Accounting Forum 40 (2016) 186204

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Accounting Forum
journal homepage: www.elsevier.com/locate/accfor

Successful changes in management accounting systems:

A healthcare case study
Clelia Fiondella a , Riccardo Macchioni a , Marco Maffei b , Rosanna Span b,
a
b

Department of Economics, Secondi University of Naples, Capua, Italy

Department of Economics, Management and Institutions, Federico II University of Naples, Naples, Italy

a r t i c l e

i n f o

Article history:
Received 28 January 2016
Received in revised form 25 May 2016
Accepted 28 May 2016
Available online 10 June 2016
Keywords:
Management accounting systems
Organisational change
Middle Range Theory
Complexity
Healthcare organisations

a b s t r a c t
This paper explores how a change in the management accounting systems (MAS) of healthcare organisations was implemented in a manner acceptable to those involved. The study
employed a longitudinal case study of a university hospital in southern Italy, and was
informed by Broadbent and Laughlins Middle Range Theory (MRT). The ndings revealed
that the change in the MAS was successful due to the involvement of professionals in
the ongoing process of change. This involvement reduced their natural tendency to resist,
and increased the commitment of the various groups of professionals to the new business
culture.
2016 Elsevier Ltd. All rights reserved.

1. Introduction
This paper addresses questions pertaining to what constitutes a successful implementation of management accounting
systems (MAS) in healthcare organisations characterised by professional dominance but under pressure to be better managed
(Jacobs, Marcon, & Witt, 2004). The implementation of MAS in healthcare organisations is still debated since the reasons for
success or failure are not yet clear in the literature. Extant studies provide heterogeneous ndings, either reporting cases
of hybridisation of clinical professionals supporting the organisational change (e.g., Abernethy & Vagnoni, 2004; Conrad
& Guven-Uslu, 2011; Eldenburg, Soderstrom, Willis, & Wu, 2010; Jacobs et al., 2004; Jarvinen, 2006; Kurunmaki, 2004;
Lehtonen, 2007), or phenomena of resistance leading to MAS that are irrelevant or even a threat to healthcare organisations
(e.g., Abernethy & Stoelwinder, 1995; Broadbent, Jacobs, & Laughlin, 2001; Chua & Degeling, 1993; Conrad & Guven-Uslu,
2012; Jacobs et al., 2004; Jones, 1999; Kurunmaki, 2004; Preston, Cooper, & Coombs, 1992). These papers lack a systematic
consideration of the complexity that results from the effect of a wide range of factors, such as regulatory pressures, changing
political and economic environments, and the power relationships between actors.
On this basis, the current paper aims to show the conditions under which MAS implementation can be an enabling
change for healthcare organisations to accomplish quality, efciency, and accountability expectations. The focus is on the
implementation of MAS following external and non-negotiable pressures exerted on healthcare organisations by regulatory
agents. We investigate the interactions between these pressures and the organisation in order to understand how the MAS
was implemented in a manner acceptable to those involved, and what factors led to a successful change.

Corresponding author.
E-mail address: rosanna.spano@unina.it (R. Span).
http://dx.doi.org/10.1016/j.accfor.2016.05.004
0155-9982/ 2016 Elsevier Ltd. All rights reserved.

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The theoretical framework adopted is a skeletal theory of organisational change, set in the context of societal change
(Broadbent, Laughlin, & Read, 1991; Laughlin, 1991), which was developed by Broadbent and Laughlin (1997, 2003, 2005,
2013), Laughlin and Broadbent (1993). It provides an understanding of the nature and functioning of accounting in society
and organisations, including the previously mentioned factors of internal and external complexity. The Middle Range Theory
(MRT) has already been successfully adopted within the healthcare context (Agrizzi, 2008; Broadbent, 1992; Kurunmaki,
Lapsley, & Melia, 2003) to interpret the impact of accounting changes. It allows an understanding of how changes in MAS that
are fostered by external pressures are deemed to become successfully implemented in healthcare organisations, and what
internal factors inuenced the accounting change. In addition, it permits an understanding of whether internal changes at
the organisational level are capable of redirecting the institutional actions. This is an issue that deserves attention given the
societal relevance of MAS, which is becoming increasingly implicated in external regulation (Modell, 2014). In this way, this
paper can offer the basis for renewing academic debate, critical policy evaluation, and practical recommendations (Broadbent
& Laughlin, 2013).
The research employs a theoretically informed ethnographic approach based on a longitudinal case study of the Azienda
Ospedaliera Universitaria Asclepius1 (henceforth, AOU Asclepius). The AOU Asclepius represents the largest and most complex university hospital in the south of Italy, and it has experienced a process of change in MAS, which was forced by evolving
regulations towards greater quality, efciency, and accountability.
The remainder of this paper is organised as follows. The second section summarises the conicting paths of management
accounting change in healthcare. The third section describes the theoretical framework of the research. The fourth section
explains the research design. The fth section elucidates the characteristics of the context. The sixth section illustrates the
ndings of the analysis. Finally, the seventh section discusses the ndings in the light of the theoretical model and offers
some concluding remarks.
2. The conicting paths of management accounting change in healthcare
The debate on accounting change has gained new momentum over the last few years, because several questions are still
unsettled despite the large amount of studies. The literature so far has focused on general models of change (e.g., Innes
& Mitchell, 1990; Laughlin, 1991) and the drivers and correlates of change (e.g., Baines & Langeld-Smith, 2003; Libby &
Waterhouse, 1996). Other works discuss the conditions enabling change (e.g., Miller & OLeary, 1987) and the inuence of
institutionalised elements on changing processes (e.g., Abernethy & Chua, 1996; Burns & Scapens, 2000; Ezzamel, Robson,
Stapleton, & McLeanb, 2007; Jacobs, 1995; Lukka, 2007). Other studies explore the politics of change, the role of inuential
agents, and the effects of power relationships (e.g., Abernethy & Vagnoni, 2004; Dent, 1991; Townley, Cooper, & Oaks, 2003).
A common feature of these studies is that they regard accounting change as a context-specic phenomenon and view
accounting as a social practice rather than merely as a technical tool. In line with this, Burns and Scapens (2000) argue that
management accounting practices are conceptualised as rules and routines, and a certain degree of inertia can make changes
in such rules and routines complicated and unpredictable (Becker, 2004; Burns & Scapens, 2000). The literature claims that
the comprehension of the dynamics of change in MAS requires a preliminary understanding of two different aspects: the
difculties relating to the intrinsic nature of organisations (Burns & Scapens, 2000) and the interaction between the wider
social, environmental, and political pressures for change and organisational behaviour (Ma & Tayles, 2009).
The above-cited dynamics are especially relevant for the public sector where New Public Management (NPM) reforms over
the past 20 years have been characterised by increasing emphasis on devolved performance management (Modell, Jacobs, &
Wiesel, 2007). The majority of reforms have dealt with the introduction of MAS, and especially performance measurement
systems, in the search for cost effectiveness and efciency (Hood, 1995; Modell, 2001). These reforms have often been
characterised by output-focused modes of performance management, which have been subject to increasing criticism and
seem to be under reconsideration in many countries (Modell, 2005; Osborne, 2006). Recent policy changes have prompted
a broader view of the effectiveness of public service delivery and the need to visualise the value delivered to the citizenry
(Norman & Gregory, 2003; Osborne, 2006). Despite this, concern about the typical operating processes underpinning public
service delivery, especially change processes, is still overlooked. This gap not only affects the policy agenda but it is also
reected in the research domain.
Extant studies have addressed either the description of accounting reforms (e.g., Anessi Pessina & Steccolini, 2005;
Hammerschmid & Meyer, 2005; Hood, 1995; Pollitt, 2001) or the impact (in terms of output) of any processes of change at
the organisational level (Christensen & Lgreid, 2007; Christiaens, 1999; Connolly & Hyndman, 2006; Liguori & Steccolini,
2012; Liguori, 2012a, 2012b; Pettersen, 2001). However, as Liguori and Steccolini (2014) comment, in the absence of proper
comprehension and adaptation to the specic operational characteristics of any settings, accounting reforms are likely to
fail due to multiple contextual elements, which constrain or enable change.
These issues become even more interesting in the healthcare sector, where multiple contextual elements (both internal
and external) constrain or enable change (Haslam & Lehman, 2006). In fact, in healthcare settings, MAS have long been
called potential enablers of a positive reconciliation between cost containment, quality, and accountability (Ellwood, 2009).

This is a fantasy name used to preserve privacy. In ancient Greece, Asclepius was venerated as the God of Medicine.

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However, accounting changes in this eld have often been realised in the absence of a proper adaptation to the clinical needs
(Agrizzi, 2008; Anessi Pessina, 2006; Chang, 2006; Lapsley, 2008), thus failing to achieve the above-cited expectations.
What should be noted is that, given the crucial role of appropriate management of health services for the wellbeing of
citizens and the nancial health of the services themselves, there has been an increasing development of transactional
based performance management systems in this sector. Extant studies on performance measurement and management in
health services focus on the difculties associated with an instrumental approach to implementing new performance management systems. For instance, Northcott and Llewellyn (2003) criticised the calculation of average costs in health services
in England, and directed attention to causes of inconsistencies that adversely affect effective benchmarking comparisons.
Other researchers (Guven-Uslu, 2005; Guven-Uslu & Conrad, 2008; Jones, 2002) illustrate the adverse impact on the overall
concept of performance management and its understanding and implementation. Other works explain the impact of power
relations between professionals (Chua, 1995; Conrad & Guven-Uslu, 2011; Llewellyn & Northcott, 2005) and the dynamics
of collaboration between clinicians, managers, and accountants (Guven-Uslu & Conrad, 2011).
These studies concur that the failure of accounting changes in healthcare so far stems from the lack of an integrated and
balanced approach to performance management, encompassing both the economic and quality logics, and its impact on the
processes of management accounting change in the eld. Indeed, despite the relevance of extant ndings, the systematic
effect of a broad range of internal and external factors in the processes of implementing MAS in healthcare is still unexplored.
As the literature highlights, the implementation of MAS may take two different routes.
The rst stream of research highlights that regulatory pressure to reduce expenditures and to enlarge accountability force
the introduction of MAS to control the behaviour of professionals (Preston et al., 1992) who have traditionally dominated
decision-making and autonomously carried out their tasks (Abernethy & Stoelwinder, 1995; Chua & Degeling, 1993; Jones,
1999). An attempt from the outside to impose controls may instigate new endeavours among professionals to evade it,
especially if they cannot comprehend the objectives of the new systems, thus threatening the implementation of MAS
(Jacobs et al., 2004; Kurunmaki, 2004; Robson, 2006). Resistance and communication barriers may affect the introduction
of control tools. This is because the presence of multiple stakeholders with different rationalities (Anthony & Young, 1988;
Hopwood, 1978), who are not keen to negotiate their positions, may lead to MAS being only formally relied on and not
serving the need for quality, efciency, and accountability (e.g., Abernethy & Stoelwinder, 1995; Broadbent et al., 2001;
Chua & Degeling, 1993; Jacobs et al., 2004; Jones, 1999; Kurunmaki, 2004; Preston et al., 1992).
In contrast, other studies highlight that processes of hybridisation of clinical professionals a source of critical information and exclusive knowledge about the performance of their tasks support the implementation of MAS within hospitals
(Abernethy & Vagnoni, 2004; Conrad & Guven-Uslu, 2011; Eldenburg et al., 2010; Jacobs et al., 2004; Jarvinen, 2006;
Kurunmaki, 2004; Lehtonen, 2007). The involvement of professionals leads to improvements in hospital decision-making,
strategic planning, and performance and is crucial in signicantly reducing conicts within the organisation. In this case,
MAS may become a means of mediation between traditionally contrasting actors (Wickramasinghe, 2015).
The literature has generally looked at resistance and hybridisation as two alternative extremes, with limited if no attempt
to address a changing pathway from one condition to another, and to comprehend the conditions under which organisations
achieve successful changes. This issue needs to be dealt with by taking into account the systematic effect of a number of
factors such as the strong inuence exerted by the increasingly changing regulations and environment that characterise the
sector, the politics of change, and the role of inuential actors in settling any resistance.
On this basis, the aim of this paper is to show the conditions under which MAS implementation can be an enabling
change for healthcare organisations to accomplish quality, efciency, and accountability expectations. The focus is on the
implementation of MAS following external and non-negotiable pressures exerted on healthcare organisations by regulatory agents. We investigate the interactions between these pressures and the organisation to understand how the MAS
was implemented in a manner acceptable to those involved, and what factors led to a successful change. In this view,
also following Agrizzi (2008) who examined the counteracting forces moulding accounting change in the British NHS, the
MRT advanced by Broadbent and Laughlin (1997, 2003, 2005), Laughlin and Broadbent (1993) is regarded as the conceptual starting point. The MRT allows us to investigate the dynamics of change related to the implementation of MAS
following changing environmental and regulatory conditions by taking into account elements of external and internal
complexity (Broadbent & Laughlin, 2013). The following section explains how the MRT has been operationalised in this
study.

3. The theoretical model

Broadbent and Laughlins model has the merit of building analytical bridges between the social theoretical orientation of
Habermas critical theory (1987), with all its philosophical underpinnings, and concrete forms of practice (Power & Laughlin,
1996). Specically, the model is based on the following elements:
Steering media are considered as societal institutions (e.g., government).
Systems of actions are considered as societal organisations (e.g., corporations, local health authorities, schools, and
universities).

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Every societal organisation has its own lifeworld, systems, and steering media, which they regard as an interpretative
scheme, subsystems, and design archetypes respectively, where the design archetypes (such as MAS) attempt to balance
and make coherent the interpretative scheme and subsystems.

In view of such renements, the model embraces the option that the internal colonisation of the life-world/interpretative
scheme theorised by Habermas (1987) arises not only at the societal level but also at the organisational level. Organisational
responses to the regulatory controls can vary depending on the differing value systems being held by the organisations (e.g.
a healthcare organisation) and societal steering media (e.g. a Health Service) that make organisational actors more prone to
resist or alternatively to accept any changes.
We draw on the aforementioned framework, considering the healthcare organisations as societal organisations and the
regulatory agent (government) as a societal institution. Focusing on the Italian setting, we consider the regulatory changes
occurring at the institutional level encompassing both the national and regional dimensions as steering mechanisms
employed by the government to achieve cost containment, quality, and accountability for the healthcare sector. Based on
this, we propose that the management accounting practices introduced by the examined organisation are design archetypes
realised to attempt to meet the regulatory requirements. Furthermore, for the purposes of this paper, the subsystems are
identied with the practices and routines of the different categories of subjects involved in the change (e.g., managers,
clinicians, nurses, other healthcare workers).
We aim to understand whether and how MAS, as design archetypes of the healthcare organisation, have become progressively capable of assimilating inuences from the external environment fostered by evolving regulations, and to translate
these inuences into the interpretative schemes of the organisation by progressively aligning subsystems with the newlyintroduced managerial culture. In addition, we consider whether internal changes at the organisational level were capable
of redirecting the Institutional actions.
Laughlin (1991) highlights that when a process of change is triggered by an environmental disturbance (such as a new regulation) and the design archetypes start to attempt to balance and make coherent the interpretative schemes and subsystems,
different types of change may occur.
Morphostasis (rst order change) occurs when the change neither really affects the heart of the organisation, which is
reluctant and tends towards the pre-existing conditions, nor the interpretative scheme. It can arise either as a Rebuttal
when an environmental disturbance is tackled through changes in the design archetype, but afterwards the design archetype
comes back to the original situation or a Reorientation when an environmental disturbance also affects subsystems, and
is compulsory internalised into the organisation, but does not affect the interpretative scheme. As Broadbent and Laughlin
(2013, 1997) highlight, Rebuttal is a highly risky strategy when the expectations are very precise or the initiatives are
fragmented. Successful Rebuttal requires strong, value-driven organisations, and involves putting forward an alternative
that is shown to work. Focusing on Reorientation, Broadbent and Laughlin (2013) clarify that it can occur through absorption
or through boundary management. Reorientation through absorption implies that any change that is not welcomed (as it
is perceived as a threat to the ethos, values, and activities of the organisation) and cannot be rebutted is internalised in a
way that does not affect the real work of the organisation and its interpretive scheme, but is just played in parallel with the
day-to-day activities. Reorientation through absorption requires that a specialist work group, with the task of complying
with the accounting control expectations, is able to demonstrate compliance and also ensure that these controls do not
impinge on what is perceived as the real work of the organisation and its interpretive schemes (Broadbent, Gill, & Laughlin,
2003; Broadbent, Gill, & Laughlin, 2008; Broadbent, Gallop, & Laughlin, 2010). This absorption is dynamic and uncertain and
becomes more difcult if the changes are very precisely detailed and intrusive (Broadbent & Laughlin, 2013). Reorientation
through boundary management occurs at the boundary between the organisation and its regulatory environment. In this
case, accounting controls forced by regulatory attempts, which cannot be rebutted due to the necessity to adapt to the
external demands that those implementing accounting control (the so-called specialist work group) recognise, are more
embedded in the organisational design and in the day-to-day activities even if they do not undermine the organisations
interpretive scheme. The specialist work group has to be a conduit for the external regulatory bodys requirements to ensure
that the changes are embedded in the real work of the organisation, while seeking to leave the interpretive schemes
unchanged. Reorientation through boundary management is based on cautious acceptance of the disturbance. It relies
strongly on the specic skills of the specialist working group, which may or may not want to use accounting controls as a
colonising lever, or to foster an evolutionary process of change played at the periphery of the interpretive schemes. These
two options cannot be theoretically addressed but need empirical work in order to understand the nature of these pathways
followed at particular times and in particular conditions.
Morphogenesis (second order change) is a change that inuences the interpretative scheme because it profoundly permeates the essence of the organisation, thus bringing lasting changes. These may alternatively occur as Colonisation, such
as a mandatory change, or as Evolution, i.e. a free and non-compulsory change. Colonisation is a forced change internalised
by some signicant stakeholders, which is usually seen as a failure from the perspective of the organisation as a whole and
as a great success by colonisers (Broadbent & Laughlin, 2013). The new interpretive schemes are the values and ethos of
an authoritative minority. In this case, as Dent (1991) has discussed, positional power and subtle tactics are likely to be
relied on to force the change. Evolution involves deliberate choice by all stakeholders in a free and open discursive exchange
until a grounded consensus is reached (Laughlin, 1987). From this perspective, accounting controls are seen as a helpful

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intervention. As Broadbent and Laughlin (2013) stress, it is very difcult to envisage this positive role of accounting in public
sector organisations.
The literature argues that a number of features may inuence change, alternatively leading to the above-discussed
different pathways. Brunsson (1989) contended that organisations with strong ideologies like healthcare organisationsmight be resistant to changes in the interpretative scheme, while those with weak ideologies are more open to manipulation
and substantial changes. Greenwood, Hinings, and Brown (1988) found that contingencies creating contradictions between
circumstances/context and the organisation lead to greater change, which is possibly mitigated by commitment to previous
schemes. It may be favoured or hindered by the dominant coalitions interpretative scheme, and is potentially easier when the
top managements skills and capabilities are higher. Smith (1982) and Dunphy and Doug (1988) highlight that morphogenetic
changes benet from collaborative approaches between individuals and shared values.
What should be noted is that the MRT does not admit prior assumptions on the pathways of change, clarifying that those
listed above are only conceptual alternatives, while the pathway that emerges is and remains an empirical question. MRT
needs empirical engagement and empirical details (Laughlin, 2007), as these latters provide the esh to make the skeleton
meaningful and to reshape the framework (Broadbent and Laughlin, 2009).
In particular, in this study we address the switch from one pathway to another that is from a reorientation through
absorption to a reorientation through boundary management. Following Broadbent and Laughlin (2013), to explore the
above-cited dynamic special attention is devoted to the regulatory pressures, the organisational responses to these pressures,
the composition of the specialist work group entitled to carry out the process of change, and the various strategies that this
team adopted over the years.
The empirics show that at the beginning the process of change has been threatened by strong resistance of the actors
involved which determined a reorientation through absorption due to the autocratic top-down approach and the lack of
clarity and mutual understanding between organisational actors. The ndings attempt to highlight that over this period the
mandatory changes were perceived as a threat to the ethos, values, and activities of the organisation, and did not affect the
real work of the organisation and its interpretive scheme, but were just played in parallel with the day-to-day activities.
On the contrary, the empirics relating to the second phase of the changing process tell another story. In this period, we
can observe a reorientation through boundary management, with the MAS implemented in a manner acceptable to those
involved and towards the progressive formation of a new business culture (Broadbent & Laughlin, 2013). The ndings of the
case study attempt to explain how to more effective communication between the organisation and the institutional level,
as well as broader attention paid by the specialist work group to the concerns of the various categories of professionals, and
their involvement, led to this different pathway.
In this way, the empirics provide evidence of a process of reorientation through boundary management, moving towards
an evolutionary change in the interpretive scheme, which complements the limitedly theoretical conceptualisation of this
phenomenon available to date (Broadbent & Laughlin, 2013; Dent, 1991). In addition, the empirics allow us to complement
the framework by highlighting how internal changes at the organisational level are capable of redirecting the institutional
actions towards improved regulation, which is amenable to substantive justication to the actors involved. Furthermore,
the empirics emphasise the new role of MAS as a means of mediation a common language between organisational actors
with conicting interpretive schemes, which equally is something not yet conceptually advanced in MRT.
4. Research design
The research approach that informs our study is Middle Range Thinking. The adoption of a middle range position implies
a number of choices in relation to various aspects, from the ontological assumptions to the detailed choice of data collection
methods (Broadbent & Laughlin, 1997).
Middle Range Thinking is based on the view that a skeletal theory has to be eshed out by empirical detail to be
meaningful. A rst choice refers to the theoretical framework to adopt. In this research, Broadbent and Laughlins framework
provided a guideline for both the data collection and the interpretation of the results.
Methodologically, Middle Range Thinking provides an outline of the processes but cannot determine the methods in detail
(Broadbent & Laughlin, 1997). Given the purpose of the study, it is crucial to comprehend the inter-subjective understandings
that are created and recreated in the context of everyday-life within the healthcare sector (Broadbent & Unerman, 2011), and
to emphasise social, inter-personal, and inter-organisational relationships, which the positivistic approach usually tends to
hide (Lodh & Gaffkin, 1997). Hence, the research relies on a theoretically informed ethnographic approach to gather data,
based on multiple sources (such as documentary evidence, interviews, and participant observation) to understand the social
system of reference (Scapens, 1990).
In this study, we examine the issues relating to the implementation of MAS in the case of the AOU Asclepius. This is
the largest and most complex teaching hospital in the south of Italy; it is also regarded as one of the most specialised in
the country. Over the past few years, the AOU Asclepius has faced a lot of pressure to introduce MAS, which is also in
line with the recovery plan designed to reduce nancial decit in its Region. In 2007, the Region Alfa,2 where the study
organisation is located, was forced to engage in actions to render the existing MAS (only formally adopted since 2005) more

The label Alfa is used to avoid disclosing the name of the Region for privacy purposes.

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191

Table 1
The documents.
Publically available documents

Publically available documents of the AOU

Asclepius

Internal documents of the AOU

Asclepius

National Health Plan

Years 20072010 and 20102013
Regional Health Plan
20002004; 20052007; 20072010, and
20102013
Regional decrees regulating the Health
Service (No. 14/2009 and No. 60/2011)

Financial Reporting and Notes (2008, 2009,

2010, 2011)
Charter of Values

Budgeting Procedures

Charter of Services

Internal Control Procedures

Protocol of Agreement with the Region

Organisation Structure and Chart
Strategic Plan 20072010 and 20112013
Code of Ethics
Statute
Re-organisational Plan

Information Flows Procedures

Plan of the Centres of Responsibility
Provision of Medicines Regulation
Inpatient management

Cost Accounting Plan

appropriate. This was as a consequence of persisting bad performance. The rational for choosing this case study is twofold.
First, it represents a complex organisation in terms of dimensions and also with reference to the nature of the mission, which
is not only related to the delivery of healthcare but also covers the areas of research and teaching, and with regard to the
power relationships between the actors. These characteristics render the case interesting as they allow us to introduce some
additional contextual elements into the analysis that have not yet been fully considered in the literature. Furthermore, the
AOU Asclepius has been recognised as a successful case of change by the Region Alfa. Hence, the case study primarily aims
to examine how the pressures deriving from the changing regional environment shaped the successful process of change in
the MAS of the AOU Asclepius, and to identify the factors that inuenced such a process.
The analysis of the case of the AOU Asclepius was conducted over a ve-year period (20092014). The researchers examined the process of change at the regional level by analysing the evolving regulations and the publicly available documents
to gain a clear and thorough idea of the crucial steps of this process and how this could impact the organisation. The data
regarding the AOU Asclepius were collected by employing multiple data sources, such as publicly available documents,
internal documents, interviews, and, when possible, participation in meetings. This enabled a closer examination of the
developments and changes in MAS at the hospital, as well as barriers, episodes of resistance, and accomplishments. The
researchers carried out an examination of the accounting details, budget proles, stafng levels, and other documentation
and policies for strategies and practices over the last four years (see Table 1). These documents concerned regulation and
strategic plans (both at national and regional levels). They were examined to identify the environmental pressures that
triggered the process of change at the organisational level. Public information about performance, organisational structure,
and strategic planning of the AOU Asclepius, as well as not publicly available internal procedures, were taken into account to
better understand the characteristics of the AOU Asclepius and to trace how changes in regulation affected the organisation
and its processes.
The authors personally interviewed the personnel. The informal interviews, which were later transcribed, followed an
agenda of topics to be concealed rather than a structured set of questions. This approach allowed full coverage of the issues
involved and resulted in a detailed picture of the practices of the hospital, with specic regard to the ongoing changes in
MAS. The interviews aimed to build up a deeper picture of how the interviewees felt about their roles, what they thought
about the hospitals role in the context of reference, the practices and management tools available within the hospital, how
they perceived the newly introduced MAS, and the impact of changing regulations on their activities.
Each of the interviews lasted around 1 h and 30 min and most of them took place with two of the researchers present
(always the same two members of the team carried out the interviews). Over the study period, interviews with 15 individuals
were held at the study site. These interviews were repeated in 2010, 2011, and 2012/early 2013. They were digitally recorded
and then transcribed for analysis soon after the event. Moreover, a telephone follow-up with the respondents was conducted
when a few data were missing. Before the analysis of the data, the interviewees were asked to review the transcripts and
to make any corrections. Where necessary, we made further visits to conrm some of the information or to follow up on
something that had arisen in another meeting, amounting to a total of 55 interviews (see Table 2).

Table 2
The interviews.
Categories of individuals
interviewed

Number of individuals
interviewed

Total number of
interviews per category

Follow-up interviews per

category

Top management
Physicians
Nurses
Internal control division

3
6
2
4

9
18
6
12

2 (1 in 2010, 1 in 2012)
5 (2 in 2011, 3 in 2012/2013)
2 (1 in 2011, 1 in 2013)
1 (2012)

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Once all the interviews were completed, the members of the research team discussed the issues raised, and were able to
x the starting point for the analysis. Information was collected and triangulated with data drawn from the other sources
to enhance research reliability and to realise a comprehensive analysis of the processes of change in the MAS. To guide
the interpretations of the data gathered, several categories of relevant themes were identied to facilitate the analysis. In
agreement with Ahrens and Chapman (2006), the interview transcripts were organised chronologically and the areas of
agreement between the interviewers regarding the categories of analysis were identied. Any area of disagreement was
reviewed and discussed in the light of the available documentary sources. The developing issues or emerging problems
were then discussed separately and used to better understand/explain the phenomena or to identify any unsolved/open
questions for further investigation.
The story of the change was addressed by focusing on its main phases: the preparation, the implementation, and the
regime of the MAS. For each phase, we devoted attention to the following elements:

The regulatory pressures and the interactions between the Region and the AOU Asclepius;
The tools introduced, the implications for people, and the subjects that resisted the changes;
The role played by the specialist work group in overcoming the arising difculties;
The strategies to engage the various actors involved to foster hybridisation.

We not only attempted to describe how changes in regulations at the regional level were interpreted at the organisational level (thus, shaping the process of implementation of the MAS), but also to identify whether internal changes at the
organisational level were capable of redirecting the regional actions.
5. Setting the context
The Italian Health Service is a system of Regional Services (RHSs) characterised by different models of governance
(Caldarelli, Fiondella, Maffei, Span, & Aria, 2013). The 21 RHSs have autonomous power and responsibility to choose their
models of governance, set objectives, plan activities, and appoint or remove managers, given only some general national
requirements.
According to Formez (2007), RHSs can be identied either as Autocratic (RHSs characterised by a hierarchical relationship between the Regional Governing Board and the healthcare organisations, mainly based on an authoritarian approach
that does not allow autonomy and participation), Centred (RHSs in which the Regional Governing Board is more open to
communication but permits limited negotiation of the conditions to healthcare organisations), or Contractual (RHSs with a
particularly high level of autonomy for healthcare organisations, with an approach centred on collaboration and negotiation).
The reform process has also granted a high degree of independence to each healthcare organisation, which is autonomous
in managing its activities in accordance with Regional wishes (Monfardini, Barretta, & Ruggiero, 2013). The reforms have
not always been successful in improving the efciency and in introducing mechanisms able to provide the right incentives
for decision units. In the case of failure, the normative pressures by the central government have become tighter, especially
in regions such as Sicily, Liguria, and Campania, in order to reduce nancial decit. Consequently, the attention of regional
policy makers and managers increasingly focuses on the implementation of management accounting tools within healthcare
organisations.
5.1. The regional environment
The region in which the organisation examined is located, regarded here as the societal institution of reference for the
analysis, is one of the largest in the south of Italy, historically categorised according to Formez (2007) as Autocratic. In 2007,
it experienced a critical nancial and economic situation due to nancial decit. This fostered the adoption of a recovery
plan (Plan to return from the Debt), and led the Board to activate the maximum level allowed by the law for regional tax,
income tax, excise taxes, and tickets to collect additional resources to be allocated to cover the healthcare decits. The
purpose of this action was to reduce healthcare expenditure to effectively contain costs as well as achieve simultaneous
economic and managerial equilibriums, both at the regional and the organisational levels to ensure the quality of care in
a framework of compatible resources. The Plan fostered the adoption of new management accounting tools because the
pre-existing ones had been only ceremonially adopted and were completely ineffective. The Council of the Region engaged
actions and strategies to design and implement more appropriate MAS, and to foster the introduction of MAS within its
healthcare organisations. The results of the actions taken can be positively evaluated since the Region, although still under
the control of a special commission, was able to reduce its nancial decit (Evaluation Report, 2012) and implement new
MAS in its hospitals (Caldarelli et al., 2013). A summary of the main changes at the regional level in the period 20022012
is provided in Table 3.
5.2. The AOU Asclepius
The AOU Asclepius is known as one of the largest (both in terms of patients served per year and number of employees),
most qualied, and specialised autonomous teaching hospitals in the whole of Italy (Lega, Carbone, & Prenestini, 2011).

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Table 3
The changes at the regional level.

January 2002
January 2005
January 2007
November 2009
May 2010

July 2010
November 2010
August 2011

December 2012

Regulatory/environmental pressures

Regions reaction

Issuance of the Regional Health Plan (20022004) to

introduce MAS
Issuance of the Regional Health Plan (20072010) with
minor changes to the previous one
Issuance of the Recovery Plan with emphasis on MAS

Absence of guidelines and lack of clarity and

thoroughness led to failure
Healthcare organisations not properly involved in the
process of change were only formally compliant
Slow process of change due to delays in the issuance of
the guidelines
New clarity on guidelines, types of tools to implement,
and aims of the changes
Attempts to redesign the MAS

Issuance of the decree no. 14/2009 (Implementation of

proper accounting procedures and management)
Change in the Regions political majority, which
reects the change in the interpretive scheme of the
regional population
Issuance of the Regional Health Plan (20102013)

Greater degree of thoroughness on objectives, actions,

and means to support the change

Issuance of operational manuals rendered available

among the actors
Issuance of the decree no. 60/2012 (Implementation of
proper accounting procedures and management
replaces the previous one)
Region Alfa concludes its process of change

Yearly, the hospital provides services in the Region to 34,539 inpatient admissions, 52,410 day-hospital admissions, 280,000
outpatient services, and 3000 rst aid obstetricians. It hosts several specialised centres such as those for rare diseases (e.g.,
the Regional Centre for Hereditary Angioedema) and for transplantations.
The AOU Asclepius statutory goals reside primarily in the continuous integration of research, education, and hospital
care, with a constant focus on care services characterised by a high level of expertise. The AOU Asclepius delivers care based
on a set of basic principles such as equality and impartiality: i.e., the rules regarding the relationships between the users
and the organisation are equal for all, and no distinction is allowed in respect to sex, race, language, religion, or political
opinion. The AOU Asclepius is inspired by criteria of efciency and effectiveness: it is engaged in a programme of evaluation
and monitoring of the services provided, from both a clinical-care and organisational management perspective. The results
of this programme are periodically evaluated during the Conference of Health Services and used to improve the tasks, and it
is planning to implement groups of continuous quality improvement in all of the areas. The Asclepius attempts to encourage
citizens participation: bulwarks of this orientation are the chance for the user to request at any time a copy of all medical
records relating to his/her person in the possession of the hospital (under the current law), the right to give informed
consent, and especially the possibility to produce documents, comments, and suggestions for improving services, as well as
the opportunity to make complaints and criticism. The organisations commitment to regularly collecting the feedback of
users aims to monitor and optimise performance levels in order to respond promptly to the needs expressed by users.
In 2003, the Region and the University produced a Memorandum of Understanding for the integration of the University Hospital (autonomous from the organisational and management point of view) with the Regional Health Service. This
protocol came about in an atmosphere of urgency, due to the need to adapt the relationships between the University and
the Regional Health Service to the law, as quickly as possible. The protocol emphasises the importance of a strong commitment from both the University and the Region to ensure timely compliance and fullment of their reciprocal obligations
regarding the specic functions ascribed to their competence and responsibilities. Furthermore, the protocol recognises and
enhances the indivisible nature of the three fundamental functions of teaching, research, and healthcare delivery typical of
universities.
The AOU Asclepius is divided into 24 departments and two autonomous services, which are in turn divided into approximately 190 functional areas. Each department has its own manager and is divided into different areas, each with its own
responsibilities. The general managerial/strategic choices (and the related responsibilities) are the prerogatives of the CEO
(Direttore Generale), who has the autonomous power/responsibility of managing the University Hospital in order to ensure,
on the one hand, the efcacy and effectiveness of the care, a high level of teaching, and high quality research, and on the other
hand, in order to assure efciency and cost containment in compliance with the guidelines proposed by the Regional Health
Plans. In carrying out his activities, the CEO is supported by a consultative body made up of physicians and experts in health
planning (Organo di Indirizzo) and an audit committee with monitoring and information functions (Collegio Sindacale).
The relationships between the different hierarchical levels are informed by the principles established in two fundamental
documents: the Statute (Atto Aziendale) and the Re-organisational Plan (Piano di Organizzazione e Funzionamento Aziendale). These documents clarify the driving values of the AOU Asclepius, as well as the degree of power and responsibility for
managers (whether they are physicians or not) and for professionals.
Joint analysis of the archival data allowed us to identify the central issues for the management of the University Hospital.
First of all, the Hospital seeks the centrality of the person: the AOU Asclepius, in accordance with its threefold nature, directs
its actions to the centrality of the patient/user as the recipient of the service, the professionals who work within it, as well as
the students. The services provided to the patient/user are structured in such a way as to take account not only of the health

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needs, but also of the whole sphere of their needs (emotional, socio-cultural, psychological, etc.) from a broader perspective.
To this end, actions are oriented towards citizens continuous assessment of the effectiveness and efciency of the services
offered (Statute). As for the professionals, it is useful to clarify that the centrality of their role is perceived as an important
key success factor; thus, the Hospital seeks to enhance the professionals contribution as well as to create a favourable
organisational climate to improve the processes of innovation, learning, and socialisation of knowledge. Furthermore, the
organisation is conceived and designed in order to encourage the creation of the conditions essential for the professional
and human development of the students (Charter of Values).
Another crucial distinguishing feature is the emphasis on clinical governance achieved through the construction of both
clinical and organisational conditions to promote the surveillance and monitoring of care processes. This is possible by
developing policies and tools to encourage the positive integration of research, teaching, and care. In fact, the integration
of scientic research, teaching, and care is not only regarded as an institutional goal, but rather as a driving value for the
Hospitals activities. The reason is that such integration allows the development of synergies between innovation in medical
science and the improvement of care pathways for the benet of patients. Moreover, integration also enables the AOU
Asclepius to perform services appropriate to the needs of health and take into account the evolution of the users sociocultural and psychological needs. The value produced by the integration of research, teaching, and service represents a
continuous incentive to improve the quality of services provided to users (Charter of Services).
From a stricter management perspective, the AOU Asclepius devotes importance to the issues of economic and sustainable
development: the dynamic equilibrium of the nancial statements requires the continuous search for conditions of efciency
and effectiveness both in healthcare delivery and in administrative/managerial processes. These conditions can be achieved,
on the one hand, by avoiding poor integration of organisational structures and by supporting multidisciplinary working
methods within the organisation, and on the other hand, by enhancing the inclination of professionals to adopt appropriate
treatment practices, not only from the clinical but also from the economic point of view (Charter of Values).
Since 2007, the AOU Asclepius has been involved in a process of change in its MAS to support the process of modernisation
(in terms of organisational structure and operational design) imposed by increasing regulatory changes. To comply with the
national and regional legislation in force, the AOU Asclepius began some processes for introducing MAS in 2007. The following
section explains the pathway of the change by highlighting the evolving nature of the relationship between the Region (as
societal institution) and the organisation, the steering mechanisms activated by the former to prompt a process of change,
the reaction of the organisation, and the role played by the specialist work group to progressively ensure that the changes
in the MAS of the AOU Asclepius fostered by regulation would be accepted.
6. Findings
6.1. The introduction of the MAS in the AOU Asclepius: the status quo before 2009
In 2007, the Region was experiencing a nancial decit and issued a Plan for Return from Debt. The goals of the Plan led
to the adoption of new management accounting tools and procedures by healthcare organisations. However, although the
Plan for Return from Debt stated the importance of MAS for the healthcare organisations of the Region, it was still at an
elementary level concerning the essential characteristics and design of the MAS required. Consequently, the introduction of
Cost Accounting and Budgeting processes within the AOU Asclepius was strongly resisted.
An initial problem that reinforced resisting behaviours was the lack of clarity about the process of change and its meaning.
Among the factors leading to an unsuccessful change, the unclear identication of objectives, roles, responsibilities, and
operational actions played a major role. Moreover, pressure for a quick introduction of these systems created the premise
for a number of misunderstandings, which led to regarding them as palliative measures per se, which did not need any
precise logic or adaptations. In particular, the budget led to a situation of conict between the managers and the physicians,
and the physicians and the nurses. More specically, given the vagueness of the guidelines, the physicians were unable to
understand the direction of the change, and this made them feel impotent. Consequently, they simply executed a series of
tasks demanded by the top management (such as compilation of additional reports on several clinical issues). However,
without a proper understanding of the role of these reports, this only resulted in the unsystematic production of more and
more papers. On the other hand, despite nurses potential role in improving the efciency of the inventory of medicines,
they were completely set-aside in this phase. Hence, they simply rejected any enrichment of their tasks by advocating the
legal terms of their contracts and their busy agenda.
Resistance in this initial period mainly determined a reorientation through absorption of the changes forced by the upcoming regulation. The regulatory revolution happening at the societal level at that time was not accompanied by the provision
of guidelines for the individual organisations facing the new rules, thus favouring a morphostatic dynamic. Moreover, the
cost accounting and the budget were not welcomed, as these were perceived as a threat to the ethos, values, and activities of
the organisation, and thus, played in parallel with the day-to-day activities. This arguably happened because the specialist
work group responsible for the implementation of the new tools was formed by the CEO and administrative bodies. They
were worried about formal compliance and urgent external legitimation. Hence, professionals and lower managerial levels
perceived these as a formal task pertinent only to the higher organisational sphere.
However, since 2009, the process of introducing the MAS was completely revolutionised leading to a reorientation through
boundary management of the changes forced by the upcoming regulation. Essential elements of this changing pathway were

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the provision of clearer guidelines and the effort of the specialist work group, which was committed to ensuring that
the changes were embedded in the real work of the organisation, leaving the interpretive schemes unchanged. Such a
commitment resulted in the massive involvement of people from different elds, which also led to hybridisation and the
creation of a common language that enabled a successful process of change. The following subsections will describe in detail
how this practically happened.
6.2. The change in action: the preparatory phase 20092010
Following the Regions renewed attention towards the implementation of the MAS, a number of regulatory changes were
realised. The innovations followed a change in the governing board, and were a response to the pressures of healthcare
organisations, among which the representatives of the AOU Asclepius played an important role. The decree No. 14/2009
Implementation of proper accounting procedures and management, both at corporate and regional level (further improved
in 2001) was issued to provide more support for the healthcare organisations of the territory. This laid the ground for the
introduction of signicant instruments to support the activities of management accounting and management control, such
as:
Manuals dening the accounting principles and rules;
Regional Guidelines in relation to planning processes, documents, management, accounting, and auditing;
Regional guidelines for the denition of the Cost Centres Plan and the Centres of Responsibility Plan, the Budgeting process
and so on, setting out the principles for keeping analytical instruments to ensure the uniformity of the detection systems
of individual organisations and the comparability of data at the regional level.
In the wake of the new legal requirements and in response to this greater level of detail aimed at creating a greater culture
of control, a change in MAS within the AOU Asclepius took place. The process started in late 2009 and ended in 2014.
With reference to the activities carried out to prepare for the change in question (covering the period 20092010), the
specialist work group formed by the top management in conjunction with the members of the Internal Control division
played a central role. This group acted as a conduit to encompass the new logics in the everyday life of the organisation,
also preserving its ethos and values. Taking into account the 2007 failure, the specialist work group involved employees
at all levels. A number of training courses and seminars were organised to engage and educate employees about the need
to streamline the processes and implement control systems. The aim of such activities was to develop a commitment for
changes in action and to eradicate the conception of the control systems as a means of punishment and coercion, replacing
this conception with a new vision of control as an element to support the quality of healthcare. To elucidate this point we
quote from the CEO:
To avoid a second failure, we wanted to build consensus before proceeding. It was essential to clarify that any tools would
be aimed at improving the results without any coercive intent.
During the meetings with the representatives of the employees, the specialist work group claried that the two primary
objectives were the implementation of Cost Accounting and Budget and the realisation of the reporting system. The rst
step was to stimulate peoples proactive participation in mapping the activities and dening the Centres of Responsibility.
The head of each integrated department and of each unit within the departments were surveyed to provide a more complete
picture of activities, roles, responsibilities, and nancial resource needs for the 190 functional areas that characterise the
AOU Asclepius. This initiative was welcomed by the participants, who showed greater acceptance, as one physician claried:
I appreciate this kind of involvement as I am convinced that no one can identify the problems of a process and the possible
solutions better than someone who is involved in it every day.
The survey participants set in motion a series of meetings with the employees, not only doctors but also nurses and
other health workers, to collect their experiences and to elaborate real, composite, and articulated proposals to bring to
the attention of the specialist work group. This helped create a collaborative environment and a willingness to accept the
changes. People switched from passively suffering the choices of top management to being active agents of that change. The
following quotes from a physician and a nurse elucidate this issue better.
Being involved in this stage made me feel part of the challenge and prompted me to question my previous conceptual
schemes (Physician).
Our category is often not considered, but this was not the case. This motivates me to act in favour of the new measures
(Nurse).
At the end of the rst phase, the specialist work group processed the reports and elaborated two preliminary plans: the
Plan of the Centres of Responsibility and the Plan for the Introduction of Cost Accounting and Budgeting. The Plan of the
Centres of Responsibility identied the activities undertaken, the responsibilities, the control process, and any overlap or
lack in the processes, thus recognising areas of improvement. The Plan for the Introduction of Cost Accounting and Budgeting

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suggested a strategy of gradual introduction of these systems in the organisation. Both plans were discussed during three
meetings.
In May 2010, an agreement was reached and the following documents were nalised:
Plan of the Centres of Responsibility;
Budgeting Procedures;
Cost Accounting Plan.
However, despite the positive results achieved in this rst phase, some difcult issues persisted, especially with regard
to some peoples reluctance to change. This also emerged during some of the interviews, which highlighted two major
problems.
First, some of the physicians were rmly against the changes as they thought that the new measures would compromise
the quality of the service. They refused to participate in any meetings because it is not correct to negotiate on the skin of the
patients. Second, the specialist work group often had difculties managing the conicts between the different categories of
professionals (e.g., between physicians and nurses) involved in the negotiations. The following quotation from a member of
the top management elucidates this situation in more detail.
Some meetings have been postponed because of the disputes internal to the single departments. . . The representatives
of different categories of healthcare professionals often began to debate on their roles and responsibilities, forgetting the
original intent of the meeting. In several cases, we could simply tell them to go back and then x another meeting, to give
them time to develop a shared and agreed course of action for their department.
6.3. The change in action: the implementation phase 20102012
The implementation of the new tools (budget, cost accounting, and reporting) by the specialist work group started in the
second half of 2010. These tools were conceived within the AOU Asclepius as elements of a complex and unitary MAS, aiming
to improve the efciency and effectiveness of the organisation. However, for the purposes of clarity, the implementation of
these tools is here addressed separately, yet bearing in mind their intrinsic interconnections.
To implement the Budget over the initial phase (mid-2010), the specialist work group focused on the denition of the
objectives of the AOU Asclepius for 2011 in terms of activities (e.g., improvement of case-mix, improvement of appropriateness, management of hospitalisations, etc.), resources (e.g., cost of medicines, management of inventories, cost of hospital
treatment, management of medical devices, etc.), and the organisation of work (e.g., management of care processes, waiting
lists, management of operating rooms, etc.), also recognising possible levers of action and performance indicators (Strategic
Plan, 20112013).
The specialist work group prepared a preliminary budget for each Centre of Responsibility (CR), divided into three sections
containing the following information (Budgeting Procedures):
Structural data (beds, clinics, and spaces assigned to the CR), stafng, and equipment;
The activities of the department and the indicators on the appropriateness, the direct costs, and the effectiveness of the
processes;
The income statement, showing the costs and revenues of the CR.
The budget plans were then sent to the CRs before the negotiation to be operationalised as tools through which the CRs
agree/negotiate their objectives for the year of the budget. The specialist work group activated an information point for any
explanations needed.
The negotiation consisted of about 50 rounds of meetings with 26 CRs and 90% of the participants nally agreed on the
objectives and jointly signed an accord supporting the decision taken. In December 2010, the specialist work group issued
the budget of the AOU Asclepius for 2011, as a consolidation of the specic budgets developed in conjunction with the CRs.
The people involved in the process recognised that the budget was not set as a control-coercive tool, but as an opportunity
for joint work towards the achievement of the objective of delivering high quality healthcare. To clarify this point, we present
several quotations.
The budget not only reects the need for economic efciency but also takes into account the specic characteristics and
complexity of the healthcare processes (Member of the Internal Control Division).
The budget represents a major challenge to pursue a better use of the available resources towards a tangible improvement
of our service (Physician).
This budget fully reects the different needs expressed by all of us. We do not feel threatened and want to support this new
form of performing healthcare (Nurse).
The implementation of the budget was complemented by the use of a quarterly reporting system, to quickly verify
whether the objectives established in the programme had been achieved, to identify possible deviations, and any solutions

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needed. The quarterly reporting involved the presentation of the data collected and comparison with the same quarter
of the previous year (2011 was the rst year of adoption, hence no comparison with the previous year was provided). In
addition, the report was published on the intranet of the AOU Asclepius, allowing the head of each department provided
with a username and password to gain access to view the reports, thus stimulating constant information and participation
(Strategic Plan, 20112013).
Each report is divided into the following four areas: structure (e.g., number of beds available in the CR), activities (e.g.,
number of treatments), organisation of work (e.g., number of individuals employed by the University in comparison with
the number employed only by the AOU Asclepius), and consumption (e.g., medicines and medical devices/equipment). The
report contains a set of indicators to measure the appropriateness, efciency, and quality of the health services provided.
Data for each CR ows within a single data warehouse, which receives information every day and updates the database
that it contains. Since the third quarter of 2011, the report has been automatically generated by the data warehouse, thus
providing information in a more timely manner and with a signicant reduction of errors in processing. The data warehouse
not only allows access to reports, but also enables access to a number of ows (e.g., ows relating to inventories) for queries
of different types (Information Flows Procedures).
The reporting activity, especially in its initial phase, has beneted from strong collaboration within the organisation. The
specialist work group was responsible for collecting data from the various ofces, and collaborating with these ofces was
crucial to ensure proper preparation of the data warehouse and its effective use. The preparation of the reports also involved
the participation of members of the individual departments, who were involved in meetings to disseminate knowledge of the
report and the information platform. During these meetings, several departmental representatives were identied (currently
46), both in medical and administrative roles, to act as a link between the specialist work group and the departments. This
allowed data to be validated on the platform and compared with those owned by individual departments.
Specialist work group members have often cited a major factor that positively contributed to this process: the independence of the internal control division allowed the progressive introduction of a business culture (previously lacking) that
superseded the resistance of the actors involved. We quote from a member of the top management.
We still observe resistance to change, even by those who provide the data for the reports. However, I must acknowledge
that there is greater openness and proactive behaviour by the subjects involved. The problems are far from over, but we are
on the right track.
In addition, the other categories of individuals interviewed highlighted the positive aspects relating to their involvement.
They stressed that it was not too difcult to satisfy the request for information due to the greater clarity of the procedures.
However, they noticed that several problems remained unanswered, leaving areas for improvement such as performance
assessment. One of the interviewees stated:
It was not too difcult to prepare the report, because we received clear instructions. However, not everything has been
correctly understood or applied. This year is a kind of work in progress. I see many areas for improvement, for example
more effort on performance indicators is to my opinion highly advisable.
They also noted that the introduction of reporting led them to pay attention to issues that had previously being underestimated or ignored yet were actually important. To clarify, we quote a physician.
. . . During the preparation of this document, several issues which deserve greater attention came to light. We realised
that one of the levers on which we must act is the length of hospitalisation, which other departments are able to optimise
through more detailed clinical-history at the time of admission. On the contrary, we realised that we have a better capacity
to efciently manage the inventories, which could also be useful to other departments.
In addition to the budget and the reporting, the AOU Asclepius has set up a system of cost accounting to improve the
allocation of resources between the different structures, to reward the virtuous CRs, and reduce wastage and inefciency.
In 2011, the AOU Asclepius started experimenting with the application of cost accounting to verify the level of resources
absorbed by each CR, starting from a baseline of data for 2009. These data, in conjunction with the indicators contained in
the quarterly reports of 2011, were crucial in identifying the inefcient CRs where a cut in resources was possible, as well as
the virtuous CRs to be rewarded by allocating, in addition to the usual resources, the extra funding received from the RHS.
Positive results were achieved in terms of reducing professional resistance to change and speeding up the implementation
of the new MAS. This was due to the participative approach promoted. However, several concerns still persisted at the end
of 2011.
Although there has been increasing commitment to developing a business culture since 2009, the negotiation of resources
is still long and complicated. This is mainly because, as a member of the Internal Control division argued, some of the people
involved in the process, although committed to increasing the efciency of the internal processes under their responsibility,
strongly oppose cuts in the available resources, sometimes also for a question of power, prominence, and the image of their
department (member of the Internal Control division).
Several physicians highlighted that the set of indicators should be integrated in order to take into account the specic characteristics of some of the departments and also to consider the problems of co-morbidity for the assessment of
appropriateness. Some of them also signalled the need for an information system that was more accessible and easier to
use.

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The specialist work group recognised that the implementation of the reporting system was satisfactory but not yet
completely successful. The group highlighted that several departments still had to improve the timing and quality of the
information provided, mainly because they still see the reports as a threat (member of the top management).
Furthermore, the majority of the interviewees emphasised that cost accounting is still at an embryonic stage (as is also
stated in the Strategic Plan, 20112013) and needs to be better developed to redene the allocation of resources.
During the rst half of 2012, the management and the departments continued working together to consolidate the MAS.
Some small changes were made to correct some of the deciencies outlined above. The specialist work group, in agreement
with the majority of the representatives of the CRs, selected several issues that could be acted on in a timely manner, leaving
to a later date the more substantial changes that would require a massive effort in the long term. The focus of attention
was on improving the information system to make it more user-friendly and also on providing departments with training
courses (held in January) to educate the users on how to take advantage of the potential of the system. This contributed to
improving the results in terms of timeliness and quality of information, as shown in the rst quarterly report of 2012. In
February 2012, the specialist work group started to work on a plan to revise the Cost Accounting system in terms of more
specic reversal criteria, in collaboration with four departments that decided to join the initial trial. Physicians stressed the
relevance of this project in creating more condence among professionals with reference to the Cost Accounting system.
The specialist work group started a mapping phase of the processes and the activities of the CRs involved to identify the
most appropriate criteria for the allocation of indirect costs and resources.

6.4. The regime

In June 2012, the implementation of the MAS in the AOU Asclepius was essentially completed, and thus, the organisation
then entered the so-called regime phase. In this phase, the reporting system showed constantly improving results. For
example, there were fewer disputes between professionals and the specialist work group over the allocation of resources,
possibly as hypothesised by the CEO due to the plan of revision of the cost accounting system, activated in recent months, which
has calmed a potentially explosive situation. Efciency in the departments improved sufciently by 55%, and this, as a member
of the specialist work group highlighted was, a sign of commitment and not just a formal implementation of the new measures.
From the organisational point of view, the implementation of the new MAS led to a process of integration between the
medical-surgical and diagnostic departments. This occurred through the creation of joint therapeutic-diagnostic protocols
to improve efciency and effectiveness, which supported a reduction in waste and improved the quality of the services
provided. By the end of 2012, the specialist work group had a meeting with the representatives of the CRs to summarise the
progress to date. During this meeting, which we had the chance to attend and digitally record, several issues arose.
The majority of the heads of departments expressed increasing interest in the MAS and recognised their usefulness as
a support for governing their CRs. They expressed their appreciation for the method of consultation adopted to develop
shared objectives and courses of action and referred to the practical support that also continued during 2012. On the other
hand, the specialist work group recognised the efforts of each CR to ensure a greater level of transparency in the processes,
which was helpful in achieving more timely, complete, and accurate internal information ows. In this respect, the work
group emphasised that the introduction of the MAS had led to a reduction in the pre-existing incorrect behaviour because
everything was monitored, analysed, and evaluated better due to the active participation of the majority of healthcare
professionals.
However, some unsolved issues were also highlighted. For example, some of the professionals still perceived the MAS as
a coercive constraint (diminished but not completely minimised during 2012); therefore, they tended to resist the change.
The members of the specialist work group expressed their hopefulness that the projects already started or planned for future
periods, with the aim of further improving the implemented MAS, could persuade the remaining sceptics of their usefulness.
They recalled the ongoing project described above to restructure the cost accounting system, and also briefed the participants
on their ideas of better developing the existing set of performance indicators by adopting a Balanced Scorecard approach in
the foreseeable future. They concluded by highlighting that although the MAS was now fully implemented, there was still
much to do to improve, and that this was possible only if everyone participated to achieve both quality and economic goals.
The ndings of the analysis show that the process of change in the MAS from 2007 to 2009 resulted in a Reorientation
through absorption given the strong resistance of the actors involved. Then, the newer process of change triggered by the
previous failure resulted in a Reorientation through boundary management from 2010 to 2013 with the MAS implemented
in a manner acceptable to those involved, and towards the progressive formation of a new business culture (Broadbent &
Laughlin, 2013).
These ndings are helpful to understand the interactions between the Region and the AOU Asclepius to nd out how
changes in regulations at the regional level were interpreted at the organisational level, shaping the process of implementing
the MAS, and also to comprehend if internal changes at the organisational level were capable of inuencing the regional
actions (see Table 4).
The process of change undertaken in 2007, consisting of the introduction of pre-packaged measures based on formal
legal requirements, failed as it was rejected by the organisation due to the strong opposition of the dominant professional
groups. In fact, at the beginning, the introduction of the MAS shed light on the existence of several problems. First, there was
no shared vision within the organisation on the objectives of the process of change and the ways to achieve these objectives.

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199

Table 4
The changes in the MAS of the AOU Asclepius and the connection with the changes at the regional level.
Regional level

January 2002

January 2005

January 2007

Organisational level

Regulatory/environmental
pressures

Reactions

Issuance of the Regional

Health Plan (20022004)
to introduce MAS
Issuance of the Regional
Health Plan (20072010)
with minor changes to the
previous one
Issuance of the Recovery
Plan with emphasis on
MAS

Absence of guidelines and

lack of clarity and
thoroughness led to failure
Healthcare organisations
not properly involved in
the process of change were
only formally compliant
Slow process of change due
to delays in the issuance of
the guidelines

May 2007

November 2009

Issuance of the decree no.

14/2009 (Implementation
of proper accounting
procedures and
management)

July 2010

November 2010

Change in the Regions

political majority, which
reects the change in the
interpretive scheme of the
regional population
Issuance of the Regional
Health Plan (20102013)

Issuance of operational
manuals rendered
available among the actors

January 2011
August 2011

December 2013

To comply with regional

requests, the AOU
Asclepius starts to
introduce the MAS focusing
on Cost Accounting and
Budgeting processes

The process was an

exclusive task of the
administrative staff, in
an atmosphere of
emergency. The MAS
was only formally
adopted due to unclear
guidelines and scarce
cooperation between
actors

In the wake of the new

guidelines, a new process
of change starts, with a
preparatory phase aimed at
stimulating collaboration
and participation
The AOU Asclepius issues a
number of documents and
guidelines and shares this
information among all the
actors

The process of change

is accurately organised
according to a
timetable considering
the priorities of
intervention

Attempts to redesign the

MAS

Greater degree of
thoroughness on
objectives, actions, and
means to support the
change
The AOU Asclepius updates
the documents and
guidelines and shares this
information among all the
actors
The AOU Asclepius starts to
introduce cost accounting

Issuance of the decree no.

60/2012 (Implementation
of proper accounting
procedures and
managementreplaces the
previous one)

January 2012

December 2012

Reactions

New clarity on guidelines,

types of tools to
implement, and aims of the
changes

December 2009March
2010

May 2010

Regulatory/environmental
pressures

The AOU Asclepius starts to

consolidate the work done,
and in mid-2012 enters the
regime phase
Region Alfa concludes its
process of change
The AOU Asclepius
concludes its process of
change

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Above all, this was due to the lack of clear and thorough guidelines and the inadequacy of the existing regulation. Second,
there was a lack of dialogue between the different categories of professionals in the organisation (20072009).
However, the pressures exerted at the regional level by healthcare organisations, among which the AOU Asclepius played
a central role to obtain guidelines, the renewed attention of the Regional Governing board to these issues, as well as the
adoption of a more participative approach triggered a new process of change within the AOU Asclepius. This process was
aimed at building a new perception of the MAS as a means of mediation between different exigencies rather than as a
coercive tool with punishments.
Although the implementation of MAS was non-negotiable, as it followed regulatory pressures, the process of introducing
these tools was negotiable. The role of the newly introduced specialist work group (formed by the top management in
conjunction with the members of the Internal Control division) was crucial. This groups effort to realise internal guidelines
(based on those provided by the Region) to ensure a wider comprehension of the ongoing process of change within the
organisation was important in supporting the implementation of the MAS. The groups commitment to a participative
approach based on knowledge exchange and communication between the actors involved was equally important in this
endeavour. The need to sit at a negotiating table in a consensual way to deal with the specialist work group led the various
groups of professionals to put more effort into developing the dialogue among them. This not only resulted in a more
rational mode of supplying healthcare services, but also contributed to the ultimate success of the process of change. The
improvement in the services delivered, which was possible thanks to the integration between the different departments
and between the different categories of professionals, raised physicians (and other healthcare professionals) awareness of
the potential of the new measures. They were able to verify that the new tools were useful in achieving not only economic
objectives, but also greater quality of care, through the reduction of waste and the release of resources to enhance the quality
of the services, thus pushing them to proactively support the changes taking place.
Nevertheless, it is also worth highlighting that although the changes in the MAS were acceptable to those involved and
helped to create a corporate culture oriented to fullling the objectives of efciency and quality in the broadest sense, a
number of issues, as the results of the analysis show, are still unresolved and require further work. This refers particularly
to concerns about the persisting resistance of several professionals, which has been reduced but not completely set aside.
Hence, the currently available tools need to be rened. Moreover, the factors or conditions that support a political inuence
still potentially affecting (at least to a minor degree) the budgeting process and the allocation of resources need to be
eradicated.

7. Discussion and conclusions

This paper moved from the well-acknowledged view that accounting change is a context-specic phenomenon, which
requires the comprehension of the nature of the organisation and the interaction between the wider social, environmental,
and political pressures for change and organisational behaviour, i.e. how organisations respond to and process institutional
changes.
In particular, in this study, we focused on the healthcare sector where multiple contextual elements (both internal and
external) constrain or enable change (Agrizzi, 2008; Anessi Pessina, 2006; Chang, 2006; Haslam & Lehman, 2006; Lapsley,
2008) threatening the ability of MAS to enable a positive reconciliation between cost containment, quality, and accountability
(Ellwood, 2009). Extant studies (Chua, 1995; Conrad & Guven-Uslu, 2011; Guven-Uslu & Conrad, 2011; Llewellyn & Northcott,
2005; Northcott & Llewellyn, 2003) argue that the failure so far of the accounting changes in healthcare lies in the lack of an
integrated and balanced approach to performance management, encompassing both the economic and quality logics, and
its impact on the processes of management accounting change in the eld. The literature indicates that the implementation
of MAS in healthcare may take two different routes, i.e. hybridisation or resistance, interpreting these as two alternative
extremes, with limited or no attempt to address a changing pathway from one condition to another, and to comprehend
the conditions under which organisations achieve successful or unsuccessful changes. This paper attempted to provide a
more comprehensive view of factors such as the strong inuence exerted by the increasingly changing regulations and
environment that characterise the sector, the politics of change, and the role of inuential actors in settling any resistance to
understand how the changes in the MAS were implemented to foster a switch from strong resistance towards hybridisation
and acceptance of changes by those involved.
Following Agrizzi (2008) and Broadbent and Laughlin (2013), we focused on the implementation of MAS following external (and non-negotiable) pressures exerted on healthcare organisations by regulatory agents, looking at the interactions
between these and the organisations to understand how the MAS was implemented in a manner acceptable to those involved.
The conceptual starting point for our analysis was a skeletal theory of organisational change, set in the context of
societal change (Broadbent & Laughlin, 2013). Broadbent and Laughlins framework allowed us to investigate the dynamics
of change related to the implementation of MAS by taking into account the complexity that characterises the healthcare
sector and possible resistance of professionals. Our analysis viewed MAS as design archetypes of the healthcare organisations
capable of assimilating inuences from the external environment (due to changing regulation) to understand if and how
these inuences have been translated into interpretative schemes, i.e., by developing a business culture. In addition, the
analysis also considered the possibility that internal changes/reactions at the organisational level could in turn inuence the
institutional, societal regulatory process.

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201

The main focus was on the Italian context, which is peculiar due to the turbulent regulatory environment that has fostered
a number of changes within the healthcare organisations over the last 20 years. Following a Middle Range Thinking approach,
the research employed a longitudinal case study of the AOU Asclepius. This was a relevant setting to investigate the abovecited issues, as the organisation has experienced a process of change in MAS in reaction to evolving regulations, seeking to
achieve transparency, efciency, and accountability.
The case study offers an understanding of how different internal and external forces acted to mould the MAS change,
shedding light on the relationships that emerged during the process of change, and of the various coping mechanisms
activated by different subjects over time. On this basis, it is possible to discuss why the AOU Asclepius experienced two
types of accounting change and how the organisation was able to switch from one pathway to another.
The initial effort to introduce MAS from 2007 to 2009 resulted in a Reorientation through absorption, given the strong
resistance of the actors involved. In this period, there was pressure for a quick MAS introduction. This derived from the environmental disturbance produced by changes in the regulatory requirements of the Italian NHS, which renewed the Societal
Lifeworlds commitment to cost containment, quality, and accountability. However, this task was only pertinent to the top
management. The change was driven by an autocratic top-down approach aimed at reaching compliance with regulatory
requirements rather than fostering profound changes in practices and routines. In this initial attempt, it was not possible
to identify a specialist work group committed to the changing process or to clarify the aims and value of the accounting
changes. Likewise, the way the change should have been approached was completely obscure to the actors hit by the change
itself. As a result, the design archetypes were unable to align the subsystems (which remained unchanged in essence) and
the newly efciency/effectiveness-driven interpretive scheme resulting from the willingness of the top management (only)
to conform to the Societal Lifeworld. Due to lack of clarity and mutual understanding between organisational actors, the
steering media was out of control in this rst phase and led the organisation to a worse situation than at the beginning of
2007.
Then, a newer effort to design and implement appropriate MAS, learning from the previous failure, resulted in a
Reorientation through boundary management, with the MAS implemented in a manner acceptable to those involved
and towards the progressive formation of a new business culture (Broadbent & Laughlin, 2013). In the AOU Asclepius,
Reorientation through boundary management was possible owing to the foresight of the specialist work group. They were
capable of ensuring that the MAS introduced to satisfy the regulatory (and non-negotiable) requirements were acceptable to
people within the organisation. They could successfully implement the MAS because they devoted attention to the concerns
of the various categories of professionals, and offered them the chance to be actively involved over the different phases of
the changing process.
The specialist work group recognising that the regulatory requirements had to be given high consideration due to the
impact on funding sources devoted much effort in managing three different types of boundaries. They not only had to
consider the ethical issues relating to the quality of care and autonomy in decision-making of healthcare professionals, but
they also had to take into account the questions relating to academic research and teaching. They had to nd a balance
between the pressures to internalise a change in the everyday life of the organisation and the need to ensure that the
interpretive scheme of the organisation remained unchanged despite their adoption. One would expect that a healthcare
organisation such as the AOU Asclepius, characterised by multiple strong (and sometimes conicting) ideologies, due to its
threefold nature relating to care, research, and teaching, might be resistant to fundamental changes in the interpretative
scheme (Greenwood et al., 1988). On the contrary, the commitment of the specialist work group to involve healthcare
professionals and the constant negotiation, in contrast with the coercive adoption of pre-packaged systems, made the
difference. This helped to create a shared corporate culture that did not exist before. The success resides in the interpretive
scheme of the organisation, which remained unchanged at its core but was enhanced at the periphery. The introduction of
the MAS contributed to enlarging the driving values of the organisation with newer elements relating to the efciency and
effectiveness of the services, complementing it in an evolutionary way. This fully reects the view of Broadbent and Laughlin
(2013) who highlight that Reorientation through boundary management benets from shared values and collaborative
approaches between individuals.
7.1. Theoretical implications
We can argue that this paper complements existing studies adopting Broadbent and Laughlins framework by showing how an organisation could switch from one change pathway to another. Thus, this paper provides a more complete
understanding of the process of change and the factors inuencing it. Moreover, it provides rich empirical evidence on
how Reorientation through boundary management, only conceptually advanced by Broadbent and Laughlin (2013), occurs
in practice. It also claries the conditions that allow this kind of reorientation to move towards an evolutionary pathway,
rather than conguring a colonising alternative within a healthcare organisation.
Another implication of this research is that it elucidates how the process of change in the MAS was handled throughout its
main phases. This provided us with a more complete picture of the actions undertaken, the problems faced by the specialist
work group, and the perceptions of the people within the organisation. The approach adopted allowed us to analyse the
change in the MAS of the AOU by considering both resistance barriers and hybridisation attempts, thus superseding the
piecemeal perspective recognisable in the extant literature. The analysis shed light on a number of aspects relating to
the factors that positively inuence the change in the MAS, thus providing a noteworthy contribution to the existing literature

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(Abernethy & Stoelwinder, 1995; Anthony & Young, 1988; Broadbent et al., 2001; Chua & Degeling, 1993; Hopwood, 1978;
Jacobs et al., 2004; Jones, 1999; Kurunmaki, 2004; Preston et al., 1992). This paper offers a new perspective to analyse these
factors more systematically.
Furthermore, it emphasises the importance of a participative approach to ensure that the MAS is not only a control system, but more broadly a means of change and mediation between different and contrasting institutional subjects
(Wickramasinghe, 2015). The MAS are discursively agreed upon by all the actors involved, and can be interpreted as the
language of change. In this regard, although the real potential of the MAS of the AOU Asclepius has not yet been entirely
revealed, the constant effort of the subjects involved towards its improvement is valuable. The usefulness of the MAS lays
in its future ability to create a common language that facilitates productive exchange, dialogue, and discussion between
the actors. A common language was helpful in superseding their previous inability to interact, due to a lack of comprehension that led to strong opposition or open conicts among them. It also allowed more relaxed relationships within the
organisation based on understanding. This led to increased participation that supported improvements in organisational
performance in terms of efciency, effectiveness, and the quality of service.
In addition, this study is valuable because it contributes to theory by conrming its usefulness in interpreting changes in
organisations characterised by high complexity, a turbulent regulatory and institutional environment, and a strong presence
of dominant groups. It highlights that internal changes at the organisational level are capable of redirecting the institutional
actions towards improved regulation, which is amenable to substantive justication to the actors involved.
7.2. Practical implications, limitations, and further research
The insights from this paper also have practical potential in showing how to cope with problems that may arise when
dominant groups of professionals are affected by changes. This is helpful for practitioners involved in the processes of change
who have difculties in making it attractive to such professionals. It makes it possible to identify potential strategies to make
the changes acceptable, and to mitigate/eliminate/manage opposition and resistance to change. It provides both academics
and practitioners, often involved in complex processes of change, with useful suggestions concerning relationships with
dominant/resistant groups of professionals. As such, the case study has an important impact by providing useful practical
suggestions for all organisations involved in problematic processes of change, and specically, for healthcare organisations
where the importance of MAS and their effectiveness cannot be underestimated due to worldwide turbulence within the
sector. The research also offers a relevant practical contribution by highlighting the signicance of another issue, quite
neglected to date. It signals that in organisations characterised by high complexity, a turbulent regulatory and institutional
environment, and a strong presence of dominant groups, internal changes supported by a collaborative spirit can be capable
of redirecting the institutional actions towards improved regulation. With this in mind it is possible to supersede some of
the well-known problems, which constrain or enable change, causing the failure of the majority of the accounting reforms in
public sector. Again, this potential is not limited to the healthcare sector, but allows a more comprehensive understanding
of the phenomena of accounting change and the related concerns in all organisations characterised by high degrees of
complexity.
However, before concluding, and despite the relevant contributions discussed above, some interesting aspects should be
explored further. In particular, questions pertaining to resistance by professionals require further attention. Indeed, these
questions could be considered from a different perspective. It would be interesting to discover whether factors such as
social and cultural background, age, education, and gender inuence the behaviour of the various individuals involved in the
process of change. Also, it could be interesting to analyse these factors taking into account the relationships between people
within and among the different groups, and the role these relationships played during the process of change to encourage
or oppose it. These represent essential elements to fully comprehend the phenomenon. In addition, it would be advisable to
encompass in the analysis the point of view of patients that are central actors in the eld, and which are not yet part of the
study due to regulatory issues in the specic setting examined.
Acknowledgments
The authors gratefully acknowledge the contribution from participants to the 7th APIRA conference and the 50th BAFA
conference. Special thanks go to Professor Jane Broadbent and Professor Richard Laughlin for their foresight and support, as
well as for our challenging debates. Their expertise added considerably to our writing experience and we would like to owe
them our gratitude.
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