The healthcare workforce accounts for the largest proportion of all health service costs, and is recognised internationally as playing a key role in providing efficient and effective health services and improving health outcomes. In recent years health policymakers, governments, practitioners and academics have given greater attention to the importance of human resources management (HRM) to health service performance (Bach 2001, Kabene et al 2006). Some of this interest is a reaction to the years of neglect of human resource factors in health sector reform despite the profound effect that such reforms have had on the work of managers and clinicians (Bach 2001, Rigoli & Dussault 2003). Current research suggests that effective HRM strategies are essential in improving health outcomes (Buchan 2004, Kabene et al 2006). Nonetheless, there is no agreement on exactly what effective human resource strategies might look like, and it is easy to ignore the powerful structural constraints and influences in the healthcare sector that detract from such agreement. Of particular note here is the role of government in providing direction to and managing health services. Another factor is the composition of the healthcare workforce itself, organised as it is around tradition-orientated disciplines often described as being rigid and reluctant to change, tribal and self-serving, as well as being strongly unionised with powerful professional associations.

This chapter explores the politics of healthcare and the potential for change. It outlines the nature of the healthcare workforce and identifies key stakeholders and their attitudes to change. The chapter also examines health sector employment relations, outlines the major health sector reform policies impacting on the workforce over the past two decades and charts the reaction of the workforce to those policies and explores the impact of these changes on the organisation including work intensification, workplace change and the greater control and scrutiny of clinicians.

The chapter concludes by arguing that the policies of health sector reform have often exacerbated the underlying problems and issues facing the sector and outlines an approach to creating a sustainable and responsive workforce that engages clinicians and managers in the process of change rather than forcing change on them. Key features of this approach to managing people in healthcare include the importance of leadership at all levels incorporating government, organisations, managers and clinicians; building people management skills; creating collaborative and committed team-based working environments through employee participation and engagement; and understanding and valuing high-performance practices.

Healthcare is a labour-intensive industry with labour costs accounting for between 65 and 80% of total costs. The health workforce in many countries has expanded substantially over the past three decades. It is constituted by different professions and occupational groups each with their own history, culture and specialisations (Duckett 2005, Kabene et al 2006). The main features of professions are the long years of training, specialised knowledge, clinical autonomy and labour mobility (Gunderson 1982:30–31). Health professionals often have a greater allegiance to their profession than to their employers and the professional bodies representing them are often powerful and well organised. They play an important role in the registration and regulation of their members and the definition of standards of practice. They participate both formally in the process of defining legal and administrative standards in healthcare and informally through lobbying governments (Bach 2001, Rigoli & Dussault 2003). Hence the professions are influential within both the industry and the community at large, with nurses and doctors in particular being held in high esteem. At the same time the health professions have a history of competition between each other over resources, prestige and control, and are often described as having a ‘tribal mentality’ (Hunter 1996).

Medical practitioners and medical specialists are generally regarded as the most powerful group in the healthcare sector as they make important resource decisions and largely control the production process. Wilson & Goldschmidt (1995) argue that doctors are trained to be independent, self-reliant and individualistic, to rely on their own judgment and to be accountable to their profession, only sharing their decision-making processes with colleagues in a non-judgmental way. They are at the apex of a hierarchical division of labour in healthcare (Freidson 1970). They decide who enters, who leaves and what treatment they receive. Hence, clinical autonomy, independence and judgment are at the heart of work practice reform in the health sector, although scrutiny of clinical practice is often seen as a challenge to clinicians’ judgment. Yet if employers are to have some control over labour utilisation they must have some control over the production process. This can lead to a direct challenge to the medical profession and to a conflict between allegiance to the profession or to the organisation (Gunderson 1982, Harrison & Pollitt 1994, Hunter 1996). Governments internationally have made various attempts to challenge this autonomy by incorporating clinicians into management and into decision making around the allocation of resources and the management of change, albeit with varying levels of success (Harrison & Pollit 1994, Perkins et al 1997).

In many countries doctors are organised into powerful professions with considerable political clout. While they do not often take industrial action, their strong standing in the community and their control over the production process gives them latent power, which they often threaten to use and occasionally do (Stanton 2006). This means that the actions of doctors can be an obstacle to change. At the micro level, for example, doctors can resist the substitution of labour by blocking the delegation of tasks to other professional groups. At the macro level the organised opposition of doctors in the US through the American Medical Association ‘contributed to the failure of reforms introducing managed care competition in healthcare in 1993’ (Rigoli & Dussault 2003:10).

While doctors are the most powerful group, nursing is one of the largest occupational groups. In Australia nurses make up over two-thirds of the professional workforce allowing a certain amount of power through sheer numbers. They are represented by the Australian Nursing Federation which acts as both a professional association and a trade union with its membership increasing significantly at a time when internationally many trade unions have suffered dramatic membership decline (Bartram et al 2007a). Nurses have demonstrated that they are able and willing when necessary to support their union and exercise their industrial strength to protect their interests and the interests of the patient and the community. Nursing in Australia has had a long and at times bitter history as nurses have had to fight for their professional and tertiary qualification status to improve their wages, conditions and career structures, to enhance their skills and roles and, more recently, to protect hard-won gains over control of some aspects of the work process, in particular nurse–patient ratios (Bartram et al 2007a, McCoppin & Gardner 1994). International evidence shows that nurses join unions not only to improve their pay and conditions but also to protect and advance the profession and their own professional status (Bartram et al 2007a, Breda 1997). As any health minister knows, an industrial dispute with nurses very quickly becomes front-page news and a potential major embarrassment for the government of the day.

Together, nurses and medical practitioners represent the largest groups of professionals in the health sector, although allied health professionals and scientists and non-professional employees are of increasing importance in the hospital environment with influence beyond their numbers. Should medical scientists or radiographers decide to take industrial action, for instance, they can quickly bring surgery in a hospital to a halt and severely disrupt the production process (Bremner & Kelly 2000, Stanton 2006). Experience over the past decade demonstrates that these professional groups will take industrial action if they feel their interests are threatened. Rigoli & Dessault (2003) describe how in a range of countries including Costa Rica, Zambia, the Philippines and Israel, trade unions have strongly opposed health sector reform that threatened labour contracts, conditions of service and the roles of health professionals. The effect of this opposition limited governments in reorganising their public sectors.

Healthcare professionals are very mobile both domestically and internationally. They often migrate to areas where their services will be better compensated both by country migration and by emigration. As the Australian Productivity Commission (2005) notes, a major challenge for the sector is the international labour shortage in many key professional areas including nursing, medical specialists and allied health professionals. Solutions to this problem include encouraging migration from overseas, increasing university places for health professionals and substituting one group of workers with another. However, the solution for one country may have a detrimental effect on others, as developing countries struggle to provide good-quality medical care to their own citizens. Countries such as Ghana, Kenya, South Africa and Zimbabwe have been forced to seek other human resource solutions to counter the emigration of their highly educated and medically trained personnel (Kabene et al 2006). In developing countries such as Nicaragua and Bangladesh health professionals are drawn to the cities where they can find better opportunities for themselves and their families (Kabene et al 2006). This trend is mirrored in Australia where there are acute rural and regional shortages of healthcare staff (Duckett 2005).

Not surprisingly, labour substitution has become increasingly popular with governments as a possible solution to the labour shortage problem. In Australia and the UK, patient care attendants now substitute their labour for some of the more routine work of nurses, allowing nurses to take on some of the work of medical practitioners in a process of ‘skills escalation’, and in the US there is extensive use made of nurses and other health professionals as physicians’ assistants (Duckett 2005). However, in Australia the ‘demarcation’ of professional work is problematic as the issue of skill mix and labour utilisation at the organisational level is highly contested terrain. At the industry level professional associations have largely resisted changes to their work practices as other professions move on to their turf. Medical practitioners resist the development of nurse practitioner roles, and nurses in some states resist the use of patient care attendants.

Finally, the healthcare sector is highly feminised. In Australia, women account for almost 80% of health sector employees. They predominate in nursing and allied health professions and increasingly in general practice, although the higher income medical specialists remain largely male (Duckett 2005). Diallo et al (2003) note that female-dominated occupations such as nursing and midwifery are often not given their proper market value in line with their skill levels as the work is seen as ‘women’s work’ and therefore of lesser value. Also increased participation by women in medicine is often accompanied by different work patterns and evidence shows that women work fewer hours than men and that part-time work is increasing. For example, in Australia in 2001 more than half of nurses worked part time (AIHW 2004) and the level and utilisation of casualisation in the sector has increased (Cregan et al 2003). Allan (1998) argues that casualisation is a managerial tool used to manage workflow. However, Lumley et al (2004) found that nursing shortages allowed nurses to choose to work casually and they did this to take control of their own work schedules, improve their balance of work and family life, and to have less responsibility and hence a more stress-free existence. This was not good news for hospitals that struggle to cover unpopular shifts and to provide acceptable standards of nursing care. In the longer term it might not be good for women either, as evidence shows that female nurses who take time out of the permanent workforce to bring up children fall behind their peers in relation to career development and salary levels (Pudney & Shields 2000).

From the evidence it is clear that workforce flexibility in the healthcare workplace is a major issue to be resolved, yet there is no agreement on what workforce flexibility means in practice, who benefits and how it is to be achieved. In 2004 the Council of Australian Governments commissioned research to examine issues that impact on the ability of the healthcare workforce to ensure ‘the continued delivery of quality healthcare over the next 10 years’ (Productivity Commission 2005:iv). The research undertaken by the Productivity Commission argued that a major objective was to develop ‘a more sustainable and responsive workforce while maintaining a commitment to high-quality and safe health outcomes’. The commission sought views and submissions from a wide range of stakeholders and concluded that while all Australian governments agreed that successful healthcare delivery depended on ‘the commitment, care and professionalism of the Australian healthcare workforce’, a range of challenges faced the sector in reaching this objective. Included were workforce shortages of health professionals particularly in rural and remote areas; an increasing demand for health workforce services; the sheer numbers of institutions, agencies and organisations involved in healthcare delivery; and the difficulties of measuring productivity in such a complex industry. Recommendations to address these challenges ranged from changes in professional training and accreditation to changes to items covered in the Medical Benefits Schedule and better evaluation of service delivery.

In practice, however, healthcare decision making takes place within a complex political arena and many of the commission’s recommendations missed the mark. Healthcare occurs largely in an organisational context and the delivery of healthcare services therefore ‘relies fundamentally upon the human capacity and capabilities of healthcare organisations to train, develop, deploy, manage and engage their workforce effectively’ (Hyde et al 2006:2). This takes place within a highly political and often emotive industrial context and a complex web of powerful key stakeholders whose activities can impact directly on the organisation’s ability to manage its staff effectively. These stakeholders include not only the already-identified professional associations and trade unions but also both federal and state governments that provide funding and policy direction and sometimes direct management and control, as well as vocal consumer organisations and lobby groups. The healthcare workforce is a major focus of change, but attempts to do so often fail because the power of stakeholders is underestimated or ignored. The goals, interests and philosophies of these stakeholders conflict as they struggle over limited resources. While the demand for healthcare services grows, the industry faces increasing resource pressures and the community expects efficient, effective, accountable and quality services.

Healthcare systems in both developed and developing countries have undergone significant reforms as governments search for more efficient and effective service delivery. As Rigoli & Dussault (2003:3) argue, while these reforms were intended to ‘improve the efficiency, equity of access, and quality of public services in general’, in practice much of the focus has been in reducing operating costs and cutting budget deficits. In the search for greater efficiencies, governments introduced a range of policies including decentralising services from central to local level, creating internal purchaser–provider markets, competitive tendering and contracting out of services, introducing performance contracts, pay decentralisation and performance-based pay, downsizing services and re-engineering processes. Yet until recently the impact that such policies had on the work of clinicians was largely ignored.

Understanding the role of government policy in shaping organisational strategy is crucial in the healthcare sector, especially in the employment relations arena, and in particular the way staff are remunerated and rewarded. An emerging issue over the past 25 years has been the level of centralisation of industrial relations and the relationship between pay and performance. In their comparison of the industrial relations systems of the UK, the US and Canada in the early 1980s, Adams et al (1982) concluded that the largely centralised National Health Service (NHS) in the UK was becoming more flexible at a local level and the largely decentralised systems of North America were becoming more centralised. They argued that ‘although collective bargaining in the health sectors started off by being decentralised in North America and centralised in Britain, both were moving towards a similar state of fairly centralised bargaining with accommodation of local needs’ (Adams et al 1982:186). The reason for this streamlining tendency is often the centralised nature of funding. The initiatives of the UK Government in the 1990s to encourage local pay and conditions bargaining to link pay to performance in the NHS failed due partly to the political sensitivity of public services, and also because governments fund public health services and allowed hospitals limited flexibility to fund wage increases. In practice, time and energy were absorbed in negotiations over fairly small amounts of money as managers sought short-term reduction in their overall pay bill by imposing changes in work organisation and labour utilisation (Bach & Winchester 1994, Thornley 1998).

The Australian experience tells a similar story. In Australia the federal government has largely driven both workplace and health sector reform, although it is state governments that have responsibility for hospital services that employ the largest numbers of staff and account for the greatest expenditure (Willis et al 2005). State governments provide policy direction to their healthcare institutions and are the main sources of funding. They set wage policies for their publicly funded services and strive to contain those policies within certain limits (Stanton 2006). Hence, state governments’ decisions about wage policy, funding priorities and employment relations have a direct impact on organisational policy and on hospital employees.

Most Australian state governments pursued similar strategies to improve the productivity and efficiency of their health systems throughout the 1990s. These strategies included budget cutbacks and financial restraint, introducing new forms of funding mostly based on output, such as casemix funding, and outsourcing and privatising services such as catering, cleaning, pathology and radiology (Willis et al 2005). At the same time, both state and federal governments pursued the decentralisation of industrial relations through a move away from centralised award-based industrial arrangements to introducing bargaining at the enterprise level (Stanton 2006). In comparing the introduction and experience of enterprise bargaining in the health sector in New South Wales, Victoria and South Australia, Bray et al (2005) found that despite the different political, legal and historical differences there were similarities. A change of government from Labor to Liberal Coalition in each state led to a period of decentralisation within a rhetoric of increased efficiency and productivity that shifted control of wages and conditions away from state-wide awards based on occupation to local employers. But in reality, although the agreements in each state were signed at the local level, they had been centrally bargained with the active intervention of state governments. The return of the Labor Party to government in each state marked a return to a more open process of centrally agreed but locally implemented enterprise agreements.

Bray et al (2005)