Accounting facilitating sociopolitical aims: The case of Maryland hospitals

Abstract

AbstractIn 2014, the State of Maryland in the United States implemented a substantial change to their hospital payment approach in the form of “Global Budgets”. This strategy for financing garnered significant attention because acute care hospitals in the state transitioned from a fee‐for‐service hospital payment system to a prospective frame‐based budget. Applying the conceptual framework of Miller and Power [Academy of Management Annals, 7(1), 557–605], we emphasise how calculative practices actively influence organisational structure decision‐making. The study investigates the reciprocal role of accounting practices in the facilitation of hospital policies. Findings demonstrate that accounting practices recursively constitute and reshape the organisation of hospitals. The policy change to Global Budgets has influenced accounting practices, which likewise have promoted large organisational changes that increase engagement with external stakeholders. The consequences of the Global Budget policy have been significant, leading to highly complex administrative practices while also necessitating a cost shifting in order to subsidise physician costs, due to the separation of hospitals and physician organisations. However, we also witness how Global Budgets and the combination of centralised monitoring with decentralised managerial freedom substantiate remarkable holistic quality initiatives.