ppropriate input to organisational performance
The director responsibility system gave health
managers the power to develop incentive systems
that were used to reward and punish staff, including
dismissal. Three types of rewards—all financial—
were used: the bonus system, the ‘‘director’s fund’’
and the ‘‘floating salary’’ (Fu Dong Gong Zi Zhi).
The bonus system was made possible by the
delegation of responsibility for the institutional
budget through the decentralisation of 1988. Up
to 30% of the surplus funds generated could be
evenly shared amongst health staff on a monthly
basis. Managers also had a ‘director’s fund’ that was
financed from up to 5% of the surplus. The
manager could decide how this fund was used; one
use was for the provision of extra individual
bonuses to staff that was distributed in secret using
a ‘red envelope’.
The ‘‘floating salary’’ was introduced as part of
wider economic reforms, but decentralisation gave
directors in institutions control over its implementation. It was widely but not universally used. The
salary has a fixed-base component. The variable or
‘‘floating’’ component was performance-related and
was normally linked to service provision e.g.
number of patient consultations or drugs prescribed. Managers had the freedom to set the
structure of the salary. For example, in Xinluo
County at Longmen THC only 10% of a doctor’s
salary was ‘floating’, whilst in Jiangshan THC it was
30%.
The bonus and floating salary systems appear to
be an effective motivator for staff to attract more
patients (and thus more income). Health workers
from Liancheng THCs reported ‘‘we feel there are
too few patients. We want more patients to earn
more for the health centre and for ourselves’’. In
Longmen THC outpatient numbers increased by
40% and income by a factor of six between 1991
and 2000.
Despite the apparent success of the systems for
managing staff performance and the delegated
authority to use them, they were discontinued on
the instructions of the county health bureau. It
appears that the bonus system using the ‘director’s
fund’ was being abused. The cancellation of the
floating-salary policy may have been connected with
negative implications for cost and quality of the
services provided to the patients. One THC
manager admitted that due to the incentive of the
floating-salary system, some doctors over prescribed
in order to make more money from drug sales.
The directors’ powers of sanction appear to have
been overridden by the county health bureau.
Directors of hospitals and THCs reported their
frustration at not being able to dismiss staff for
incompetence; and some of the staff, realising they
could act with impunity, seemed to take advantage
of this.