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Prague University of Economics and Business

International Business – Central European Business Realities

"Hospitals as place builders: economic and social impacts of hospitals"

Author: Jonathan Fernández

Supervisor: doc. Ing. Zuzana Křečková Kroupová, M.A., Ph.D.

2021

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Table of Figures

Figure 1 Members states and groups structure (European Economic and Social Committee,

2010) ... 10

Figure 2 The Realms Model Theory (Sack, 1980) ... 13

Figure 3 Meanings of place model (Gustafson, 2001) ... 14

Figure 4 Organizations' contributions diagram (Thomas & Cross, 2007)... 15

Figure 5 Trade-off for organizations (Thomas & Cross, 2007) ... 16

Figure 6 Four Types of Place Builders and Their Corporate Priorities (Thomas & Cross, 2007) ... 18

Figure 7 Health systems in Europe (Eurostat, 2010) ... 26

Figure 8 Comparison of health indicators for Chile and Austria (2019). Author's illustration, data retrieved from Health at a Glance - OECD, 2019 ... 30

Figure 9 Map of Antofagasta, Chile (Chile Maps, 2021) ... 32

Figure 10 Innsbruck location on the Austria Map (On the World Map, 2020) ... 33

Figure 11 Internal stakeholders, Author's Illustration ... 36

Figure 12 External stakeholders, Author's Illustration ... 37

Figure 13 Power-interest matrix for stakeholders, (Ginige et al., 2018) ... 38

Figure 14 Stakeholders' map, Author's Illustration using www.miro.com's template ... 40

Figure 15 Network Structure for hospitals. Author's Illustration ... 41

Figure 16 Calculation for ' Days-off due medical license', Author's Illustration ... 46

Figure 17 Days-off due medical licence, comparison Antofagasta- Avg. Chile. Author's Illustration... 46

Figure 18 Calculation for ' Unemployment rate', Author's Illustration - Based on OECD definition ... 47

Figure 19 Unemployment rate, comparison Antofagasta- Avg. Chile. Author's Illustration 48 Figure 20 Calculation for ' Doctor or nurses per 1.000 population', Author's Illustration - Based on OECD definition ... 49

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Figure 21 Doctors per 1.000 population, comparison Antofagasta- Avg. Chile. Author's Illustration... 50 Figure 22 Nurses per 1.000 population, comparison Antofagasta- Avg. Chile. Author's Illustration... 50 Figure 23 Average salary per person, comparison Antofagasta- Avg. Chile. Author's Illustration... 52 Figure 24 Economic model's structure, direct expenses. Author's Illustration ... 53 Figure 25 Economic model's structure, other expenses. Author's Illustration ... 54 Figure 26 Average monthly expenses for students, results for Antofagasta. Author's Illustration... 54 Figure 27 Average monthly expenses for health professionals/employees, results for Antofagasta. Author's Illustration ... 55 Figure 28 Days-off due medical licence, comparison Innsbruck(Tirol) - Avg. Austria. Author's Illustration... 58 Figure 29 Unemployment rate, comparison Innsbruck (Tirol)- Avg. Austria. Author's Illustration... 59 Figure 30 Doctors per 1.000 population, comparison Innsbruck (Tirol) - Avg. Austria.

Author's Illustration ... 60 Figure 31 Nurses per 1.000 population, comparison Innsbruck (Tirol) - Avg. Austria. Author's Illustration... 61 Figure 32 Average salary per person, comparison Innsbruck (Tirol)- Avg. Austria. Author's Illustration... 62 Figure 33 Average monthly expenses for students, results for Innsbruck. Author's Illustration... 63 Figure 34 Average monthly expenses for health professionals/employees, results for Innsbruck. Author's Illustration ... 64 Figure 35 Comparison between Antofagasta-Chile and Innsbruck (Tirol)-Austria. Author's Illustration based on the data used in this document. ... 66

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Introduction

Since the first hospitals were established, they have been valued among the most important organizations within the host areas. These institutions were conceived to help people to recover from different illnesses and were closely related since the birth still the dead of each person, but over the years were evolving with the society to become not merely healthcare service providers becoming fundamental engines for the socio-economy welfare of the place where they are located.

Even though, hospital is a worldwide extended concept for institutions related to the practice of medicine, each of them have his own cultural, social, and medical history (Risse, 1999). As its own historical aim, these institutions attract the interest of several stakeholders and cannot be merely linked to clinical activity. The interest for these health centers comes from several sources, that’ includes people who operates within the bounds of the organization such as hospitals’ employees, medical staff, stockholders, suppliers, third party players, government, political-action groups, the media and, of course, patients, among others.

Each of the above-mentioned players participates within the operation of the hospital, based on their own interests, sketching up a complex interconnected operating web for healthcare managers. Nevertheless, the purpose and performance of these multi-sourcing operating entities, are highly influenced by the location where the hospital is located, this variable plays a significant role by granting particular socio-cultural characteristics, economic diversity and local challenges to the organization (Fottler et al., 1989).

The thesis aim is to contribute with a deep understanding of the impact of Hospitals within the region where are established, considering the entire framework where this organizations develop their activities.

The following research questions will be answered to fulfil the thesis aim:

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• What are the direct impacts in the economy of place builder organizations as hospital? (Education, Direct-employment, incomes, etc.)

• What are the indirect impacts in the economy of place builder organizations as hospital? (Leisure time, productivity of regional workers, Clinical research, quality of life, etc.)

The thesis will make use of ‘Place Builder’ concept’ as a comprehensible approach to model the role of this institution within the region, identifying its effects to the region's social and economic realities by measuring its direct and indirect impacts to the welfare of the local population (McKee et al., 2002).

‘Place builder’ as concept, incorporates the traditional business-centred management with social phenomena, usually omitted in economic research, by including also organizational culture, practices and local characteristics of the region analysed (Thomas and Cross, 2007).

This social-economical approach allows to harmonize and understand the social role and the corporate mission of these organizations, proving a whole overview of the activities and contributions of hospitals within a region, the outcomes of this activities that may have a positive effects on the economic performance of other sectors in the national economy (Jones et al., 2016), through the jobs that hospital indirectly generates or negative effect due the overpopulation in certain areas provoking overpriced rents for local citizens.

Finally, this thesis will provide key overview about the healthcare systems and the analysis for two different countries and realities, by making comparing performance, staff, regional activity, and expenditures among others, beyond the comparison the overall goal is to stablish a framework of analysis for different countries regarding the different management systems behind their healthcare system. This framework can be used by policymakers at national, regional, and local levels to improve the conditions to this sector, driving forward the implementation of local or national policies for sustainable development and the improvement of quality of life, building trustworthy relationships with the entire society.

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Literature review

1.1 Organizations

The concept of organization has been discussed at length throughout the history of humanity and encompasses groupings with very different purposes such as tribes, colleges, hospitals, governments, and companies.

To find the first records of this concept it is possible to review cultures prior to our era such as the Greeks or Babylonians. However, the most current contributions that have successfully governed organizational models and conceptions during the last decades, were the influential statements of Adam Smith (Crowley and Sobel, 2010), also called father of economics, in his book “The wealth of nations”. Smith declares the relevance of industries, their systems, workers, and efficiency as the core importance within organization. Later, many authors contributed to this theory by including organizational structures, bureaucratic models and some more moderns concepts, such as planning, budgeting, reporting, etc. (McGuigan, 2012).

The concept of organizations continued to evolve over the years, incorporating different attributes from other disciplines, as well as learning from the concepts and historical events that occurred especially during the century, such as both world wars, industrialization, and industrial revolutions. The most recent theories about organizations, includes new trends and challenges to this idea by incorporating concepts such as human resources, organizational structures, economics organizations, power & politics, and cultural theory among others to the classical overview (Önday, 2016). Whilst these approaches provide great understanding to several industries and companies by adding previously unconsidered factors to extend the understanding of the concept, these theories are still built on the basis of profit centered organizations. Therefore, the organization concept that

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is commonly used among the different industries or rather said the whole universal concept or organizations still lacks an integrative overview of the society (Jones et al., 2016).

1.2 Organizations as place builders

Contrariwise, to the traditional approach, the concept of organizations as place builders it is not based in the classic organizational role of industries as a profitable business. As stated before, the common proposal frames the entire concept of organizations as structures that provides employment to the surrounding areas, these employees produce services or goods, and then it generates benefits for their shareholders.

Place builder management approach considers the whole holistic role of the organization as a group with a certain purpose, usually business or government focused, including its social management, organizational practices, ethics, environment and how this organization boost the whole economy of a certain region due the direct and indirect effects of the business activity (Banning and Thomas, 2014). Consequently, organizational place building establishes community goals that demands the involvement of the entire organization, as well as the corporate guidelines to be aligned with the relationship organization-community.

Place building approach arises as a concern of the reductionist view of researchers about their research during the last years, usually separating analysis performed to economical from socio-cultural realities (Denison, 1996). Place builder concept was stated at first by David Thomas and Jennifer Cross in the article ‘Organizations as Place Builders’, in this document the authors explain this integrative view by harmonizing the social role of organizations and places as a multi-variable idea. With these thoughts, the authors explain how places are built upon this community aim at the time that incorporates several variables, in addition the document classifies the organizations according to their level of dependency with the nearby communities and the prioritization of the corporate goals in terms of social welfare and business focused success.

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Every of the above-mentioned dimensions represents relevant areas of study about these social-business phenomena, beyond using these variables to understand the previous behaviour of companies, these factors provide tools to realize the gap between corporate goals and the current performance of a certain industry and, moreover, to understand the finals outcomes of organizations to the entire society and environment where they are established.

1.2.1 Social Role of Organization

Some authors have incorporated these new dimensions into this broader view of concepts related to companies and their role as business agents, recent publications regarding organizational topics and evaluations of successful business entities includes, within their business analysis articles.

An exhaustive review of six articles were published in the journal ‘Academy of Management Review’ where becomes evident; the importance and complexity of including social welfare into research, how it enriches the conclusions and how sometimes its contribution is underrated (Jones et al., 2016). The authors also declare that by expanding the scope and understanding of organizations it also increases the difficulties for researchers, the forthcoming complications provides an extended and complex scenario, where becomes evident that the economic success of organizations is closely linked to the contribution of organizations to the social welfare to the areas where the organization is located. Despite this, the upcoming challenges for the same structures and the difficulties of measuring these social benefits. the circular relation along with different kinds of variables. The outcomes of this articles invite researchers to develop potential measure models that can include the social welfare within the benefits generated for the business, it also concludes that social welfare, and therefore total contribution of organizations, cannot be understood only from an economic perspective, ending the neo-classical approach of businesses as

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merely profit-productive centred organizations and supporting the idea of joint value creation for organizations (Bridoux and Stoelhorst, 2016).

Unfortunately, there are several reasons to declare that the relation between social welfare and economic efficiency is not a simple balance issue. In fact, this situation has been discussed by many authors and, also, by the major economies in the world.

The European Union has been working with these concepts for long time, specifically since 1957 when the ‘Economic and Social Committee’ was stablished in the EU Rome treaty and its role have been reinforced in the subsequent treaties, its composition it’s shown in the Figure 1. Through this committee the European Union developed initiatives to assist the European Parliament, Council and European commission in their aims to develop better conditions for the member states (European Economic and Social Committee, 2010).

Figure 1 Members states and groups structure (European Economic and Social Committee, 2010)

The initiatives driven by the European Economic and Social Committee are involved for the economic and social interest of their members, seeking for cross-industry and social

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dialogue among employers, workers, authorities, social committees, and stakeholders in general, including the concept of social partner organization (European Union, 2020).

Furthermore, the European Parliament have been progressively increasing the importance of social aspects; in 2006 the European Parliament made a call to consider the social economy as one of the keys variables of the European Social model, later on in 2009 the European Parliament recognized social economy as the most valuated factor in achieving the goals proposed in the Lisbon Strategy objectives (European Economic and Social Committee, 2012).

On the other hand, the United Stated of America has been more reluctant in their approach to apply politics that will increase the social welfare, noticing the political cost implied in these decisions, the article ‘Why Doesn’t The US Have A European-Style Welfare State?’

provides a critic point of view of this situation by comparing its current situation with the European efforts aimed at being more equitable and generous with those in need. It is very relevant to mention that a cornerstone stated in this document tries to explain why politicians have not made much effort to imitate the European path and what is the so- called political costs of increasing budget allocations in social welfare. The author links the racial animosity in the United States with the political cost for those who dare to increase state benefits or ‘harm’ organizations by increasing corporate social responsibility obligations. “European countries are much more generous to the poor relative to the US level of generosity… Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters” (Alesina et al., 2001). Conversely, other authors recognize the relevance of social economy in the United States recognizing the economic-social integration business development, this social-economic interaction has been gaining followers within various industries in the North American market by reshaping the role that Corporate Social responsibility have in each organization (Forte, 2013). Even so, the author remarks that despite the numerous efforts to find the balance between both areas, there are still missing parts in this interconnected social economic outcome in the United Stated but also in some countries of Europe.

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Having said that, the organization concept moves further from merely a business or economical view, but as a social agent within the society responsible that bring economic benefits and social welfare to the stakeholders.

1.2.2 Concept of place

The general definition for the word ‘place’ refers to “the formal way to call areas, towns, buildings or to refers to the position of something/someone in relation to other”

"(Cambridge Dictionary, 2020). Nevertheless, the concept of ‘place’, from a managerial approach, should be understood as multi-variable idea that build from the interaction from severe factors, environments, and purposes.

“Over the past decade, sociologists have pointed out the need for researchers … to treat places as agents in social phenomena” (Thomas and Cross, 2007). The authors of the concept ‘Organizations as Place Builders’, David Thomas and Jennifer Cross, identifies the many dimensions that a ‘place’ involves, to explain the relevance of these aspects they use a mixed model based on two previous models; ‘The realm theory’ and ‘The meaning of place theory’, developed by Robert Sack and Per Gustafson correspondingly.

First, using the realm model developed by the geographer Robert Sack (Sack, 1992), who based his explanation of the concept ‘place’ grouping the multi-dimensional characteristics of it in three realms:

• The realm of nature, that refers to the territory or logic physical space (based on his geography formation)

• The realm of social relations, that includes relationships, economic benefits, among others.

• The realm of meaning, that tries to explain the other two realms, the interrelation among the domain of a territory (realm of nature) and the social organization

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(realm of social relations), this interaction is also explained as the constant changing in the nature (Paasi, 2000)

To summarize, the author explains that every real interacts with the environment in which they unfold, among the other realms and with themselves in a constant flow. Hence, the concept ‘place’ is the result of the interaction of the other 'realms' described in his model, this is described below in the Figure 2.

Figure 2 The Realms Model Theory (Sack, 1980)

In addition to the above-mentioned model, the model proposed by Per Gustafson in their article ‘Meanings of place: Everyday experience and theoretical conceptualizations’ is included to understand how and why places becomes meaningful. The author performed several interviews to a group of participants that were asked to select and describe places that are important to them. By studying the results of the experiment, the findings exposed that the relevance of these places can be grouped according to the meaning that the

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participants gives to them (Gustafson, 2001), accordingly the results can grouped in three main poles:

• Self-pole, related to the life path, identify and emotion of the individuals.

• Environment-pole, related to the physical environment in which the individual is exposed, it also includes the work environment, their daily life environment, and the natural environment.

• Others-pole, mainly related to the perceptions of the individuals, characteristics, or behaviours.

Ultimately, as stated before in the realm model theory, Gustafson also includes the interaction of the different dimensions of his model and add some parameters that helps to explains the meaning for certain place, this is described in the Figure 3. Despite the results of the study provides empirical findings, the author highlight that this study presents a limitation due it is only focused on those ‘important’ places that means something to the participants.

Figure 3 Meanings of place model (Gustafson, 2001)

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Finally, the model proposed by Thomas and Cross is made by superimposing in a creative way the models proposed by Sack and Gustafson, so that the ‘realms model’ maintains its structure but adding the 'material realm' that will include all non-natural environment related elements, while the ‘natural environment’ will keep all the non-manmade elements, both together make up the previous ‘realm of nature’ created by Sack as it is shown in the Figure 4.

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Figure 4 Organizations' contributions diagram (Thomas & Cross, 2007)

It is also relevant to distinguish that 'realm of meaning' is situated above the other three themes: natural environment, material environment and social relationships (‘realm of social relations’ in Sack’s model), by this way the model will be able to explain how organizations interacts with these three themes at the time that the meaning of these relations are linked to places and relations among these environments, this represents the whole view of the effects inside and outside the organization (Thomas and Cross, 2007).

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1.2.3 Agent Perspectives

Subsequently, once the term the ‘organizations’ have been consolidated, as active entities with a preponderant role within society that acts not only as economic-based agents but also as welfare provider to their stakeholders, and the concept of 'place' as a multi- dimensional meaningful space that is built based on the social, material, economic, and natural dimensions. Nevertheless, the balance between economic efficiency and social welfare in every organization is not a common task of easy resolution, this goes beyond the maths of operational costs in comparison to the allocated resources. This search is still going on, as was reviewed in the previous sections many factors may influence, a certain region may influence largely or slight, as well as the kind of industry, the power of the communities where corporations are located, or the prioritization made by their executives.

The guidelines and importance that those responsible for executive decisions give to fulfil their role within society will be of special importance, this is how corporations will privilege establishing an integrative relationship of mutual dependence with their environment or acting as external agents to the environment in the one they meet, generating a non- dependent relationship with their environment. Additionally, each organization must establish the specific weight that the compliance of corporative mission and goals for each have for each one of them (Banning and Thomas, 2014). This exercise reveals a trade-off between the corporate goals and the community’s welfare, in other words show these objectives may be influenced by the assigned importance to the social welfare as its shown in the Figure 5 Trade-off for organizations (Thomas & Cross, 2007)

Figure 5 Trade-off for organizations (Thomas & Cross, 2007)

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To understand the how organizations deal with this trade-off, authors of ‘Organizations as Place Builders’ propose the ‘Agent Perspective’ as a way to measure the level of independence that organizations have with the place where they are location (Thomas and Cross, 2007). According to this approach, for every organization there are two possible types of perspectives:

• Interdependent perspective, this term refers to those kinds of corporation that perceives the relationship between social welfare and business success is mutually inclusive. The interdependent perspective understands the organizations as part of the community where the corporation is established creating a deep organizational commitment that seeks for actively maximize the well-being of a place, this is understood by the mutual dependence for success, where the corporations can’t stand alone the upcoming challenges, and then they does not work to achieve community’s objectives but along the community an member that actively looks after for opportunities to improve the conditions that will brings benefits for both parts.

• Independent perspective, this term refers to those kinds of corporation that perceives the relationship between social welfare and business success is not related at any point. Aversely to the interdependent perspective, independent corporations does not embrace a positive correlation in the potential economic and social earning. Thus, independents organizations act as merely external tenant or users of the place where they develop their activities, they are exclusive concern about reaching their internal objectives and corporate shareholders’ demands.

There is no commitment of these corporations with the community of the place where they are settled, a mutual cooperation relationship between locals and the independent organization may only arise at some point if the interests of the corporations seem threatened by not having this connection with the local agents or if there’s a way to obtain any kind of benefits for the shareholders by developing this relation.

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Agents perspective allows to understand the position of the organizations regarding the local communities’ interests and how their corporate objectives may be affected for these decisions, usually companies utilize corporate social responsibility to go through this positioning and to achieve their self-imposed duties with the community (Lindgreen et al., 2009).

Later, the final outcome between the social and economic interaction will depends certainly on the independence level of the organization and how the corporate objectives are balanced with the level of involvement of the corporation (Thomas and Cross, 2007).

Despite the outcome may seems uncertain and subject to many variables ‘place builder’

approach provides a model to make an objective evaluation of long-term corporate objectives and culture, that at last will define the organizations’ identity. There have been identified four different types of organizations or ‘place agent identities’, these identities will contextualize the role of the company and can be grouped as is shown in the Figure 6.

Figure 6 Four Types of Place Builders and Their Corporate Priorities (Thomas & Cross, 2007)

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1.2.3.1 Transformational organizations

As can be seen in Figure 6, these organizations prioritize place well-being over the fiscal internal-business success. They identify themselves as social changing actors that seeks for the improvement of the conditions in a of the entire society and push changes in their behaviour or culture, assuming the role of responsible for these improvements to happens.

They have an interdependent perspective, and their corporate objectives are aligned with meaningful goals for the place where they are settled (Thomas and Cross, 2007). Hence, the entire organizational culture is focused on developing an open and strong rounded relationship with local organizations, this involves educating and training their corporate’s workforce to internalize and transmit the company’s mindset to clients contributing effectively to the development of the place while the organization also benefits at the same time.

The accountability for these organizations pushes their organizational objectives way beyond from current regulations or industries common culture, the integrative view of society is assimilated by each participant of the system in an effort to provoke a positive impact in the place as a whole. One clear example or this engagement is when organizations work with universities or schools in long-term agreements to develop qualified workforce required for the industry or to develop innovative projects according to improve internal company’s processes. Usually these agreements includes clauses for the management of patents, quotas for the incorporation of local labour, among others, and the company involve themselves as responsible of the success of these initiatives, therefore is a common practice to include their own staff within these learning processes along with including the accomplishment of these programs in their own corporate objectives (Lutchen, 2018).

The involvement of the company in these educational organizations will help the organization to improve their business performance at the same time that provides resources, research and development opportunities to their partners, but also helping to

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generate important spaces to improve the employability, raising community participation along the company and enhancing the quality of life of the environment of the corporation.

This common ground helps to cultivate intimate relationships among corporations and institutions, spots of mutual benefits and dependence to achieve the success in their final outcomes. This is out, the corporative culture of transformational organizations applies to every dimension of the place as was stated in the ‘organizations as Place builders’ model developed by the Thomas & Cross (Figure 4), where natural environment, material environment and cultural/social relations converge on a common point so-called ‘place’, in this stage organization that acts as interdependent with their environment and gives more importance to the well-being of the place rather their own internal success, holds a transformational meaning.

1.2.3.2 Contributive organizations

As can be seen in Figure 6, these organizations assign the same importance to the place well-being and to the fiscal internal/business success. They identify themselves as a promoting agent of social welfare among the local community, their interdependent perspective develops a corporate business network that seeks for shared common goals between the organizations and the place where they are located (Thomas and Cross, 2007).

Unlike the transformational organizations, contributive organizations do assume a not change agents’ role for the well-being of the community where they are located but defined themselves as key member of the place, main contributors or investors, cultivating a culture where the company focuses on generating good returns towards the place where it operates, but always within the framework of the rules and obligations established by the local premises.

The improvement of the conditions in their locations is still an important asset to the company and the social relationship is a requirement that must be satisfied in order to keep running their operations (Banning and Thomas, 2014). The place will not necessarily play a

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relevant role in their processes, and it may remain as agent that receives benefits from the organization and would be worse off without the organization located there. Nevertheless, for contributive organizations after accomplishing the required social relationship with the local communities arises the possible business opportunities, their have an interdependent perspective, and their corporate objectives are focused to achieve the best performance for their internal goals and to fulfil the community demands, usually aligned with the legal local requirements, of the place where they are located.

Hence, the entire organizational culture is focused on developing a relationship with local organizations and care about their need but acting as agents that contribute towards satisfying community needs, their corporate’s workforce internalizes and transmit the company’s mindset to clients contributing to the development of the place as long as the organization is able to achieve their internal objectives.

‘That’s why we have businesses to improve people’s lives, to improve the customer’s life’

(Thomas and Cross, 2007) this very interesting point of view considers peoples of the community as a potential customers resumes very well the end goals of contributive organizations, where the interest of these organizations to keep the environment satisfied it’s related to the potential of locals to benefits their business, by attracting more customers or turning current customers into more loyal ones.

The contributive organizations acts in every of the three realms of place, proposed in the Figure 4, always guided by a culture that seeks to maintain the balance between their organizational objectives and the welfare of the local community. They position themselves as key contributor to the place where they are located valuating the characteristics that makes that places important among others (natural environment), the human-built resources that allows the place to have a good life with access to organizations and services by having the proper infrastructures available for their citizens (material environment) and the promoting the social responsibility the place (Stonehouse and Houston, 2003). At this

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point the organizations acts as interdependent with their environment but keeping their internal goals at the same levels of importance as the well-being of the place.

1.2.3.3 Contingent organizations

As can be seen in Figure 6, these organizations assign more importance to the fiscal internal/business success than the place well-being. They identify themselves as a merely participant among the local community where their contribute to activities/events only when there is a specific gain for the organization. Unlike the transformational and contributive organizations, contingent organizations have and independent perspective, so they perceive themselves as autonomous agents not depending on the place where they are located. Their role in the well-being of the local community, is strictly aligned with the legal and compulsory laws, rules and obligations established by the local authorities for all companies, that is, the corporation does not go beyond what is strictly necessary.

The improvement of the conditions in their locations is considered just as a tool that helps the corporation to keep their processes running and the way that contingent organizations can achieve their own internal goals. The place will not play a relevant role in their processes and will be treated as a must to keep satisfied as long as they represent a specific benefit to the internal corporate goals, the place will be benefited from the organization accordingly to the gains that can be obtained by caring of the community or corporate social responsibility initiatives that the corporation have to implement due to regulations(Kimball and Thomas, 2012).

Contingent organizations are usually committed with the local organism in order to avoid any possible conflict between the corporation and the place that might impact their operations. It’s common that these organizations possess a specialized area that are constantly looking for possible threads to the operation, taking care for the complains that the community can make about the operation of the firm(Sheehy, 2015). Therefore, the

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entire organizational culture is focused on developing a stable relationship with local organizations working on build a good image and friendly behaviour of the organizations with their communities.

For these cases, usually the firm ‘…prefers to be seen as the employer of choice and as a good corporate citizen…’ (Thomas and Cross, 2007) this statements positions the organizations in a power position regarding their economic power. The contingent organizations will keep investing in the local community because it is necessary to be a good

‘neighbour’, the corporation know that if they do not keep local need satisfied or general customers will choose to not buy product or services to the organization.

As well as the two previous interdependent organizations, contingent organizations act in every of the three realms of place, proposed in the Figure 4, but guided by a culture that limits their corporate social responsibility to obeying local, labour, environmental and international regulations, promoting ethical behaviour and their own internal goals. The participant position embraced by contingent organizations value the different dimensions of the ‘place builder’ model as resources to keep their operations running; the social dimension is value because provides the workforce required to produce and achieve their internal goals.

On the other hand, the material environment valuation is linked with one main idea;

maximize their business success (profit), this usually involves minimizing of their labour costs by having cheap workforce with very low rotation and reducing their financial duties (such as taxes) by contributing to the community need, relying on laws that usually reduce the taxes of companies that finance or carry out activities related to improving the well- being of localities (Knuutinen, 2014). In addition to the human resources required for production activities, this organizations also considers the natural environment as the resources required for production activities. As a whole, these organizations try to achieve the most basic requirements with their place.

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1.2.3.4 Exploitative organizations

As can be seen in Figure 6, these organizations assign total relevance to the fiscal internal/business success, being organization profit-oriented and industry centered, considering well-being of the place as a commodity. They identify themselves as independent agents among the local community where utilizes place’s resources to maximize the profit of the organization. Alike the contingent organizations, exploitative organizations have and independent perspective but, in this case, it is taken to the very limit where this kind of organizations are willing to take the resources from a place without worrying about the possible consequences that it may carry to their population (Thomas and Cross, 2007). Equally, these kinds of corporations are not committed at any point with the risk management that their operations may bring to the locals, their accountability is almost null and the entire area where they are located is seems as disposable.

Exploitative organizations position themselves as total autonomous agents that does not depends, at any point, on the place where they are located. Their role in the well-being of the local community, is very poor, most of the time it is limited to include some local workforce in their staff or buying to local providers but there is no long-term goal to invest or care about the community. Either, these corporation keep their business strategy and strategic goals aligned with the maximization of profit, there are no relation of their strategic interest with the corporate social responsible or local requirements (Banning and Thomas, 2014).

Of all the above kind of organizations, these ones can be considered the most controversial ones. In many cases they enjoy a privileged position owning a big share of the market, despite this their common practices about taking advantages of the local market at any cost, usually pushes the well-being of the place downside and creates a poor reputation to the company. Common cases for this classification involve the predatory consumption of natural resources, large environmental effects such as pollution, deforestation or depletion

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of other natural sources, this brings immediate consequences to the local population health and a deterioration in their quality of life. This is a direct consequence of their maximizing their profit at any cost, that is also one the motives that organizations holds to establish and stay in a certain place (Sahil Baloch, 2019), if at some point the local communities obstructs their regular operations or harms their internal objectives, specially their profit, these organizations may evaluate to leave their current place and look for another that offers better economic-business perspective.

As well as the three previous interdependent organizations, exploitative organizations act in every of the three realms of place, proposed in the Figure 4, but guided by a culture that seeks to achieve their internal goals only. By acting as a merely external user of the place where there are located, exploitative organizations value all the different dimensions of the

‘place builder’ model just as far as they can take advantage from any of those resources in order to fulfil their own interest.

1.3 General information about healthcare systems

Healthcare systems contributes largely to the community development and stability, by providing healthcare services through structured and organized national systems, that balances private and public resources in order to minimize population’s risk and maximize their well- being (Boyce, Tammy and Brown, Chris, 2019). Healthcare systems have been responsible for the economic and social evolution across the world helping countries to growth in a sustainable way promoting the equity among their citizens. In Europe, these systems are mainly based in two big groups as can be seen in Figure 7, even when every country adjusts their national systems accordingly to their realties most of the countries are using Bismarck or Beveridge models as their base healthcare systems. Both models are based in the universality, solidarity, and equity, nevertheless, each ideology has its own approach to coverage, financing, and allocation of health resources. In most of the cases,

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these models were subject to few or several modifications and then were also implemented in North-Central and South America, Africa, and some regions in Asia.

Figure 7 Health systems in Europe (Eurostat, 2010)

Bismarck model provides non-universal access to healthcare services through the access to private organizations, in this manner employers and workers pays, usually monthly, a mandatory contribution (taxes) from their salary that goes directly to non-governmental entities, that are regulated by law by the state. These nongovernmental entities are responsible for carry out all the necessary steps to deliver a quality service, their internal processes include the initial request from healthcare services, the management and allocation of resources (hospitals, doctors, supplies, etc.) and then providing healthcare services to the insured citizens (DICE, 2008). In this system the users are subject to face complementary payments, co-payments, and reimbursement, all of these transactions are required by the regulatory framework of the national healthcare system while the government acts as a regulator.

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On the other hand, Beveridge model provides national universal healthcare services access for the citizens through a structured and organized public health system, this entire system is managed and allocated the different resources across the country, as well as their infrastructure and material resources, the entire healthcare system is owned and controlled by the government. Similarly, to Bismarck model, Beveridge approach is financed by taxes from the entire population, but the main differences come in the role of the government, who is the one that collects and manage these incoming flows, for later distribute those funds according to the needs of their population, across the network of its health centers.

Despite this, equally to the Bismarck model this model offers the possibility to co-existence to the public and private sector, but it may exist only small private offers of healthcare services. In this system the users are not usually asked for co-payments for health services, being the government the responsible and total controller of the entire system (DICE, 2008).

Although these two ideas have visible differences, nowadays is more common to find hybrids models than pure Bismarck or Beveridge models, due the upcoming convergence for sustainable development of both ideologies. In addition, each country has a different baselines, challenges and weakness, the people and governments also vary for each reality to another, so the customization and mixing of these models as been considered as the best answer for different countries. Each of them embracing a holistic view of the whole healthcare systems, providing the best possible solution to their citizens and empowering their own models.

The development, operation and maintenance of a national healthcare system is a long- term objective for every country and, therefore, for every government in the world. It is a common debate that among the budget items, healthcare is one of the most demanding expenditure of the nation, so it cannot be taken as a short-term problematic that have to be faced by the current government but must be considered within the strategic long-term plans of the country(Nelson, Tony, 2017).

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1.4 Introduction to country and regions realities

This study is based in the comparison of two the realities from different regions that belongs to the Organization for Economic Co-operation and Development (OECD) group. OECD group is an international organization that seeks for the better development of countries by promoting the best-practices, knowledge, analysis and public policies that will help to improve the development of countries around the world (OECD, 2021a). Specifically, the regions to be considered for this study will be the city of Antofagasta - Chile, who joined OECD on 7 May 2010, and Innsbruck - Austria who is one of the founder nations of the organization signing the convention on 14 December 1960 (OECD, 2021b).

Historically, Chile has been stated as a model follow in Latin-American countries due the good performance in macroeconomic terms among the last decades and the consequent development of further public policies that tries to position Chile in the path of a developing country to become a full developed country. This leadership within the region is also displayed in health services where the administration of the healthcare system boosted the country to become one the first Latin American country to adopt the western European models for healthcare system (Candia, 2016). Chilean Health Care system is still in developing stages to become a solid social support for the country, but it may be mentioning the increasing policies that looks after improvements in infrastructure and technology that has been supported by large investments during the last 20 years (Bitran, 2013). However, the main weaknesses of the Chilean Health Care system are the strong dependency between high quality health care services and high incomes required to afford these expensive services, therefore if citizens are able to afford their own insurance and medical bills it’s highly probable that the service provided will achieve all your expectations but the solidarity of the entire system is not able to respond adequately to those citizen that may struggle with the payment due their acquisition power and the large inequalities that the country exhibits.

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On the other hand, Austria is one of the strongest members of the European Union (EU) with a consistent growth during the last 20 years, positioning themselves as the 6^th richest economy among the EU in terms of Gross Domestic Product (GDP). The Austrian federal republic is formed by nice different states and is led by a chancellor that represents the government and a president that represents the state, within the country regional and federal governments in addition to the parliament, which is composed by the lower chamber (Nationalrat) and the upper chamber (Bundesrat); are the responsible for the implementation of regulations across the country (European Union, 2016).

Austrian citizens enjoy great levels of satisfaction regarding their national healthcare system, most of the general national healthcare indicators such as life expectancy or life quality are above the average of the OCDE. During the last years, the country has implemented two big modifications for their healthcare system within the constants efforts for improve the services that are offered to the insured population; a proper explanation about their healthcare system is provided by the European Observatory on Health systems and Policies (Bachner et al., 2018) as follow:

“The Austrian health system is complex and fragmented:

1) responsibilities are shared between the federal and the Länder(State) level

2) many responsibilities have been delegated to self-governing bodies (social insurance and professional bodies of health service providers)

3) health care financing is mixed, with the state (federal and Länder level) and social health insurance (SHI) funds contributing to different parts of the budget”

Given these particular characteristics of the healthcare social system, most of the reforms have been focused in optimizing resources, reduce of overutilization, better allocation of funds, and mutual cooperation agreements among the different states but also in various levels of cooperation among each local state authorities and federal government, pushing the current health system to a federal structural system that will collectively establish their financial resources and health objectives for their entire population.

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1.4.1 Global health indicators of the proposed countries

Countries that are part of the OECD share their policies and initiatives as an effort to replicate the better practices around the world. Hence, these countries share a relevant amount of data that helps them to compare to each other in almost every area involving economics, politics, education, environment, health, etc.

“Health at a Glance” is an annual report published by OECD where is establish the comparison of key health indicators for population health and health systems performance for all OECD countries members, partners, and candidates. This document provides key overview about the health care systems and the analysis among for different countries and realities making interesting comparison about the performance, staff, expenditures among others, beyond the comparison the overall goal is to stablish a framework of analysis for different countries regarding the different management systems behind their health care system (OECD, 2019). According to the available literature some variables such as ‘Size and Scope of the Health Economy’, ‘Health Care’s Share of GDP’ and ‘Labour in the Health Economy’ can be considered as the common indicators to measure health economics performance (Folland et al., 2013). In order to provide further details to make a proper comparison of the countries involved in this study, an overview of the performance in health for both nations is shown in the Figure 8 .

Figure 8 Comparison of health indicators for Chile and Austria (2019). Author's illustration, data retrieved from Health at a Glance - OECD, 2019

2019

Indicator unit Chile AUS OECD avg.

Population ^{# millions} 19,1 8,9 -

GDP USD billions 298 455.3 -

Health spending USD/per cápita 2.182 5.395 3.980

Health spending share % of Gross Domestic Product 8,9% 10,3% 8,8%

Doctors /per 1,000 population 2,5 5.2 3,5

Nurses /per 1,000 population 2,7 6.9 8.8

Life expectation ^years 80.2 81.7 80.7

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The challenges for public health are mostly the same around the world, higher smoking rates, drugs, and alcohol consumption, ageing of the population, increasing levels of obesity and pandemic situations, to note some of them.

Nevertheless, the infrastructure, workforce, and resources, that every country can gather from their citizen and from the national budget, to face these challenges may provoke differences for these two countries, the health spending of Austria is 2.4 times the spending of Chile, this provides larger capital and funds to the healthcare system to be expended into their population. In addition to this, the gap in infrastructure, projects, technology, and management is large, even though both systems require improvements.

1.4.2 Hospitals and reality of the regions

The regional Hospital of Antofagasta is situated in Antofagasta, the capital of the second region of Chile, and is the biggest public health care center in the north part of Chile that considers from the national north limit with Perú still La serena region located in the fourth region, comprising a total of 1.534km as can be seen in the Figure 9.

This health care centre was built in 1966 and was replaced for the new hospital compound of 114.000 m² in 2017 (Gobierno de Chile, 2018) through an open tender which was awarded to a private company that obtained the rights to build, operate and maintain the health complex for a total of 50 years. Although this concession includes the supervision by the national ministry of health. But at the same time, it considers that the main Hispanic arm and the maximum reference point in the great north of the country will be administered by a private sector. The new compound is labelled as a high complexity center, that includes oncology, geriatrics, pediatrics along with other specialties and is expected to satisfy the health demand of approximately 607,534 inhabitants (Government of Chile, 2020)considering the city of Antofagasta and the surroundings provinces. On the other hand, the old building was renewed and given as a loan for 50 years to the University of

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Antofagasta, for the creation of the university hospital as subsidiary of the national health care system.

Figure 9 Map of Antofagasta, Chile (Chile Maps, 2021)

Innsbruck Regional Hospital is located in the very center of the Alps, in the capital city of the state of Tyrol located in the most east side of the Austrian Federal republic as can be seen in Figure 10, and is supported by the Innsbruck Medical University that provides large workforce to their processes and pushes their development through constant research for innovative solutions to the problem of their population. The hospital is located in a key location that is able to fulfil the requirement to the entire population of Tirol, Innsbruck itself is counting about 181,000 inhabitants (Tyrol Kliniken, 2021) and as a whole the Tirol region it was estimated, for 2021, a total of 760,105 inhabitants (“Österreich - Bevölkerung nach Bundesländern 2021,” 2021).

The hospital of Innsbruck has been service to the community along the history for several centuries, beyond their current reality where is closely engaged to university development providing a transformational and integrative perspective of the possible services that can be offered to the population. The first healthcare establishment was made in the early 14^th

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century, then the University of Innsbruck was founded close by in 1669 with its medical faculty since that date. The history of this hospital is related how the small settlement were evolving still be positioned as a relevant agent among the country providing quality services and standing for international recognition, shortly it was still 1888 when the ‘New City Hospital’ arises as a whole. Afterwards, in 1948, the building was renamed as the general hospital of the Tyrol area and becomes property of the state of Tyrol. The most recent history points out that in 1991 this public organization were transferred to private holding, this company was founded under the name, "TILAK GmbH", later in 2015 it was renamed

"Tirol Kliniken GmbH" and from this year it has been owned by the state of Tyrol (Tyrol Kliniken, 2021).

Figure 10 Innsbruck location on the Austria Map (On the World Map, 2020)

1.5 Hospitals as place builders

As has been discussed in the previous chapters, organizations have different purposes depending on the assessments that each one of them make regarding the environment in which they are found and, also, regarding the effects that could indirectly affect the company.

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This is how the different management approaches, private or public, will provoke certain effects in the place where they are located; the way the local authorities and the national healthcare system manages their hospital will define their perspectives as interdependent or independent agents within their shared area. This thesis seeks to find how these managerial differences may affect the final outcome; the research questions have been defined as follow:

• What are the direct impacts in the economy of place builder organizations as hospital? (Education, Direct-employment, incomes, etc.)

• What are the indirect impacts in the economy of place builder organizations as hospital? (Leisure time, productivity of regional workers, Clinical research, quality of life, etc.)

The current literature is very limited at this regarding this type of analysis and the data is shown at a very aggregate level; some insights respecting the main idea of calculating the spread of the economic impacts is given by the World Health Organization (WHO) as follow:

• “Per one additional €1 spent on products and services (output) in the health care sector would result in €1.4 of greater output in the national economy

• For every additional €100,000 spent on the health system, four new jobs are created in the rest of the economy” (Boyce, Tammy and Brown, Chris, 2019)

This corroborates that health impacts generate a virtuous cycle of spending that ultimately has a positive impact on the place where the medical centers are located.

Nevertheless, the economic efficiency and the social welfare of a certain region are in a constant search for balance, this balance involves an integrative analysis that includes the classical business evaluation, the resources allocated and the social well-being of the population around the place. This search is still going on, the final outcome is uncertain but clearly the ‘place builder’ approach provides huge evidence and tools to make an objective evaluation which eventually will lead to consensus.

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Methodology

This chapter is intended to explain the different sources and approaches where the data were retrieved for this thesis, as well as detail how this data was processed. The first overview is given by the stakeholders’ analysis identifying the interested parts within the direct and indirect impacts of hospitals as place builders. By mapping the stakeholders, it is possible to understand how hospitals works at and organizational level and consequently, establish how the organization develops ‘network structures’ with partners networks and supplies.

For this project both primary research as well as secondary research were used to enrich the thesis that is based mostly in a comparison and therefore in quantitative data. This data was retrieved from official sources from both regions studied commonly based on annual reports, governmental data bases, international organizations’ reports, among others.

The side-effects and health services delivered to the community by hospitals present an innate complexity of their processes and management of one of the major social determinants such as health. To this already complex context this project adds degrees of difficulty by studying the effects of these organizations within society and how they are affected directly or indirectly. Thus, the difficulty of processing, manipulating, and obtaining data is greatly increased, this is especially relevant for sensitive data which access is limited to any external entity such as students, external researchers, or regular citizens. Despite the long list of national and international reports available, this accessibility constrains applies for public entities and especially for private companies.

The variables and factors that can fully explain the effect of 'place builder' organizations such as hospitals within a specific region are multiple and according to the literature reviewed, the effects extend to various levels of social, economic, cultural, and political layers. However, due to the limited access to information explained before, the analysis and comparisons, proposed in this thesis, as well as the subsequent analysis of results, discussion and suggestions will be based on those indicators considered open data combined with the primary research performed for this study.

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2.1 Stakeholders

This section is intended to identify all supporters, participants, people and organizations related within the context of hospitals operation including patients, clients, suppliers and workers.

As identified earlier throughout this paper, the effects of place builder organizations on the locations in which they operate can basically be classified into direct and indirect effects.

This is due to the multiple synergies, non-linear effects and other factors that allow the sector where these organizations are located to be better off with them than without them.

Following the same logic but now applying it to stakeholder analysis, it is possible to identify at least two different layers of stakeholders (Pinheiro, 2015):

• Internal stakeholders (First layer), referred to those persons, institutions, or organizations that are directly linked to the hospital operation. This relation is binding in terms of providing the expected services (patients, governments-NGO), current or future jobs (health employees, professionals), education/internships (health students, universities), direct suppliers of services or goods, as well as internal associations or unions of workers, among others. A list of these stakeholders can be found in Figure 11, further details as specific names of the organizations will be provided in the next section.

Figure 11 Internal stakeholders, Author's Illustration

• External stakeholders (Second layer), referred to those persons, institutions, or organizations that are non-directly linked to the hospital operation. This relation is not binding, and the scope includes suppliers of services or goods that are used for the internal stakeholders. This is how internal stakeholders’

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demands for basic services such as rent, housing or food services pushes that the owners or providers of these services also in the categories of interested entities of the hospital operation.

Consequently, this scope is not limited to direct demands of the internal stakeholders but also includes third parties that can be benefited from the indirect activities of the hospital such as outsourced services of laundry, cleaning, etc. as well as organizers of leisure activities that will offer these services to the entire population including stakeholders and regular citizens.

A list of these stakeholders can be found in Figure 12, further details as specific names of the organizations will be provided in the next section.

Figure 12 External stakeholders, Author's Illustration

2.2 Stakeholders Analysis

After identifying the characteristics and nature of the stakeholders, the stakeholder analysis will categorize people or groups according to their levels of interest and influence (power).

This exercise seeks for to find the best way to involve and treat the stakeholders according to their position power-interest in the business/organization. By performing this analysis,

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stakeholder can be defined in to 4 different groups(Ginige et al., 2018) as is shown in the Figure 13 below.

Figure 13 Power-interest matrix for stakeholders, (Ginige et al., 2018)

2.2.1 High Power, Low Interest

The stakeholders in this position must remain satisfied due their high influence (power) but should not be involved into decisions due their low interest in the business, clear examples at this category are thanks, business partners and government institutions.

2.2.2 High Power, High Interest

On top right corner are located the most important stakeholders, those with high power and are also very interested into the business. These stakeholders should be prioritized in order to assure the success of the business.

2.2.3 Low Power, Low Interest

On bottom left corner, there are the least important group of stakeholders, they have low or no-interest in the power and interest. Despite the above, these stakeholders must be informed about the business situation periodically without much effort.