A Public-Private Model for

Health Service Delivery

Henry G6mez Samper, Jose Malave, and Ram6n Piiiango

Ascardio, a not-for-profit association formed in 1976, provides

organization, staff, physical plant, and economic support to
operate the Health Ministry’s Regional Cardiovascular Center for
west-central Venezuela, thus combining the management features
of a private foundation with the public objectives of a national
bureaucracy. A wide range of in- and outpatient services are
offered, with cardiovascular service growth outpacing that of
major public hospitals elsewhere in Venezuela. Management
features include novel approaches to staff compensation, employee
empowerment, information controls, fee charges, and a wide-
ranging support network that spans private sector medical and
public health bureaucracy linkages as well as political, volunteer,
and patient groups. 8 1994 John Wiley & Sons, Inc.

Deep-seated problems engulf Venezuela’s public health system. Cum-

bersome procedures that successive governments introduced to curb
corruption, coupled with union and professional guild restrictions,
turned what once was a model health care system into an unwieldy
bureaucracy now grinding to a halt. In the social security health
agency, for instance, it was disclosed in 1992 that of the 65,000 on
payroll, 45,000 did not work (extended “sick leave,” premature retire-
ment, etc.). Health Ministry nurses work only a 30-hour week. Medi-
cal and nonmedical staff are recruited from political party lists. Hos-
pital equipment costing millions of dollars lays idle for lack of
maintenance. Ambulance crews employed to offer 24-hour service

The authors are with the Znstituto a!e Estudios Superwres de Administracidn (IESA),
Caracas, Venezuela.
The International Executive, Vol. 36(6)689-699 (NovernbedDecernber1994)
0 1994 John Wiley & Sons, Inc. CCC 0020-6652/94/060689-11
689
690 MMEZ, MALAVE, AND PINANGO

are being paid but most ambulances are not in service and unionized
drivers cannot be assigned other work. In public hospitals patients
must often bring their own medicines and supplies. These conditions
particularly impact the nation’s poor as well as the future quality of
Venezuela’s labor force.
A number of policy options have been proposed. The privatization
of public hospitals is strongly opposed as health services are expected
to be free of charge. In 1987 a “national health service” was created
to coordinate dozens of public agencies that operate in the sector, but
conditions continue to deteriorate. The Antonio Cisneros Bermudez
Foundation has commissioned the Institute of Advanced Studies in
Administration (IESA) to determine whether Ascardio can serve as a
model for public health reform (Palumbo, 1991;Malave, 1994).

ASCARDIO’S ORIGINS

After completing graduate studies in cardiology in 1974,Bartolome

Finizola returned to his home city of Barquisimeto. Finizola pro-
moted among the city’s business and civic leaders the idea of locally
offering cardiology services but encountered the opposition of the
medical establishment attached to the city’s major public hospital.
Barquisimeto is Venezuela’s fourth largest city and capital of the
state of Lara, with a population of 750,000.
Determined to carry out his project, Finizola then obtained a posi-
tion at the Mmez L6pez Hospital, operated by the Health Ministry,
which specialized in pneumonology. With a nurse and a secretary, he
started a network of outpatient cardiology services in villages outside
Barquisimeto, following guidelines set forth by an as yet unimple-
mented Health Ministry program. The equipment a t their disposal
was minimal: a device for measuring arterial pressure, a stethoscope,
and a jeep; when needed, they borrowed an electrocardiograph from
the hospital.
In 1976,Finizola launched Ascardio as a private, not-for-profit
foundation addressed to support treatment, research, and training
for cardiovascular health in Venezuela’s west-central region. Finizola
moved swiftly to obtain resources from business leaders and promi-
nent politicians; equally as important, he recruited young cardiolo-
gists to tap physician vacancies within the Health Ministry. To help
operate the service, patients were asked to contribute supplies; later,
cash was requested, taking into consideration ability to pay. Fin-
izola’s goal was to implement the Cardiovascular Program designed
in the 1950s by the Health Ministry, featuring a network of primary,
MODEL FOR HEALTH SERVICE DELIVERY 691

secondary, and tertiary levels of health care attention operated from

regional centers such as Barquisimeto.
As service delivery expanded, space was preempted within the
G6mez L6pez Hospital. Early in 1977, the Ministry created a Cardio-
vascular Unit to serve the area, also based at the Hospital, with
Finizola as Coordinator. By this time the service featured a team of
four cardiologists, all recruited by Finizola to fill the Ministry’s med-
ical staff vacancies. In 1979 the unit formally became a Regional
Cardiovascular Center and physical facilities were built by the Min-
istry on land adjacent to the Hospital. Ascardio acquired its own
physical plant, also next door, enabling it to add services beyond
cardiology. In time, these came to include, among others, internal
medicine, pediatrics, gynecology, and neurology. To attend inpa-
tients, Ascardio undertook the operation of 26 beds at the adjacent
Hospital.

ASCARDIO TODAY

Barquisimeto’s Regional Cardiovascular Center (RCC),physically in-

tegrated with Ascardio, commands Venezuela’s only network in this
specialty approximating the Ministry’s 1950s model. Operations
span a total of 20 outpatient facilities, seven rural centers, nine
health centers, and two hospitals. Between 1977 and 1991 outpatient
consultations multiplied 28 times over from 1,200 to nearly 34,000;
and the number of nonsurgical cardiovascular explorations rose from
750 to more than 50,000. From 1985 to 1992 the number of surgical
tests (pacemakers, ECG-HIS, hemodynamics) rose fivefold.
Growth was matched by an expansion of services: Ascardio boasts
a cardiovascular library and supplies copies of international journal
articles to subscribing physicians across the country. A bioengineer-
ing unit manufactures low-cost equipment that, in an emergency, can
facilitate a cardiovascular diagnosis by radio or telephone. A total of
202 staff persons, including 45 cardiologists and 26 other physicians,
offer a variety of health care specialties. A pharmacy sells medicine
at discount prices. A 24-hour radio-dispatched ambulance service is
available on contract to business firms, institutions, and individuals.
A total of 18 physicians from Venezuela and other countries are
supervised as they fulfill their 3-year graduate residence require-
ments. A crew of 90 volunteers, including community leaders and
former patients, assists in fund-raising, helps organize special
events, and attends to patient care.
692 G6MEZ, MALAVE, AND PINANGO

Ascardio supplies management assistance to other health centers

in an effort to transfer and replicate its experience. In 1989, the
adjacent, Ministry-dependent Gomez Lopez Hospital was in a state of
virtual bankruptcy, that is, heavily in debt, out of stock, and unable
to obtain credit from local suppliers. In close coordination with a
state of Lara health foundation (also headed by Finizola), Ascardio
undertook to assume the Hospital’s outstanding debt and administer
funds assigned to the Hospital under an approved budget. In two
years, the debt was paid off, supplier credit reestablished, and inven-
tories replenished; more significantly, Ascardio’s management style
was introduced and a Gomez Lopez Hospital Foundation created,
modeled on Ascardio. Malave (1994) examines Ascardio’s experience
in transferring its management model to hospitals in three other
Venezuelan cities.

ORGANIZATION

For the outside observer it is not easy to separate Ascardio, a not-for-

profit organization, from the Regional Cardiovascular Center, an or-
ganization dependent on the Health Ministry. An important feature
of the service center is, precisely, the overlapping of the two organiza-
tions. Some of the staff are paid by the Ministry of Health and some
by Ascardio, a peculiar yet successful arrangement of public-private
sector collaboration. Additionally, all Ministry staff are paid extra
compensation by Ascardio based on their function and the income
generated by their respective administrative units.
Figure 1 shows that Ascardio formally appears as an advisory unit
of the Cardiovascular Center, whereas in reality the Center is oper-
ated by Ascardio. The Ascardio assembly of members includes all
staff, from physicians to janitors. The Ascardio board serves as the
formal link with community leaders. Policy decisions are made at
either the medical directorate or technical council levels and the
latter is empowered to make Regional Center decisions in the Coor-
dinator’s absence. The nonmedical administrative unit runs opera-
tions, including budget, purchases, procedures, and conflict resolu-
tion. The management of medical services corresponds to the clinical
unit. The orientation service assigns patient appointments, assesses
ability to pay, and determines applicable charges. The systems unit
processes data and generates its own income by selling services to
other public health agencies, such as payroll management. The bio-
engineering unit is staffed by four electronic engineers and attends
to equipment maintenance, as well as the design, manufacture, and
sale of low-cost cardiophones, reusable electrodes for cardiology in-
MODEL FOR HEALTH SERVICE DELIVERY 693

U
*
M of H

ACADEMIC
COUNCIL COORDIXATIOS ASGLXDIO
I I

SLBRECIONAL
COORDIXATIOk' DIS'IXCTS

OLT-PATIENT HOSPITAU EXPLOUTORY MERAPELTIC EPIDE,UOLOCY TEACHING

SERWCES UlTlON YETHODS METHODS & RlULRCH

ORGANIZATION OF ASCARDIO

7 ASSEMBLY

ADVISORY

I I
I

Figure 1 Organization of The Regional Cardiovascular Center

struments, and other technology needs. The fastest growing unit is

the ambulance service, initiated in 1989.

ASCARDIO'S SUCCESS

At the heart of Ascardio's success are its decision-making process as

well as its skillful use of information systems and staff compensa-
tion methods. Both aspects have contributed to developing Ascardio's
694 G6ME2, MALAVE, AND PINANGO

managers and represent key features of Ascardio’s innovative man-

agement, that include:

empowerment;
team-centered (vs. one-to-one) approach to medical attention;
personnel selection, training, and promotion based on merit;
data analysis for management control and service improvement;
health care offered to both fee-paying and nonpaying patients;
interaction with a national, regional, and local support network.

Empowerment
Participative decision making is perhaps Ascardio’s key manage-
ment feature. Participation encourages open review of and comment
on how services are operated and assures quality service delivery by
enabling all staff members to influence each other’s performance.
Also, it delegates staff recruitment and promotion to operating lev-
els. New staff is recruited mainly from friends, acquaintances, and
relatives of personnel already employed. Novel outcomes of partici-
pation include the public opening of a (patient and employee) sugges-
tion box at the monthly assembly meeting, where, for instance, a
janitor once complained of mistreatment by a physician and obtained
an apology; and the Assembly’s choice to forego a salary increase
mandated by the national government, as acceptance could threaten
Ascardio’s financial position and cause staff layoffs. Patients are
asked to assess service quality; every day, a sample of the previous
day’s ambulance users are asked to evaluate the care received from
drivers and paramedical staff.
Participation and interaction is implemented by means of a daily
schedule of staff meetings usually held at lunch time, when staff
members from both shifts are on hand. The assembly is held on the
last Friday of each month. Medical staff meetings, held on Mondays,
discuss significant journal articles reviewed by resident students;
those held on Tuesdays and Thursdays discuss clinical cases. Admin-
istrative procedures are discussed on Wednesdays. Cardiologists
meet on the first Friday of the month to discuss the progress of
resident students, the second Friday to discuss teaching activities,
including special courses open to outside health administrators; and
the third Friday, to discuss inpatient services.

Information Management
An information system was developed by adapting successive equip-
ment models to the founder’s personal computer. Data processed now
include:
MODEL FOR HEALTH SERVICE DELIVERY 695

epidemiological data drawn from patients and regional centers;

cardiovascular pathology, also drawing on other health centers;
patients serviced by type of health care, time of day, length of
consultation, no shows; charges levied by level of fee (including
no fee);
financial and cost control data.

A novel feature that improved Ascardio's cash flow has been to sched-
ule patient appointments in the same order as fee payment receipts,

Staff Compensation and Support

Whereas public health agencies in Venezuela are subject to frequent
work stoppages and slowdowns, generally because of delays in pay
disbursements, Ascardio and RCC staff are paid on time and work
stoppages have not occurred. (At the adjacent G6mez L6pez Hospital,
for example, during 1992 as many as 103 labor actions were re-
corded!) In contrast with the Health Ministry, where pay increases
and benefits are obtained through labor actions, Ascardio staff ob-
tain improved compensation based on productivity.
Privileges offered to staff and nonstaff physicians include the use
of Ascardio space and equipment for private practice by paying As-
cardio an overhead charge.

Income from Operations and Patient Fees

Ascardio raises four-fifths of its income from operations, including
patient fees that account for about 50 percent of the total. Figure 2
shows the composition of operating income, with ambulance services
as the fastest growing revenue source. Other income includes Minis-

15
10

15% 1991 1992

Figure 2 Ascardio: Income Erom operations, 1990-1992 (millions of current boli-

vares)
696 G6ME2, MALAVE, AND PINANGO

try allocations, which have declined from 80 percent of total income

at the outset to less than 20 percent. Donations are generally raised
by Ascardio volunteers.
Fee levels are well under those charged in private practice. Top
fees are charged to only one out of four patients. Except for costly
surgery, charges tend to vary within a fairly narrow band. Signifi-
cantly, Ascardio fee levels appear to have changed those charged by
private practitioners in its home city. A patient’s ability to pay is
judged on the basis of income and family size. If the charge is moder-
ate the patient’s word is accepted; if high, structured home inter-
views are conducted.

ASCARDIO’S SUPPORT NETWORK

Ascardio exists thanks to the initiative and commitment of a small

group of physicians led by a cardiologist with a career in public
health. Ascardio’s network of civic, business, and political relations
spans the state and municipal government, members of congress and
ministers, communications media, religious institutions, and the
armed forces. With Ascardio support, the Regional Cardiovascular
Center has become the highest coverage and most developed agency
of its kind in Venezuela, serving as a model for national health care
reform. Medical conferences held at Ascardio, short courses open to
medical and paramedical professionals, and its graduate medical stu-
dent residence program have generated support from physicians.
Abroad, Ascardio has developed links with the Pan American Health
Organization and other world agencies.
Ascardio’s community support is built on its reputation for reliable
service offered 14 hours a day (vs. a net 4 hours a day in most public
hospitals) and without the interruptions, long queues, and other in-
conveniences that beset Venezuelan public services. Patients obtain
quality, reasonably priced health care offered by highly trained and
courteous staff in well-maintained physical facilities. Well-to-do pa-
tients with serious cardiovascular disorders are referred by the city’s
leading private clinic, which makes use of Ascardio’s expensive he-
modynamic equipment and, in exchange, allows Ascardio physicians
to use its surgical facilities. Local firms and institutions subscribe to
the ambulance service, and the local Small Business Chamber offers
employees of member firms a n Ascardio-administered health ser-
vice.
Ascardio has fostered links with the lower income barrio commu-
nity in which it is physically located: sports facilities have been built
and neighborhood teams are supplied with T-shirts displaying Ascar-
MODEL FOR HEALTH SERVICE DELIVERY 697

dio’s emblem; students employed part-time at Ascardio are awarded

work scholarships; and community members are invited to attend
special events. These efforts curbed the vandalism previously prac-
ticed on vehicles parked outside Ascardio facilities.

PROBING ASCARDIO’S SUCCESS

Ascardio’s support strategy harnesses a wide-ranging network of
public, private, professional, and community relations that together
mobilize the resources required to deliver health care and institu-
tionalize its style of operation. Ascardio’s development could be de-
scribed as a social movement, with features that equate its growth
with a common cause, an action directed at changing an aspect of
reality capable of generating group commitment. This helps explain
the sense of “belonging to something valuable” commonly observed
among those identified with Ascardio.
The process of generating group commitment toward Ascardio’s
cause is best illustrated by its personnel recruitment and develop-
ment practices. As noted earlier, staff recruits are drawn mainly
from family, friends, and acquaintances of employees. Even resident
medical positions are filled by tapping the pool of graduate students
that are already on hand; in Finizola’s words, “by getting them while
they are still young.” Finizola considers that drawing staff from
personal recommendations contributes to build a reliable team that
performs “in the Ascardio way” by means of what he calls a “filter
effect.” He adds: “Recommending a candidate for a position tests and
puts at risk the staff member’s own credibility, loyalty, and commit-
ment to the organization, for all staff are subject to ongoing, infor-
mal performance evaluation.”

HOW VULNERABLE IS ASCARDIO?

Notwithstanding its wide-ranging support network, a number of fac-

tors could jeopardize Ascardio’s future. For one, Venezuela’s public
administration suffers from severe discontinuities. Ascardio could be
targeted by shortsighted bureaucrats that demand strict adherence
to norms and a clear distinction between the public and private as-
pects of the Regional Cardiovascular Center.
Ascardio’s dependence on its founding leader is also a ground for
concern. Key staff members feel that Ascardio’s management style is
sufficiently consolidated to survive on its own; while they share Fin-
izola’s enthusiasm, not all may prove to be equally as effective in top
management. Indeed, not all cardiologists in public health are likely
698 G6MEZ, MALAVfi, AND PINANGO

to reach and simultaneously carry off three chief management posi-

tions as ably as Finizola: Ascardio, the Regional Center, and the state
of Lara health foundation.
Too rapid expansion of services or too intricate a web of public
health relationships could also become a threat. Meeting Ascardio’s
courtesy standards in ambulance service operations proved to be
something of a management challenge, plagued with high initial
turnover among medical and paramedical staff. Nonetheless, it can
be argued that expanding the scope of operations stands to yield a
more favorable organizational environment.

HOW INNOVATIVE IS ASCARDIO?

Ascardio’s management features, staff delegation and participation,

performance-based compensation, skillful use of information, broad
support network, are neither new nor uncommon; what is unusual is

‘hble 1. Examples of Ascardio’s Management Guidelines

Social and political pres- Assembling patients or campaigning for patient
sure to support organi- signatures a t critical moments
zational objectives
Egalitarianism Use of staff assembly to air a janitor’s complaint
of mistreatment by a doctor
Social solidarity Assembly decision to postpone a salary increase
decreed by the government in order to avoid lay-
offs or curb services
Hiring the unemployed father of a patient to help
cover the cost of surgery
Staff empowerment and Decentralizing staff recruitment, selection, and
development of man- promotion
agers
Human development Promoting a floor sweeper to become a n X-ray
technician
Efficiency Acclerating cash flow by assigning appointments
in same order as receipt numbers
Broaden medical care beyond cardiology to make
better use of specialists
Replacing traditional one-to-one medical attention
with a team approach combining medical and
paramedical staff
Elevating image of a Sharing equipment with private clinics in order to
public service care for well-to-do patients
Productivity incentives Basing compensation on work performance and in-
come generated by each administrative unit
MODEL FOR HEALTH SERVICE DELIVERY 699

to combine them within the context of a public agency. Table 1shows

how these management features that distinguish Ascardio have been
applied in practice.
What is truly innovative is Ascardio’s development of a hybrid,
pub1ic;private service center, whereby a private foundation provides
leadership for a public agency, integrates both operations, and gener-
ates powerful commitments for public health objectives. The process
of building a hybrid agency, however, has taken considerable time;
hence efforts to replicate Ascardio’s experience for health reform
purpose elsewhere in Venezuela and the Latin American region, are
hardly a matter of administrative design and budget allocation.
None of Ascardio’s leaders is a business school graduate or a stu-
dent of management. The claim they make is that Ascardio owes its
success to practicing “common sense management.” If so, common
sense management is no easy task.

REFERENCES

Malavb, J. (1994)El Modelo Ascardio: Elementos para la Sistematizacidn de

un Modelo Adrninistrativo en el Campo de 10s Servicios de Salud en Ven-
ezuela. Caracas: IESA, to appear.
Palumbo, G. (1991)Gerencia Participativa. Un Caso Exitoso en el Sector
Salud, Caracas: Fundaci6n Antonio Cisneros Bermddez.