms in the actual operations of the public hospitals. This paper aims to investigate the production and utilization of cost information, organizational culture towards costing initiatives, and power and conflicts in the organization studied. To investigate these issues, we used a state-owned large teaching and research hospital. To inform the case study, we developed a theoretical framework in light of the insights drawn from institutional theory, organizational change, and power and conflicts. The major conclusions from this study centre around the institutionalization of costing practices at the higher level of the hierarchy. Here, there is a perception of moderate accuracy of the current production of cost data. In addition, results indicate that the current utilization of the cost information resides at higher levels of the organization; health professionals such as doctors and nurses appear to have little interest in the use of costing data. The major organizational change, particularly accountability pressures, is slowly filtering down throughout the hospital. This research concludes that there is a need for power to be asserted throughout the organization in support of costing and management reforms.