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Skip to 0 minutes and 4 seconds IAN MCCLOUGHLIN: So what is interesting about Victoria also is this very devolved healthcare system. So the initiative itself is an enabling initiative involving placing funded redesign leads into hospitals who would then try and build individual capability and capacity in hospitals’ Develop Improvement Projects, and because of a devolved system that could happen a number of different ways. So a number of different styles of leadership, a number of ways of trying to lead improvement projects naturally occurred since the initiatives began in 2008. So there are a number of different answers to the questions in terms of styles of leadership.

Skip to 0 minutes and 51 seconds So for example, some hospitals have been very much attracted by lean thinking, and taking ideas from other sectors, such as the motor industry, and trying to translate those into ways of improving various aspects of service delivery in hospitals. Others, have not been so keen on the more rigid methodology of lean, but have focused much more on building culture change, and trying to emphasise key values, such as the centrality of the patient, and identifying patient needs, and involving patients in the redesign process, a culture led approach.

Skip to 1 minute and 33 seconds Other hospitals we found have looked at project management and programme management techniques, which are quite prevalent in other parts of the public sector and of course the private sector, and trying to build a strong alignment between the individual improvement projects that they engage in, and the overall strategies that the hospitals are trying to pursue. In those cases adopting a much more businesslike model to the way they run the hospitals.

Skip to 1 minute and 59 seconds So there’s been a variety of different leadership approaches, all very much related to that particular context, so it’s very hard to say that one is better than the other, it’s just that through trial and error, the health services in this really devolved system have tried to work out what works best for them. Well the biggest challenge, of course is because everybody’s in a way been evolving things in a manner that suits their circumstances. Their first thought is to build in their own organisational capability, but not necessarily how they can share those lessons with other health services around the Victorian system.

Skip to 2 minutes and 38 seconds So sharing knowledge and learning has been a challenge, I think, for the system as a whole because it hasn’t been quite clear what it is they should be sharing. Should they be saying everybody should be lean? Should everybody be more project management focused? Should it be about culture change? And so I think one of the things we’re trying to do in the research is to uncover some of the more generic lessons so it becomes easier to understand what the things that should be shared could be, or could be shared should be, without it becoming a competition between our approach is better than your approach, which is always a danger in a devolved system.

Skip to 3 minutes and 19 seconds There’s an element of competition involved in that they’re all competing for funding to fund projects so naturally you want to advance the superiority of your particular approach to leading innovation as opposed to others. So I think one of the challenges is actually sharing learning and knowledge across the system. And that’s very much evidenced in the reviews that have been done, independent evaluations, and government inquiries, which have shown that whilst investments produced good results individually, and one can point to some very effective projects and returns on investment, they haven’t diffused even within health services very far and they certainly haven’t scaled up to have an effect on the health system as a whole.

Skip to 4 minutes and 2 seconds So if you’re a patient in the Victorian healthcare system, and you were asking the question, what has been the benefit of this investment to me and people like me, it’s actually a very patchy answer that you can give the health system as a whole hasn’t experienced improved outcomes. For example, in terms of patient experience or other health indicators, in a manner that certainly the intentions behind the programme at its outset would have wanted. And so, this barrier to sharing learning and knowledge, I think, is part of the reason why the outcomes have not scaled beyond the islands of improvement that are being achieved.

Skip to 4 minutes and 42 seconds PRUE BURNS: Victoria has a devolved government system, and you’ve probably been told a little bit about that already, and it’s a blessing and a curse, I think. So what that means is that healthcare systems are free to operate as how they like more or less, which means they can meet the needs of their local communities, can be responsive to their local communities quite effectively. Whereas in other jurisdictions it’s more centralised. I’m not sure whether I would say Control and Command system, but it’s definitely more centralised. And what that means is that it’s probably a little bit easier to diffuse an innovation or an improvement across a system where there’s a more centralised authoritative body.

Skip to 5 minutes and 28 seconds But in a devolved governance system that’s a little bit more difficult to do because it depends on the voluntarism of each health service. And dare I say, there’s potentially a little bit of competition between some of the health services.

Skip to 5 minutes and 45 seconds It’s an interesting thing, you know, health services have reputations, they have aspirations.

Coordinating improvements in a devolved healthcare system

Here we look at an example of how some of the principles of NPM reform described in previous steps have been adopted and their impact on healthcare improvement. We look specifically at a large-scale healthcare improvement initiative - the Redesigning Hospital Care Program (RHCP) – in the Australian state of Victoria. After watching the film and reading the summary below, please address the questions posed in the next activity step.

Launched by the Victorian Department of Health and Human Services in 2008 (and still ongoing) the RHCP was a radical attempt to develop and promote new innovations to improve the quality and efficiency of health services. However, what the case reveals are difficulties associated with so-called ‘translational gaps’ that might hinder the implementation of new innovations. A classic problem is the transfer of knowledge generated ‘at the bench’ in the laboratories of research organisations (e.g. universities) into everyday clinical practice ‘at the bedside’. A further issue relates to the ‘scaling up’ or ‘scalability’ of new innovations across multiple organisations in a health system. Even when new innovations have significant evidence to support them, actors may not act rationally to copy or adopt those ideas. Much will depend on the values and priorities of clinicians and managers and whether they can envision different ways of doing things. As this case shows, the spread of innovation is also shaped by the organisational structure of a health system and the difficulty of achieving coordinated action in situations where there are many independent organisations providing care, each with their own interests and agendas.

Australia, Victoria health context

As a federal country, public funding and responsibility for healthcare in Australia is divided between its states, territories or provinces and the federal government (the Commonwealth). Although the system provides universal access to healthcare, the Commonwealth is responsible for general practitioner (GP) services while the states run hospitals. Victoria is one of six states and two territories.

In total, Australia spends 9.3% of its gross domestic product on healthcare, roughly average for the Organisation for Economic Co-operation and Development (OECD). In a recent Commonwealth Fund report focusing on 11 developed countries’ healthcare systems (according to measures of quality, access, efficiency, equity, expenditure and healthy lives), Australia ranked fourth.

As the second most populous state in Australia, Victoria describes its health system as consisting of three parts – metro, regional and rural. Metro covers the fast-expanding city of Melbourne, which accounts for some 4 million of the state’s 6 million population. Regional covers the state’s more significant towns and cities, while rural includes the outlying districts of the state.

All (public) healthcare provision in Victoria (primary and secondary) is organised into discreet ‘health services’, each one overseen by a board with an appointed chief executive. The ‘health services’ that these boards manage are extremely diverse and range from running a hospital, to situations where all hospital, community and non-GP primary care are run together. In total there are 85 separate health services in Victoria, although these vary in size. On the one hand, are health services such as the Alfred, Monash and Royal Melbourne teaching and tertiary hospitals, with an annual turnover of A$1 billion and on the other, small rural services with a turnover of A$3 million or less.

These characteristics of the Victorian (and Australian) health system mean that services are highly fragmented and hard to coordinate. The Victorian Health Priorities Framework for 2012–22 describes it as: ‘a complex web of types and providers of services that are managed and funded by the Commonwealth, state and local governments, and by private and not-for-profit organisations’. This complexity is further increased by the system of ‘devolved governance’ introduced after 2003. Under this system, boards of ‘health services’ are responsible for overseeing local delivery, within a ‘statement of priorities’. These statements include a number of key performance indicators (KPIs) which must be met. In return, health services that are judged to be performing are then subject to much less-detailed surveillance than in the past – in effect, a system of ‘earned autonomy’.


In Victoria, as in other health systems, there has been a growing interest in identifying and experimenting with management ideas and practices from the world of business. Examples of this include a variety of HI tools and techniques such as business process analysis and re-engineering, continuous improvement methodologies and practices, high-performance work-teams, and lean production techniques.

To further these objectives the Redesigning Hospital Care Program (RHCP) was formally launched in 2008, coinciding with a period of financial crisis in the Victorian health system and political calls to improve value for money. RHCP was described as “the most comprehensive and integrated process improvement program implemented in any Australian jurisdiction”. The goal of the RHCP was to promote new innovations in the redesign of services and spread these throughout the Victorian healthcare system, although the initial focus was primarily on hospitals. Investment in the programme has been substantial, rising to AUD 21 million (by 2012).

The way in which RHCP aimed to achieve its improvement objectives is through the appointment of specialist redesign and improvement positions, called ‘Redesign Leads’, charged with initiating and supporting a range of redesign and improvement projects. Some of these projects are identified by the Department of Health and Human Services as state-wide priorities (called ‘Targeted Redesign Projects’, or TRPs), although many others are defined locally. Some projects are organisation-wide and cut across services (pathways), but most are discrete projects that are confined to a specific area of the health service. Thirty-two of Victoria’s 85 health services currently participate in the RHCP, with the redesign lead in each of these services receiving extensive training in process redesign methodologies. Most redesign work focused on discrete improvement projects – more than three times as many discrete improvement projects (N=143) undertaken in 2014-15, compared to the next most common kind of initiative, organisation-wide programmes (N=46).

The early results from the programme were promising. An independent review by management consultants DLA Piper noted that the best projects achieved a 10 to 1 return on investment and that, “16% of total Victorian public hospital staff” had been exposed “to redesign (via training and/or participation in a redesign project)”. Department of Health and Human Services policy documentation also suggests that many redesign projects achieved non-financial benefits, such as improved quality and patient and staff satisfaction.

However, while staff exposure to redesign may have increased, many clinicians remained unaware of redesign and/or did not regard it as particularly relevant to their everyday practice. More worryingly, the devolved governance structure within Victoria appeared to encourage health services to pursue a strategic advantage over one another and promoted a closed-system mentality that discouraged the sharing of knowledge and scaling up improvements. One of the key findings of the DLA Piper review was that, whilst the programme had achieved some very good outcomes, the overall impact was sub-optimal because improvements pioneered in one part of the healthcare system did not spread more widely. This meant that there has been considerable duplication of effort and that the objective of achieving system-wide efficiency gains has not yet been met. Discrete, localised projects continued to be the mainstay of the RHCP and successful projects were proving difficult to scale at even the most local level (i.e. within individual health services).

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This video is from the free online course:

Leadership for Healthcare Improvement and Innovation

The University of Warwick