Running Government as a Business

Published in the Telegraph-Journal 3rd February 2012

In the drive to find efficiencies and cost savings in government, there has been an increasing call for government to operate like a business. On the face of it, there is a visceral appeal associated with circumventing the convoluted organization design and decision-making of government bureaucracy and substituting this with a flat organizational structure and simplified decision making approach that typifies corporations. Presumably, government would be subject to the same methods to enhance productivity, such as business process engineering, outsourcing and lean six sigma. These approaches have not been universally successful, but winning corporations have used management and organization efficiency programs to boost profitability, market share and competitiveness in an increasingly tough global marketplace. University departments of public policy have borrowed liberally from the private sector to show how downsized government operations are the way of the future. The federal government’s own Treasury Board Secretariat houses a library of publications that document these new approaches. So, are there advantages to running government like a business?

Well, yes and no.

It’s true that the line between public and private sector operations has blurred significantly in planning, organizing, controlling and in the provision of leadership. The rationalization of services across federal government departments is a project that is now more than twenty years old in Canada and there are still additional efficiencies to be found. Andy MacDonald, the federal government’s first CIO, was responsible for initiating the fundamental reorganization of the government’s many IT shops into a more coherent and cost effective group, and the savings have been in the billions of dollars. Private sector methods, processes, practices and procedures were in many cases seamlessly integrated into public sector operations. Internal service provision, not only in IT but in real property management, procurement and many other services, has been radically overhauled over that twenty year period. And business process engineering, outsourcing and lean six sigma have been part of that overhaul all along.

Integrating business principles and methods would be a welcome approach to many of New Brunswick’s challenges. The management, design and direction of utilities and service provision agencies would respond to greater entrepreneurship and independence.

But there are limits. Perhaps the best example of where we need the business and public sectors working together is health care. We are becoming more fully aware of the impending crisis in health care funding, especially in the wake of the federal government’s unilateral funding formula that provides hard limits to the provinces.   It is clear we need a plan to work with this new funding model at precisely the time that spending is facing the greatest stress.

In response, we need to find ways we can improve not only the predictability but also the potential success for health care innovation in order to enhance the overall delivery of health care over the next decade. We will also need to make critical decisions based on key demographic statistics, the role of prevention and treatment in health care systems, and on important industry trends in emerging markets for the health care sector. New, expensive pharmaceuticals will come onto the market that will strain health care budgets and require decisions over what will be paid for as a public good.

All of this will complicate health care policy in the face of rapidly transforming approaches that technologies will deliver. Once esoteric, some treatments that today are at the leading edge of innovation will become standard approaches, but critically not for everyone everywhere. Under this pressure of judgements about what will constitute the public good rather than determinations of efficiencies, health care cannot be run like a business. The mutual benefits and responsibilities that are embodied most visibly in public institutions are not merely predicated on efficiency and cost. Citizens will expect elected politicians and departmental officials to be accountable for those decisions.

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Filed under Government transformation, Healthcare

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