Peking University People's Hospital: An IT-Led Upgrading in the New Healthcare Reform

In 2006, Dr. WANG Shan was appointed as the president of Peking University People's Hospital (hereafter referred to as "PKUPH"), a large class 3A public hospital in China. Prior to his appointment, PKUPH had experienced three consecutive years of financial losses due to poor internal management. No standard operating procedure was established to prescribe the level of activity expected from each responsible person or decision units, and the amount of resources that a responsible party should use in achieving that level of activity. No formal management control systems were installed to collect, process, analyse accounting (particularly cost-related) information and provide timely feedback to the management. As a result, actual costs significantly exceeded budget. Loopholes in the system stemming from loose monitoring and control gave rise to severe agency problems. To turn the situation around, WANG Shan launched an IT-led management reform. By 2012, the reform has yielded significant and positive results. Annual revenues and profits increased significantly. Management and operational efficiency was also significantly enhanced. This case is intended to demonstrate how an institutionally complex organization (particularly hospitals) can overcome institutional challenges and upgrade management with an IT-oriented strategy.

• Healthcare and treatment