CAOS in Italian hospitals during COVID: an analysis of healthcare intangible resources

1. Introduction

In Italy, the national healthcare service offers universal access to locally based healthcare, where local authorities are responsible for the organisation and delivery of health services. This leaves the Italian government with a weak strategic leadership in this sector (Armocida et al., 2020). In this Country, hospitals are public, private, for-profit and private non-profit. All hospitals usually compete with others for the provision of services, directly or indirectly. However, all are considered relevant players (Hansmann, 1980).

As in other countries, the healthcare sector continues to be at the centre of significant changes and challenges (Pereira de Souza et al., 2021), especially from the 2020, where healthcare sector was tested by the Covid-19 pandemic, which has created a global public health emergency to which governments have been called to respond. During this emergency, the lack of coordination is a problem (McDonald and Larson, 2020) nonetheless, the local governments (LG) were left to respond independently. In Italy, the coronavirus outbreak in the north, especially in Lombardy, which was identified as the epicentre of the pandemic, has overwhelmed the public health system.

Regarding the need to cope with this type of event, scholars claim that the intangible elements in organisations have strategic importance (Jia et al., 2019; Prasad et al., 2015). In this panorama, the IC elements, such as human capital (HC), structural capital (SC) and relational capital (RC) (MERITUM, 2002), become very important. These components are essential for enhancing knowledge in organisations and allow them to become resilient (Johnson et al., 2013). Previous studies assert that there is a close correlation between IC elements and Knowledge Management (KM) (Kianto et al., 2014), which are both capable of improving organisational efficiency through relational skills and external networking (Kianto et al., 2014; Buenechea-Elberdin et al., 2018). Although the topic of IC has received a lot of attention in the literature during the last 20 years, few previous studies have focussed on the connection between IC components and KM (Buenechea-Elberdin et al., 2018). This gap in research may have been because of the novelty of the topic, which has been foregrounded in the context of the current pandemic. Therefore, this work aims to address the following research question:

A multiple case study was used to answer the research question, where two hospitals located in Milan (Lombardy, Italy), one private hospital and one public, were analysed. This study was done used the CAOS (an Italian acronym caratteristiche personali, ambiente, organizzazione and start-up) model (Paoloni, 2021); a qualitative approach developed within the strategic management studies (Mason, 1939; Bain, 1968), that is useful to explore the type and intensity of relationships (RC).

The findings reveal several implications. Firstly, the work contributes to the literature on intangible assets by revealing that RC and KM are critical for health sector resilience during a pandemic. RC is a considerable factor in reactive resilience, and KM thanks to its capacity to manage the internal resource in an efficient manner, plays an important role in surviving harsh periods. There are also some practical implications that are connected with the created relationship between hospitals and the central government during the pandemic. In fact, as the effects could be extended to the entire national territory, it is possible to assert that the national management of the healthcare sector is preferable and the results generalisable. Hospitals of different sizes and locations, even in peripheral areas, could benefit from this relationship.

This paper is structured as follows. In section 2, the most interesting previous studies are reviewed. This part also helped the authors to lay the foundation for the study. Section 3 describes the methodological protocol as well as the case selection process and the CAOS interpretative model variables. In section 4, the results of the analysis of the relationships are discussed. The final sections of the paper conclude the work, disclosing the limitations of the study, recommending further research and highlighting theoretical and practical implications.

2. Literature background

Former research studies confirm that IC is being increasingly investigated (Lerro et al., 2014), and the attention to KM has grown (Mariano and Walter, 2015). Although these two topics seem different, they could be considered intertwined and parallel (Hussinki et al., 2017). For example, KM “is crucial for exploiting business relationships and extracting value from the external networks of the organisation” (Del Giudice and Maggioni, 2014). Also, some studies have argued that IC and KM are closely related. IC explores intangible elements from a static perspective (Cabrilo and Dahms, 2018; Stewart, 1997) and studies on KM are focussed on managerial activities conducted to deal with organisational intangibles (Kianto et al., 2014).

In the healthcare literature, IC has not been frequently chosen as a topic of investigation (Orlando et al., 2021) remaining for long as an “unknown terrain” (Habersam and Piber, 2003). However, intangibles such as IC, are considered “critical” (Cabrilo and Dahms, 2018) as they allow organisations to achieve a competitive advantage (Davenport and Prusak, 1998; Heisig et al., 2016) and for this reason, the analysis should be deepened.

Previous studies on IC components (HC, SC and RC) show that some of them have been considered more important than others. In any case, precisely because the healthcare sector is characterised as having a high intensity of knowledge, it is considered a fertile ground for studies on different component of IC. Furthermore, this statement is also true for RC because in this specific sector, the value chain is formed by several actors and competencies (Huang et al., 2021). RC is significant because according to a definition (Euroforum, 1998), it encompasses the image, the reputation and the satisfaction of users (Daou et al., 2019), including all relationships that the entity can create with its stakeholders. Relationships such as established links between the company, institutions and people, based on a strong sense of belonging and the capacity for cooperation (Capello and Faggian, 2005). In addition, some scholars have highlighted that RC plays a central, strategic and influential role in long-term activities and returns (de Castro et al., 2004), as it provides access to critical internal and external resources (Hitt et al., 2001; Nahapiet and Ghoshal, 1998) and reflects the value of relationships, as well as the existing quality of people and organisations (Yang and Lin, 2009; Fiano et al., 2022). Although RC is considered the most valuable intangible asset (Stewart, 1997), it has received little attention in the literature (Paoloni et al., 2020a).

Therefore, several relevant issues have remained unaddressed in this sector. For instance, challenges of improving the quality of relationships between patients and healthcare employees with providing adequate health services and enriching positive perceptions of users of the value chain, which is composed of different actors and their specific skills (Thakur et al., 2012). Moreover, RC could impact the general reputation of organisations (Habersam and Piber, 2003), especially where there are strong cognitive involvement (Fiano et al., 2022) as healthcare, sector in which Information and Communication Technologies and R&D investments are essential (Papa et al., 2020).

By focussing on KM in the healthcare sector, it is possible to assert that creating and sharing knowledge is a complicated issue. This sector's complex, multi-professional and multi-level nature is reflected in the fragmented distribution of healthcare knowledge (Nicolini et al., 2008). Following the recent literature, KM as a topic in the healthcare sector can be observed on three main streams (Berg, 2004): (1) information about patients; (2) management information about the processes and outcomes of the organisation; and (3) professional knowledge required to handle the patients optimally. The third stream is related to the relational networks created among people based on the adoption of a collaborative, relational approach (Saviano et al., 2017) and the use of infrastructure (Murray et al., 2016; Švarc et al., 2021). That leads to the enablement of the organisations to generate and coordinate knowledge in an efficient manner (Serino et al., 2020). These relationships are the primary tools for transferring tacit knowledge (Hansen et al., 1999) and making strategic decisions aimed at facilitating the creation, sharing and transfer of knowledge (Zack, 1999). They are also considered extremely important in addressing knowledge-based issues in organisations (Grant, 1996).

Finally, a few previous studies have examined the interaction between IC and KM (Wiig, 1997; Buenechea-Elberdin et al., 2018; Cabrilo and Dahms, 2018; Kianto et al., 2014; Seleim and Khalil, 2011; Pflugfelder, 2021). Inter-organisational knowledge flows play an important role in modern healthcare systems (Laihonen, 2012) and SC and RC reflect the outcomes of codification and personalisation of KM strategies (Buenechea-Elberdin et al., 2018). Moreover, the importance of the relationships between dynamism of KM, and the static perspective of IC (Kianto, 2007; Kianto et al., 2014) is established. Especially when the focus is on the capabilities of KM practices to leverage intangible assets for value creation Kianto et al. (2014). Therefore, it appears that a personalisation-based KM strategy enhances RC. Moreover, as the embeddedness of relationships is positively associated with the effectiveness of knowledge transfer (Ferraris et al., 2020), RC could be considered as the result of this approach (Buenechea-Elberdin et al., 2018).

However, what happens when the circumstances are unusual, as in crises or challenging times?

Although this topic has received scant attention (Prasad et al., 2015), several studies have showed that some IC elements (i.e. SC and RC) are fundamental to survival in the time of crisis and increasing the resilience of organisations. Based on the findings of former analyses, it is possible to assert that these elements of IC allow organisations to access valuable information and resources and achieve organisational resilience (Johnson et al., 2013). This is thanks to the ability of organisations to develop a preventive capacity during unexpected disruptions (i.e. the proactive aspect) and to take necessary actions regarding responding to and recovering from such disruptions (i.e. the reactive aspect) (Jia et al., 2020). Hence, the key attributes such as an organisation's flexibility (Kuminova and Bykova, 2014) and the existence of an open and collaborative ecosystem created by KM practices (Santoro et al., 2018), allow organisations to quickly formulate responses to a disruptive event, recognising that positive behaviours (e.g. trust, commitment and reciprocity) are derived from organisational culture as well as the norms and practices that were in place before the crisis.

3. Methodology

This work is supported by a qualitative multiple case study. This method is appropriate for examining contemporary issues in particular settings (Benbasat et al., 1987; Yin, 2009). The case selection was performed via purposive sampling of hospitals that have differing ownership but are located in the same Italian region. The selected hospitals are both similar and different and this allows us to illustrate the paper's theoretical interests (Eisenhardt and Graebner, 2007).

To answer the research question, we used the CAOS model (Paoloni, 2021) which aims to interpretate RC thorugh the connections between factors that typically influence the relationships. This approach resulted from the evolution of industrial organisation studies, which were subsequently transformed into strategic management studies and on which the Harvard Business School is based (Mason, 1939; Bain, 1968). In this approach, the sector, the company's structure and its performance are correlated to the resource-based view (Penrose, 1959; Peteraf, 1993; Wernerfelt, 1984), which acknowledges that performance is no longer dependent on the corporate structure but on the company's possession of specific resources and capabilities. In the most recent approach, which is known as the knowledge-based approach (Nonaka and Takeuchi, 1995), the possession of unique and rare knowledge is the primary resource for creating the value of a business. The development of this approach led to the relational view (Dyer and Singh, 1998), which extends the boundaries of investigation into the possession and dissemination of knowledge and the study of the relationships that the company promotes. This view fits the CAOS model (Paoloni, 2021), which is employed to study the types and intensities of the relationships intertwined in a specific observational moment.

The determinants of the model include the following:

1. (C) refers to the personal characteristics of an entrepreneur, and it describes the specific characteristics of the hospital.

2. (A) refers to the macroeconomic element of the analysis, and it is related to the environment in which the healthcare organisation operates.

3. (O) refers to the microeconomic element of the analysis, particularly focussing on the Organisational and managerial aspects.

4. (S) refers to the temporal element.

The CAOS model allowed us to analyse the relationships between the hospitals based on four types of network relationships (Paoloni, 2021), which are crucial for understanding how the network supports the entities (Cillo et al., 2019; Scuotto et al., 2017) through challenges of the pandemic. The relationships were characterised by the intensity of the relational variable (permanent or temporary) and its type (formal or informal). From the intersection of these variables, we sought to determine the following:

1. Formal and permanent relationships: long-term relationships that are formal;

2. Formal and temporary relationships: those relations which were temporary but formal;

3. Informal and permanent relationships: lasting informal relationships;

4. Informal and temporary relationships: informal short-term (or limited-term) ties.

To apply the CAOS model and to identify the kinds of relationships, it is necessary to analyse the elements and identify the connections between the driver S and the drivers C, O and A in the cardinal links. The model identified four network relations, as shown in Figure 1.

The cardinal links is first (S–C/C–S), second (S–O/O–S) and third (S–A/A–S).

The first cardinal links are identified as all the contacts that the hospital activated to face the emergency; they depend on their characteristics, needs and motivations. The second cardinal links are those relationships that the governance of the hospitals activated during the observational moment of reorganising their internal structure and redefining the roles, tasks and responsibilities associated with them, as well as the relationships among the various governing bodies (i.e. lines of influence). Hence, during the emergency period, the hospitals were called to redefine their internal relationships to deal with COVID-19-related challenges. The third cardinal links during the emergency phase are the hospitals and their environment. Therefore, they are considered as external relationships of the HO. In these relationships, the environment is the driver of the relational circuit. It can be said that using a certain type of network is not a conclusive solution to an issue, but it is necessary to do in particular situations, such as an emergency.

4. Discussion: analysis of relationships

According to Paoloni (2021), relationships may exhibit different levels of solidity and this due to their persistence in time and to the level of trust between the involved individuals and their active and constant participation in the life of the organisation. During the COVID-19 pandemic, most of the relationships in the Lombardy hospitals were formal. This finding could be justified considering the importance of the health system in Italy and the strong impact that the pandemic had on the hospitals. The main results of the CAOS model are as follows.

The first analysed link was the cardinal link S-C. Through this analysis it was possible to identify the contacts activated in the hospitals during the emergency. The findings showed that formal and temporary or permanent relationships characterise this connection. Considering that the two selected hospitals for the present study differ in terms of ownership, this link was managed differently at different times. Here, it is important to remember that the Lombardy health system was initially reorganised and then supported and endorsed at the national level.

At first, the crisis was managed at the local level through the creation of task forces established specifically to deal with the crisis. Shortly after that, because of the considerable increase in the number of confirmed COVID-19 cases, the government took extraordinary measures. In the initial phase of the emergency, only public hospitals were involved; shortly afterwards, private hospitals were also asked to manage the unexpected and disastrous situation. Therefore, with the establishment of regional task forces temporary relationships were created, whereas permanent relations existed between the region and the central government. In both cases, the connections were formal because those contacts referred to relationships with institutions that were managed and maintained according to laws or regulations.

The second observed link was S-O. Here, it was possible to observe different types of formal temporary connections:

• The identified relationships were internal because the hospitals were mandated to rethink and review their organisation. Both structures had to increase the number of beds in intensive care. Therefore, the private organisations were asked to modify their usual activities (i.e. mainly planned surgical services) to support public hospitals in the management of the emergency and to accommodate patients affected by the coronavirus. They were also asked to employ private hospital staff to manage the current crisis; therefore, this event also triggered an internal organisational change in human resources. That is, it inevitably led to a review of the activities and organisational relationships within the hospitals themselves. This led to an increase in overtime compared with normal working hours.

  These actions were linked to the modification and transformation of the organisation and were aimed at promptly addressing the problems that emerged from the pandemic. The problems confirmed that flexibility and collaboration (Santoro et al., 2018) have strategic importance for enabling the proactive and reactive aspects of organisations in times of crisis (Jia et al., 2020);

• Hospital research areas were modified. Research topics were set aside to give more attention to the new virus, identifying its cause, as well as suitable treatments to counter the devastating effects of the virus and to obtain more information about it so that solutions could be found to stop the pandemic. This maximised the use of knowledge and effective management, which are considered critical elements in achieving a competitive advantage for organisations (Keong Choong, 2008).

These relationships were considered formal because they were established by formal documents or formalised instructions. They were considered temporary because it was assumed that when the emergency period was over, the hospitals would gradually resume their traditional activities.

The third analysed link was S-A, which represents the organisations' involvement in the territorial, social, cultural and economic environments in which they are located. In the analysed cases, this connection was characterised by both formal and informal temporary links. As explained in the theoretical part of the present work, the Italian NHS is administered in the regions. In the specific moment observed in this work, namely the pandemic, the relationship between hospitals and the political level changed. At first, the management of the emergency was left to the regions. When the situation worsened, the central government took the reins because the crisis could not be managed by the regions alone. However, the pandemic was so severe that the government had to intervene to try to deal with the emergency to prevent the health system from collapsing. Moreover, the national intervention was simultaneously caused by the varied severity of the emergency between one region and another. In fact, there was an unequal number of coronavirus cases in the whole territory.

In this case, where the external relationships coming from RC promoted the internal knowledge efficiently, the existing correlation between RC and KM was evident. The relationships were identified as formal because they always intervened between the authorities and the hospitals. However, they were temporary because they were to be in place only for the time required to manage the emergency. Alternatively, it was also possible to observe one type of informal temporary relationship formed in connections with private donors or associations that wanted to support the Italian health system in this dark period by voluntary contributions.

As shown in Figure 3, the hospital's relationships during the pandemic are resumed.

The severe crisis caused by the virus could only be managed at both national and regional levels by issuing decrees and measures to reduce the risks of the epidemic. Moreover, Innovative connections with respect to ordinary operations were found in both S-C and S-A relationships. In the first connection, a formal and temporary relationship was triggered between task forces established to manage the emergency. As far as the S-A relationship is concerned, this relationship continued to be formal and permanent because it was first setup between hospitals and LG and then between hospitals and the central government responsible for health management. The link continued to be following the reforms of the national health system. Simultaneously, it was a temporary relationship because during the study period, both the debate management and timing changed. Therefore, the findings of the analysis showed that in terms of time, it was possible to identify both temporary and permanent relationships. The relationships with stakeholders were formal, except for fundraising by a wide variety of voluntary associations and private individuals who wanted to make financial contributions to the health service.

5. Conclusions

Intangible assets are a main resource for gaining a competitive advantage (Ferreira et al., 2016) and allowing organisations to be resilient. RC, as a component of intellectual capital (IC), arises from relationships created between organisations and their stakeholders, creating value and improving users' satisfaction through the provided services (Ting et al., 2020). This intangible resource is particularly important in the healthcare industry, in which patients guarantee the success and survival of the entity. According to the literature, RC displays these potential benefits, especially during disasters and uncertain periods, such as the Covid-19 in 2020 (Jia et al., 2020; Prasad et al., 2015). In this context, it is also important to consider the role of knowledge, which is absolutely strategic. The use of knowledge is considered necessary to create value (Pigola et al., 2021). Furthermore, the relationships between IC and KM are fundamental for the effectiveness of an organisation (Curado, 2008) and both are identified as sources of sustainable competitive advantages (Seleim and Khalil, 2011). The reason is that in the simultaneous analysis of these elements, it is possible to combine static and dynamic perspectives of knowledge (Pigola et al., 2021). However, only a few scholars have examined interactions between these two constructs (Kianto et al., 2014; Mariano and Walter, 2015; Cabrilo and Dahms, 2018).

To fill this research gap, in the present study, we aim to analyse RC and understand the types of relationships that were created in Italian public and private hospitals during the emergency caused by the coronavirus pandemic. One of the main goals of the present research is to understand whether the dynamism of these connections (KM) could be considered strategic in health emergency management. Therefore, the work aimed to answer the following research question:

To address the RQ, the authors chose to analyse two Italian hospitals with different ownership structures (one public and one private), which are located in the epicentre of the pandemic in Lombardy. The CAOS model (Paoloni, 2021) was applied to this qualitative case study.

The findings showed that during the management of the health emergency, similar relationships were created in both hospitals. Notably, the findings indicated that the ownership structure was not a discriminating element during the health crisis. Instead, it was possible to limit and contain the damage caused by the pandemic. The political decision was to narrow down (and perhaps even impair) the differences between public and private structures. Moreover, the external environment of the hospitals was analysed. Hence, the hospital network managed to generate and coordinate knowledge efficiently. Most relationships were formal (except for contributions to fight COVID-19 donated by associations or individuals). There is evidence that this could deduce a priori as the right to healthcare in the Italian legal system is recognised at the constitutional level. Additionally, if it is considered that the public sector (to which healthcare is assigned) is usually characterised hierarchically and bureaucratically (Durst et al., 2020), further elements allowing the confirmation of the lack of informal relationships include the fact that only publicly available documents were used in the study. Therefore, these elements may have influenced the emergence of only formal relations.

The results highlighted that temporary relationships arose specifically during the emergency, and they were presumed to dissolve afterwards. At the same time, previously established relationships continued between the hospitals and the public organisations and between central and LG. Based on the findings on the management of the hospitals and relations during the emergency, the KM practices implemented during the crisis enabled the transformation of the components of the IC, which affected performances that were related (Pigola et al., 2021). Therefore, these skills were used in the development of the IC to create value (Cabrilo and Dahms, 2018). The findings indicate that RC plays a reactive role during the emergency period and the KM could be considered strategic in health emergency management.

However, the most useful relationships found in the present study were those between the hospitals and Lombardy and between the hospitals and the central government. The change in management that the LGs experienced during the pandemic presumably made it possible to keep the pandemic under control despite its seriousness.

The limitations of the work are different. One of the limitations is related to the data collection. In fact, information on both hospitals was extracted from public documents available online. This limit is due to the period when the analysis was performed, and it could be traced back to three main issues:

1. The lockdown was in place during the period of writing this work. In fact, the circulation restrictions and the dangers of the virus did not allow the writers to go to the selected places for the case study.

2. The availability of the hospital staff. While the work was being written, hospital staff members were busy managing the emergency. Therefore, they were under pressure and did not have time to do anything else, such as attending interviews.

3. When the analysis was performed, there was not the same efficiency, as it is now, in the knowledge and use of Information and Communication Technologies tools that make reducing the distances between people possible.

Although the results obtained from the study are generalisable, it is believed that the analysis could also be carried out by focussing on hospitals located in other European countries where the COVID-19 had different impacts and the emergency was managed differently. Therefore, future work could focus on the health sector in other European countries, perhaps through a comparative case study. A further work that could be interesting to carry out would be comparing the situation during the emergency phase and when state of emergency will be over by the use of the dynamic CAOS (Paoloni and Modaffari, 2022) as it is a useful approach for analysing the evolution of relations and studying the intangible resources in different periods.

Concluding, it is clear that the healthcare sector has a relevant role in society (Bevan et al., 2010; Papa et al., 2018). However, this industry is difficult to investigate because of its complexity (Orlando et al., 2021). IC is an interesting topic because this sector is highly intensive and specialised (Kumar et al., 2009).

The present work makes several theoretical and practical contributions. From a theoretical perspective, the work contributes to the literature on the little-explored topic of the relationship between IC and KM. The literature review revealed that although IC has received much attention in the past 20 years, correlations between its components and KM have remained unexplored. As demonstrated in the present work, both IC and KM were critical in health sector resilience during the emergency. In line with previous studies, in the present work, RC was confirmed as a factor in reactive resilience and this is also due to the role played by the KM.

Moreover, thanks to the CAOS model, namely the analysis of the relationships between hospitals (C), their internal organisational elements (O), their external environments (A) and their involvement during the emergency (S), the study showed that a “formal” approach to relationship development ensured the survival of the hospitals and the management of available resources. Another contribution of the present study is related to the use of the CAOS model. The model was applied in a multiple case study where the sector was compared with a previous study in which the same model was used.

From a managerial perspective, this study may help to rethink the management system of the healthcare sector, or at least support policy makers when the pandemic is over and they will need to reflect carefully on the complicated period they have had to face and they will be called upon to deal with the sums of what has been learnt during this terrible moment. The practical implications linked to the created relationships between the hospitals and the central government during the health emergency, could be a contribution to this reconsideration. As explained in the body of the paper, during the pandemic, the interlocutor of the hospitals changed from the LG to the central government. Considering the Lombardy disaster, it is hoped that this learnt lesson in emergency management will inspire the legislator to reconsider and rethink the management of the health sector. All this should be done with a view to having a homogeneous treatment of patients affected by Covid throughout the national territory, without the legislative power of the regions being able in some way to influence the outcome of the emergency management. In fact, if the crisis had been managed individually by the LG (as it should have been following the decentralisation of the Italian national health system), it would most likely have resulted in an even greater disaster. Thus, it is hoped that S-A relations, which were interpreted as temporary, would become permanent or that this relation, could be seen as a formal and temporary connection. This statement is generalisable, as the effects would occur not only in the Lombardy, which was the setting of the present study, but in the entire national territory. Hospitals of different sizes and located in different geographical area, including peripheral areas, could benefit from this relationship. It is assumed that emergency management during the first months of 2020 may have led to the reconsideration of the decentralised Italian health system, which has been in place for 20 years (Paoloni et al., 2020b).