Interactive management control via analytic hierarchy process (AHP): an empirical study in a public university hospital

Management control in public university hospitals is a challenging task because of continuous changes due to external pressures (e.g. economic pressures, stakeholder focuses and scientific progress) and internal complexities (top management turnover, shared leadership, technological evolution, and researcher oriented mission). Interactive budgeting contributed to improving vertical and horizontal communication between hospital and stakeholders and between different organizational levels. This paper describes an application of Analytic Hierarchy Process (AHP) to enhance interactive budgeting in one of the biggest public university hospital in Italy. AHP improved budget allocation facilitating elicitation and formalization of units' needs. Furthermore, AHP facilitated vertical communication among manager and stakeholders, as it allowed multilevel hierarchical representation of hospital needs, and horizontal communication among staff of the same hospital, as it allowed units' need prioritization and standardization, with a scientific multi-criteria approach, without using complex mathematics. Finally, AHP allowed traceability of a complex decision making processes (as budget allocation), this aspect being of paramount importance in public sectors, where managers are called to respond to many different stakeholders about their choices.