Clinical governance: striking a balance between checking and trusting

Clinical governance emerged as one of the big ideas central to the latest round of health reforms. It places with health care managers, for the first time, a statutory duty for quality of care on an equal footing with the pre-existing duty of financial responsibility (Warden 1998). Clinical governance tries to encourage an appropriate emphasis on the quality of clinical services by locating the responsibility for that quality along defined lines of accountability. This paper explores some of the implications of clinical governance using the economic perspective of principal-agent theory. It examines the ways in which principals seek to overcome the potential for agent opportunism either by reducing asymmetries of information (for example, by using performance data) or by aligning objective functions (for example, by creation of a shared quality culture). As trust and mutuality (or their absence) underpin all principal-agent relationships these issues lie at the heart of the discussion. The analysis emphasises the need for a balance between techniques that seek to compel performance improvements (through externally applied measurement and management), and approaches that trust to intrinsic professional motivation to deliver high quality services. Of crucial importance in achieving this balance is the creation and maintenance of the right organisational culture.