Good governance and performance-based budgeting: Factors affecting reform progress in Lesotho hospitals

This dissertation examines the applicability of the Transformational Change (TC) model for understanding the implementation of performance-based budgeting (PBB) reform in the health sector in Lesotho. Public financial management reforms such as PBB are designed to improve transparency and accountability of government, and require truly transformative change in mission, vision, and organizational culture. Hospitals must set new goals, change structure, and create new ways of doing business from top to bottom. This study tells the story of how staff in four hospitals understood the meaning of the reforms and went about these changes. My purpose in telling their story is to help policy makers understand how PBB reform can be measured in the health sector and to identify factors which impede progress. The research draws on 52 in-depth interviews with hospital personnel and other key informants, site visits, and analysis of plans and budgets. Qualitative analysis methods were used to develop analytical categories, guided by the TC model.;I found that despite four years' of implementation efforts and millions of dollars in donor support to Lesotho, hospitals have made almost no progress in implementing PBB reform. Although personnel go through the motions of performance-based planning and budgeting, people in authority do not understand the purpose of the reform and resources are not linked to results. Problems can be traced to an overly complex design, inadequate capacity to implement, and lack of alignment of information and costing systems with reform requirements. Frequent management transitions, staff shortages, and lack of incentives have resulted in low impetus for change and weak direction, while professional boundaries and lack of trust between accounting and clinical managers have further impeded progress. The study suggests that policy makers in Lesotho---and indeed around the world---should re-think PBB reform and its relevance to developing countries. The constructs of the TC model of organizational behavior, adapted to this setting, provide a framework for exploring impediments to reform and identifying ways to better support hospital transformation.