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Management, Mutuality and Risk
1. Management, Mutuality and Risk:
Better Ways to Run the
National Health Service
IoD Research Paper
_________________________________________________________________
Geraint Day
3. Contents
_____________________________________________________________________
1 Introduction and summary 5
1.1 Introduction 5
1.2 Summary 6
2 Accountability, governance and management 8
2.1 Governing principles 8
2.2 Governance in health 9
2.3 NHS bodies 10
2.4 Accountability in the NHS 11
2.5 Councils of advice? 12
2.6 A forum for debate? 13
3 Management and risk 15
3.1 First do no harm! 15
3.2 Healthcare and risks 16
3.3 Healthcare, and health and safety 17
3.4 Hippocratic or hypocritical? 20
4 Management and medicine 22
4.1 Trust in management 22
4.2 Dichotomies: cutting through extremes of care 23
4. 4.3 Managing medics 24
4.4 2001: managing the monolith? 26
5 Is there no alternative to the NHS way of providing 28
healthcare?
5.1 Alternative forms of healthcare provision 28
5.2 Mutuality and medicine 29
5.3 Overseas examples of mutual healthcare provision 31
5.3.1 User-owned health co-operatives 31
5.3.2 The West: The user experience in the USA 32
5.3.3 Going East: Japan 33
5.3.3.1 Consumers and health 33
5.3.3.2 Agriculture and health 34
5.3.4 European examples 35
5.3.5 Elsewhere 35
5.3.6 Summary of worldwide scene 35
5.4 Options for the future 36
5.4.1 Raising support 38
Acknowledgements 40
Biographical note 40
References 41
Your comments 45
5. 1 Introduction and summary
1. 1 Introduction
The National Health Service (NHS of the United Kingdom seems to be in the
NHS)
NHS
news in a way that it perhaps has not been before. The pioneering service that was
formed in 1948 with the aim of providing comprehensive healthcare free of charge at
the point of delivery may never before have seen so much sustained attention and
criticism as it did in the first half of the year 2000.
In its role as a membership body that aims to bring to bear its expertise on major
issues in public life, the Institute of Directors (IoD) had set out some views in a
Research Paper before the more recent close scrutiny by the Prime Minister and the
1
Government really got off the ground . A revised version was produced in June 2000
(reference 2). Ruth Lea, Head of the Policy Unit at the IoD, set out in the Paper a
commitment to a set of health services free at the point of use, but focused on a
use
number of areas where great improvements could and should be made. These
included more funding from private sources a better and more open level of debate
sources,
about the resources that are allocated to particular types of health services and
programmes, and ways of making the NHS more manageable by turning it into much
manageable,
smaller units. It also covered some issues of better patient (consumer) influence over
the NHS. The present Research Paper further examines the next to last of these
issues, together with some matters of governance, and honesty about risk.
The Government has launched a national plan (The NHS Plan) for renewal of the
The Plan
3
NHS . In its Plan it recognised that there is a need for more work with the private
sector to help improve health services. It is also intended to improve the quality of
leadership in the NHS. As the UK’s foremost individual membership organisation
whose aim is to help directors to fulfil their leadership responsibilities in businesses
and other important organisations, the IoD has a clear interest in both these areas.
One of Ruth Lea’s other suggestions was to change the provision side of the NHS
into self-governing mutuals rather than preserve the current fairly top-down, highly
mutuals,
4
bureaucratic system .
Some of the IoD’s suggestions for the NHS may be subsumed into the following
areas:
1. Governance including clinical governance (see chapter 2) and the power of
Governance,
clinicians (see chapters 3 and 4).
2. Alternative models of healthcare provision focusing on mutuality as one option
provision,
(see chapter 5).
5
6. 3. Patient participation in the provision and operation of health services (see chapter
2, sections 2.4 and 2.5 and chapter 5, section 5.4.1).
The Government’s NHS Plan3 does in fact contain a number of points that are
relevant to all three of the above. Like the IoD, the Government has stated that
many aspects of the NHS need to be changed. The NHS Plan specifically refers,
among other things, to5:
A. Lack of incentives to improve performance.
B. Over-centralisation.
C. Patient disempowerment
disempowerment.
The IoD’s general concerns 1, 2 and 3 set out above are in fact similar to the
Government’s broad areas A, B and C.
The IoD has also set up a Healthcare Provision Policy Study Group, which began its
Group
work, starting a time-limited series of meetings, in September 2000. IoD members’ views
6
were also being solicited to feed into the Study Group’s deliberations .
Like the Government, the IoD knows that there is and has been much to be proud of
about the NHS. Also like the Government, the IoD view is that there should be
7
“fundamental and far reaching reforms” to the National Health Service. The
intention is not to be prescriptive. The intention is to make a further contribution to
the debate.
1.2 Summary
This Research Paper examines all of these areas, as follows:
• Governance and accountability (chapter 2):
Some principles of governance are discussed in section 2.1, with reference to the
NHS in section 2.2. Information about some of the many organisations that make
up the NHS is presented in section 2.3. Following that there is some discussion
about the appointment process to NHS public bodies and the debate about the
“democratic deficit” in NHS public bodies (see sections 2.3 to 2.5). One of the
particular proposals made in the Government’s NHS Plan (that relating to
Patients’ Forums) is examined in section 2.6, and found wanting on corporate
Forums
governance grounds.
• Management – and risk (chapter 3):
The NHS needs good management. It needs good management to make
intelligent decisions that take account of the vast amount of patient-specific data
that are gathered (see section 3.1). Those running health services should also
have a much sharper focus on the risks involved. These include risks around the
intrinsic uncertainties of many medical interventions where a much higher level of
interventions,
public debate and honesty is needed (see section 3.2). Risks also include the more
mundane matters of health and safety, with which all employers must comply,
including the need to safeguard users of the Service. This has not always been given
the appropriate priority by NHS bodies (see section 3.3). Other aspects of ensuring
patient safety, including validation and appraisal of doctors, are touched on in
doctors
section 3.4. Good systems are needed but at the same time, public vilification of
6
7. any particular groups of clinicians must be avoided; those charged with stewardship of the
NHS should take much more responsibility for bringing about improvements. This will
include NHS boards and management.
• Management and medicine (chapter 4):
The general absence of coherent management of too many parts of the NHS is
commented upon in section 4.1. Some of the severe criticism that has been
directed at the quality of NHS management is dealt with in section 4.2. Also, the
“corrosive cynicism” experienced by many groups of staff is considered. The
difficulties of managing clinicians is covered in section 4.3, along with some of the
problems caused by trying to manage an NHS of a million employees amid an
ocean of central directives. Section 4.4 comments on the Government’s NHS Plan
directives
for improving the quality of leadership in the NHS.
• Options for ending patient disempowerment and a centrally directed NHS
(chapter 5):
The NHS Plan too readily dismisses overseas methods of providing health services and of
involving the public more directly in decisions about healthcare. The current NHS is not the
only viable model of healthcare. We comment on this in section 5.1. Following Ruth
Lea’s suggestion for having self-governing mutuals provide health services some
services,
arguments for exploring this option are presented in section 5.2. Examples of such
means of organising and providing health services in other countries are given in
section 5.3. These include cases of significant user influence or actual ownership
of the bodies providing healthcare; bringing together informed citizens and
healthcare
patients with health professionals and others to tackle health problems and
provide good-quality services. Finally, some initial ideas on how to introduce such
models into the UK NHS are explored in section 5.4, including the possibility of
piloting such schemes. They could greatly improve both consumer influence and
management accountability of organisations providing healthcare.
We are not trying to be prescriptive, but do want to make a contribution the much-
needed task of mending the “chronic system failures” and radically reforming the
delivery of health services in the United Kingdom, a challenge that has been set by
8
the Prime Minister .
7
8. 2 Accountability, governance
and management
2.1 Governing principles
The IoD takes a keen interest in good governance. In its role as a professional
membership organisation for directors from all sectors of the economy, and the
leading body for directors in the United Kingdom, it seeks to promulgate the
principles of good corporate governance and high standards of business ethics.
Those principles are fundamentally the same across all types of organisation – or
should be. Thus alongside commercial public and private limited companies are to be
found directors from the state sector, from mutual and community organisations,
charities and the panoply of voluntary bodies and “non-governmental organisations”.
Corporate governance is also an international issue. The UK Government has signed
up to 12 generic principles of corporate governance produced by the Organisation of
Economic Co-operation and Development, and 15 principles set out by the
9
Commonwealth Association of Corporate Governance .
Good governance should apply in the National Health Service too. The NHS
Executive (NHSE) has produced governance guidelines for board members in the
10
NHS. So has the IoD . “Accountability” could usefully be considered as having two
main aspects. The first relates to the processes of appointment and removal of office-
holders; here, board members. The second is about stewardship of the organisation.
This encompasses the procedures and actions of the board in its duty of trying to
ensure the success of the organisation. It would include such matters as what factors
are considered by the board in its oversight of the organisation, how (and which)
measures of performance are used, and how reports are made to key interest groups
(or stakeholders). In the case of the NHS it would include modes of reporting to
government and the public, and whether and how their respective views were taken
into account (ranging from legislation to instructions from the NHSE and
Department of Health (DoH), to public consultation exercises).
The IoD has also commented on ways that businesses consult with their key
11
stakeholders . Businesses decide how and when to keep in touch with, to consult,
their key stakeholders. Businesses would not remain in business if they did not take
account of the views of key stakeholders, such as customers. In the case of the NHS
the key stakeholder group is – or should be – the public, the users of the Service.
This should not just be a social responsibility and about enhancement of reputation.
A focus on patients as users should be the raison d’être of the NHS. Many are now
saying that it is not.
8
9. 2.2 Governance in health
NHS health authorities and trusts have to abide by codes of conduct laid down by the
Government. For example, they must publish certain information in their annual
reports, and must hold meetings in public (except for parts which may be confidential
by reason of patient or commercial confidentiality). In common with most parts of the
public sector, senior people in NHS organisations are subject to public scrutiny – up
to and including being put under the spotlight by such influential bodies as the
National Audit Office (NAO) and the House of Commons (by the Health Select
Committee and ultimately the Public Accounts Committee).
Q is for quango
Quangos are organisations whose board members are appointed by the government to perform
public functions.
Quangos include several types of publicly funded bodies. According to the House of
12
Commons , in the United Kingdom in 1998 there were:
304 executive non-departmental public bodies (NDPBs) – such as nationalised industries,
public corporations, and the Environment Agency (with 2742 members)
563 advisory NDPBs – these include some royal commissions (6780 members)
69 tribunal NDPBs – these operate within a field of law (19882 members)
137 boards of visitors to penal establishments (1823 members)
4534 local public spending bodies – including 623 National Health Service (NHS) bodies such
as NHS trusts and health authorities (between 65000 and 73000 members).
Quango numbers fluctuate from year to year. Nevertheless there is a large number of them
and they are collectively – and individually in many instances – responsible for large amounts
of public funds. For example, the NDPBs spent in total more than £24 billion in 1998.
The boards of NHS bodies are made up of executive and non-executive directors
(NEDs). In this regard they resemble structures common to many companies and
other commercially run bodies. In public limited companies the shareholders – acting
collectively – can confirm in post or vote out of office a director. In the NHS the
situation is rather different. Technically speaking the Secretary of State for Health
has the ultimate say over who is appointed or removed from NED service on NHS
bodies. In this the situation resembles that of more than 5500 quangos and similar
national and local public bodies. Members of NHS boards are also meant to operate
within a national NHS policy framework. In this sense they have similar roles to local
government councillors, who must also operate within national or devolved
government guidelines and rules, while also having responsibilities to local residents.
9
10. 2.3 NHS bodies
The Department of Health is responsible for more than 4000 public appointments in
England to bodies that include NHS Trusts, Health Authorities, Special Health
13
Authorities (SHAs) and NDPBs . From April 2000 a new type of NHS body – the
Primary Care Trust (PCT) began to enter the field. Most of the appointments are
made by the Secretary of State for Health to local NHS boards. Appointments are
made to 364 NHS Trusts, 99 Health Authorities and 17 PCTs. The norm is for each
board to have five NEDs (with an NED chair), and five full time executives. SHAs
and DoH NDPBs are mainly national bodies, with a wide range of specialist
responsibilities. They range from executive bodies such as the National Blood
Authority and the Public Health Laboratory Service to entities such as the
Committee on the Safety of Medicines and the Scientific Committee on Tobacco and
Health. The DoH is currently responsible for 15 Special Health Authorities, 7
Executive NDPBs and 37 Advisory NDPBs. In Scotland there are 15 Area Health
Boards, 28 NHS trusts and two specialist quangos. Wales has 5 Health Authorities, 15
NHS trusts and one specialist body. In Northern Ireland the situation is slightly
different, with organisations having responsibilities for both health and social
services. There are 4 Health and Social Services Boards along with 20 Health and
Social Services Trusts and 7 specialist public bodies.
Directors’ views on quangos
The IoD encouraged its branches to discuss issues connected with quangos, in the first
14
quarter of the year 2000. The following is taken from the summary report of the outcome :
‘In response to the question on the case for continuation of quangos the answer seemed to be
a qualified yes. One comment was that they were a good way of getting innovative and
practical solutions by drawing on skills from outside a “conservative and uncommercial civil
service culture”. They could also be useful in carrying out activities such as certain regulatory
functions. Others wanted a review of quango numbers, as there seemed to be far too many. It
was proposed that advisory NDPBs be drastically cut, beginning with areas in which
specialists could readily be sought to give advice to government on individual issues. …
‘There were thought to be some examples of bodies that performed well in health, higher
education, industrial tribunals and prison visiting. On the other hand, there was a perception
that there were quite a few poorly performing bodies that had outlived their useful lives. One
branch remarked that “Directors would not be the men and women they are if there were no
suggestions for improving the situation …” …
‘Generally, the opinion was that there should be greater openness. One IoD branch discussion
led to the comment that, “Just because a Quango has members of the public serving on its
committees … or main board, does not mean that it is accessible and accountable”. In
practice, directors have valuable experience to offer “given their expertise at setting strategic
objectives and delivering results – that’s real accountability!”. Furthermore, board members
should have the same level of accountability to the public as company directors have to their
shareholders. Some contributors to the debate wanted there to be elections to quango boards,
especially for the more powerful and high profile bodies, although the practicalities of doing
this would need to be considered. …
‘One view was that there was an “in group” who were frequently chosen to serve on boards of
public bodies. … Although it was recognised that there could be problems of time
commitment, it was felt important to try to achieve a mix of experts and lay people.
Independence of mind was seen as very important in board members.’
10
11. According to supporters of the quango model, accountability is ensured by virtue of
the relevant secretary of state’s and Parliament’s powers to scrutinise the actions of
the various public bodies. With the best will in the world it would be an impossible
task to adequately supervise so many individuals in so many organisations in this way.
There are still perceptions along the lines of those expressed by Dr Peter Brand MP,
that appointment to an NHS body “has become a second or even first career for some
people, leading to well-paid appointments in quango-land”15. These remarks are in
tune with some of those made in the consultation exercise of IoD members
concerning quangos (see the box on the previous page).
2.4 Accountability in the NHS
Will Hutton of the Industrial Society has been trying to rekindle a debate about the
accountability of those who have been given stewardship over the various parts of the
NHS. In a report commissioned by the Association of Community Health Councils
for England and Wales (ACHCEW)16 he and others tackled the issue of an
“accountability deficit” in the NHS. The report did not recommend direct election of
NHS boards. Health minister, Lord Hunt of Kings Heath, subsequently promised
that the ACHCEW report would be considered seriously by the Government17. It
may be ironic, but the Government has since decided to abolish CHCs, as part of the
National Plan for the NHS. In place of the unpaid volunteers on CHCs, who are
meant to take a patients’ perspective on local NHS service delivery and public health
issues, are to come “citizen and lay membership” of a succession of new quangos and
committees. They all fall well short of dealing with the question of the “democratic
18
deficit” in the NHS. This “citizen and lay” membership will form :
• One third of the new NHS Modernisation Board [sic];
• One third of the new Independent Reconfiguration Panel [sic];
• A new Citizens Council to give advice to the National Institute for Clinical
Excellence (NICE);
• Additional appointments to the General Medical Council (GMC) and other
professional regulatory bodies;
• Citizen and “lay” inspectors on all Commission for Health Improvement (CHI)
review teams;
• Older people represented on the CHI’s inspection teams;
• Local advisory forums in each health authority area;
• Patients’ forums in each NHS trust with representatives drawn from local
residents as well as patient groups and other voluntary organisations (see also
section 2.6 below).
Labour peer Lord Harris of Haringey – formerly chief officer of ACHCEW –
suggested that the Local Government Bill currently under discussion contained a
provision for a variety of forms of local government. He suggested having a locally
19
elected commissioner for health services . During the debate points were made as to
whether many people would vote in elections to NHS bodies, given the usually low
turnouts in local council elections.
The Labour Member of Parliament Frank Field is also among those who have called
20
for NHS trust boards to be elected . Apart from the idea of there being local control,
he also suggests that this would protect government ministers, who would not then
11
12. be held accountable for everything that went wrong in the NHS. The very first
minister for the NHS, Aneurin Bevan, predicted that health ministers would
eventually become answerable for every dropped bedpan!
Liberal Democrats have supported Primary Care Groups (PCGs) and PCTs, provided
that there is democratic accountability at trust level21.
2.5 Councils of advice?
There have been continuing calls for local government councillors to be appointed to
22
NHS boards . This is what happened in the case of health authority boards prior to
the previous government’s separation of health service providers (NHS trusts) from
health service “purchasers” (health authorities). It may be argued that the role of
local councillor is onerous in itself, and that creating extra duties for some by
automatic appointment to NHS bodies does not in fact do justice to the requirements
of the two types of organisation. There are now closer working arrangements between
the NHS and local government. To this extent it does seem sensible to have some
degree of cross membership of boards. However, a general call for automatic
representation could seem to be special pleading. If NHS trusts were to become free-
standing bodies (see section 5.4.1) then the case for appointing councillors to boards
would weaken. In any case it would restrict the pool of talent from which directors
could be drawn. Just because an individual is involved in public life does not mean
that all aspects of public duty should be personified in one and the same individual.
In other spheres the Government has been keen to follow overseas examples of
practice in governance, for example in local government, with the introduction of the
23
notion of directly elected mayors, and cabinets for local councils . So why not in
health services and the NHS? See chapter 5 for some possibilities. It may be salutary
to recall that Aneurin Bevan (at a time when the members of the various pre-NHS
local health committees and boards were unpaid volunteers) believed that “election
is better than selection”. He also thought that the introduction of democracy into the
running of the parts of the NHS should await reform of local government into all-
24
purpose bodies that could encompass the NHS .
The Government has now decided to go for a middle way. Local government is to be
given the power to scrutinise the NHS locally, by means of calling the chief
executives of NHS organisations to attend the main local authority all-party scrutiny
25
committee, if the authority wishes to do so . This process is also to be available for
consideration of major changes in service provision. Although it would be a move
away from the present situation whereby largely unelected CHCs have a right of
referral to the Secretary of State for Health, it would still be a case of one public body
scrutinising another public body. According to a straw poll by the Local Government
Chronicle, 69% of 109 local authority managers did not believe that they would have
26
the powers they would need to hold the NHS to account . (Although it might
provide some interesting exchanges of view and ideas, would anybody seriously
suggest that, say, the chairman of J Sainsbury be required to appear before the board
of W H Smith to account for how he had been serving the public in the same
geographic location as some of the latter’s shops? In both this hypothetical example
and the intended NHS process neither “scrutineer” would actually have any power
over the examinee, as it were.)
12
13. Many, including the renowned health policy advisory body the King’s Fund, have
commented about the NHS in general, that it has never been good at taking the
needs of local people into account27. An extreme example of this – if not rivalry
between two public bodies – is the battle between a local authority and the NHS in
Lincolnshire. South Kesteven District Council organised a ballot in May 2000, calling
for the resignation of all five of Lincolnshire Health Authority’s NEDs28. In a 25%
turnout, over 7500 (98%) people voted in favour of the proposal. The Council was to
consider in Autumn 2000 the idea of seeking to replace the incumbents by elected
representatives. The outcome of this local difficulty will be interesting.
“The real alternative to secretive, centralised, bureaucratic government is a bonfire of the
quangos and greater democracy and decentralisation”,
Gordon Brown MP (now Chancellor of the Exchequer), 1995 (reference 29).
2.6 A forum for debate?
As mentioned in section 2.4, it is intended that CHCs be abolished. Indeed, referrals
in future, rather than to the DoH, would be to a new body, the Independent
Reconfiguration Panel30, although the final decision would still rest with the Secretary
of State for Health. There are plans to have randomly selected patients chosen for
half of the places on new patients’ forums, which are to be set up in every NHS trust
and PCT31. The other half is to be made up of representatives of local patient
organisations and voluntary bodies. Although it would be a move toward greater local
accountability (as compared with the status quo) it might also be seen by some as a
move from the so-called NHS “postcode lottery” of geographic variation in
availability of certain drugs, to a local NHS lottery for places on a local quango.
Set against all this is the proposal by the House of Commons Select Committee on
Public Administration, that an independent commission be established to appoint the
32
NED members of NHS boards . The Government subsequently announced that it
intended to remove the power of appointment of the trust and authority 3000 NEDs
in the NHS from the Secretary of State for Health to a new NHS Appointments
Commission33. This would be a quango which appoints people to other quangos.
“If the great and the good are not great and good enough to be elected they should not get a
second bite at the cherry through the appointment system”,
Dr Peter Terry, speaking at the British Medical Association (BMA) annual meeting 2000
(reference 34).
The Patients’ Forums are to have the right to direct representation on each NHS
trust board – elected by the Forum31. First there is the fact that half of the Forum is to
be randomly selected from participants in respondents to an annual patient survey by
the trust. (Presumably these people would have been users of the local health
services fairly recently.) Second, any person then chosen by the Patients’ Forum to
become a trust board member could be placed in an invidious position. This is
because the duties of a board of directors should be (collectively) to the organisation
being directed. The NED drawn from the Forum would need to have a fiduciary
duty to the trust, not in some way to the Forum. It is entirely possible that the
hapless individual would have a hard time of it, by trying to square the circle of
representing the Forum’s views and at the same time of sharing the collective
responsibility of the board. If the Forum were not pleased with the person’s
13
14. performance then he or she could presumably be removed and replaced (while the
other board members would not be subject to this mechanism). Yet no individual
director could be expected to be the leader in changing policy and practice when in a
potential minority on a board. From the trust board’s perspective the situation could
be viewed as having a director who might become the permanent “opposition”.
These are hardly good omens for constructive and harmonious workings of the board.
An entirely plausible alternative scenario is that the Forum-drawn NED would “go
native” for the sake of a quiet life. By treating the board as having different
constituencies to which NEDs might be thought of as accountable, rather than
seeking to reform the way that NHS boards as a whole are constituted, the result
would be a mishmash. Notwithstanding any intention to try to bring about wider
influence on the trust boards’ operations, this scheme as set out in the NHS Plan
would lead to appalling corporate governance and should be dropped.
In a further move toward centralised government by quango, the Secretary of State
for Health has now set up a wholly appointed Modernisation Board to oversee the
work of the Modernisation Agency [sic]. It consists of senior managers, clinicians and
patient representatives. Clearly there is a need for modernisation and improvement.
The chief executive of the NHS Confederation has called for it to have an even
wider remit; advising the Secretary of State for Health on all the work of the DoH
and the NHS35. This national body does nothing to address the chronic deficit of local
leadership, however. Also, given that it is made up of some 31 people, it is hardly an
optimum size to make any decisions.
It may be difficult to avoid seeing a general principle somewhere: if there’s a difficult
decision to be made, set up a quango. More seriously, the question should be asked
as to whether the new crop of quangos and other administrative arrangements
described in section 2.4 are likely to really produce a consumer-based perspective
within and without the NHS. We think not. Other possibilities for involving patients
as consumers are considered in chapter 5, section 5.4.1.
14
15. 3 Management and risk
3.1 First do no harm!
“I will use my power to help the sick to the best of my ability and judgement; I will abstain
36
from harming and wronging any man by it” ,
from the original Hippocratic Oath.
The modern form of the Hippocratic Oath that is adhered to by doctors exhorts a
physician to first do no harm. That is, before examining a patient in any way, let alone
attending to any ailment, the doctor should do no harm. Now, the nature of a
particular illness or discomfort may mean that in fact a clinical intervention will carry
a risk of harm. For instance, colonoscopy – visual examination of the lowest part of
the intestines with an optical device – carries the risk that the instrument used will
perforate the bowel and thereby induce damage. The doctor will, as a matter of
routine professional practice, have to weigh up the likely benefits and disbenefits of
the intervention – or non-intervention. In this case it might conceivably include
considerations as to the general wellbeing of the patient (assessing frailty and other
factors), knowledge of the presence or absence of cancerous tumours or other lesions,
other existing illnesses, and so on. In general, all health interventions carry some
degree of risk to a patient; something that we feel is not always appreciated by most
people, including some politicians.
For many years the NHS has gathered a huge amount of personal patient-specific
37
data. Large amounts of this data have remained unused . This is true even at board
level. For example, vast resources have been utilised over the years in gathering
hospital activity data, much of which is inaccurate and most of which has been
unused by management. There are still huge concerns about data variability,
38
especially between the NHS and local authority social services. Although the NHS
is not necessarily unique in its lack of intelligent investigation and utilisation of data
(compare the large amounts of point of sale data gathered by many retailers), it is an
issue of serious concern. This is because the “product” of the NHS is (or ought to be)
better health outcomes. By not having concentrated on meaningful measures for so
long, there is a huge gap in the NHS as to the sort of information that the best run
businesses use to measure their progress. If a bank found that it had similar levels of
error concerning its transactions then the exigencies of day to day business would act
as a powerful stimulant to correction. The NHS equivalent of misposting a cheque
deposit could be performing the wrong clinical procedure. People’s lives should
presumably be regarded as more important than their financial transactions. Devisers
of yet further NHS “information strategies” please take note.
15
16. 3.2 Healthcare and risks
39
The NHS Code of Practice on Openness covers many things . It covers information
about services provided, standards set and results achieved. It covers information on
health policy proposals and changes to service delivery. It also covers the way that
people can go about gaining access to their medical records. The Code of Practice
omits one major area. That is the general topic of the intrinsic risk of medical
treatments.
With the best will in the world, medical interventions can be risky affairs. This
should not come as so much of a surprise if one considers:
(a) the complexity of the human body and of its functions (with its millions of
interdependent chemical reactions going on each second);
(b) the incomplete nature of medical knowledge and how best to apply it
(despite modern science and new developments, not all diseases can be cured
and not all symptoms alleviated);
(c) the fact that health services – all health services – are themselves complex
systems containing many thousands of different people with different
professions and different skills – and different faults and foibles (nobody is
perfect). And the system itself is unlikely to be in a state of perfection at any
given time;
(d) the subject of public health, which deals with the various influences on
health, including housing, education, availability of social services, and not
merely the particular biological and clinical factors with which health
40
professionals are typically trained to deal with .
Point (b) above is very important, but heavily influenced by points (c) and (d). Health
services are managed systems. Managed systems have to exist in similar regimes,
whereby the attributes of individual employees and the various functions and
departments have to be taken into account. When considering the business and
financial performance of a firm, the directors and managers often have to think about
the risks involved. These may include the perhaps more obvious risks to people’s
health and safety, but also nowadays may in principle include a much wider range of
factors (see section 3.3 below).
Medical procedures are not always entirely successful. Incomplete knowledge,
combined with human error, can lead to a figure of success that is much less than
100%. The job of management is to try to optimise resource use so that “avoidable
risk” is minimised as much as possible (given that resources are finite). Clinicians
work to minimise the risk attributable to their interventions (doctors do so according
to the Hippocratic Oath). Management should work to minimise the risk attributable
to extrinsic factors – such as having unclean or unsecured premises, but at the same
time ensure that information on outcomes is focused on, rather than simply processes
(e.g. numbers of operations performed). The total risk – as far as patients are
concerned – results from a combination of these two sorts of risk (together with the
personal risk brought by the patient, as a result of many possible influences,
including age, sex, environmental exposure, genetic makeup, past medical history,
16
17. and lifestyle or behavioural factors). A risky business? Not all of these risks can be
completely specified, let alone quantified. However, what is lacking in the arena of
public debate is something about the actual intrinsic risks of medical treatments.
It is said that perhaps 15-20%, or maybe as few as 10%, of doctors’ interventions are
backed up by evidence to show that the interventions did more harm than good41.
Less extreme-sounding, perhaps, is the suggestion that only perhaps 15% to 20% of
medical interventions have been rigorously validated. This does not necessarily imply
that the remainder are not efficacious. But it does – or should – imply that there
should be much more honesty about what can be achieved by clinicians and health
services. This should also be set against the trend of people – at least in the more
affluent parts of the world – to be seemingly obsessed by all manner of risks (real or
imagined) to health, at a time when their populations are actually enjoying a general
state of health that is probably the best in all human history42.
3.3 Healthcare, and health and safety
However, rather than the health sphere per se, it is in the area generally thought of as
health and safety about which some of the most fundamental problems within the NHS
have manifested themselves.
“The board is required to be sufficiently knowledgeable about the workings of the health
43
authority or trust to be answerable for its actions …” .
The case of general medical practitioner (GP) Dr Harold Shipman encapsulates many
of the management problems. The mortality data that might have been used to give
much earlier detection of the murders being committed by Dr Shipman were
recorded and registered over six years but neither looked at systematically nor
analysed44. This is a very stark example of how certain basic duties of care were
lacking to say the least. Other examples have included discarded blood samples,
human tissue and other clinical waste being found during demolition work at a
45
disused hospital .
Methicillin-resistant staphylococcus aureus (MRSA) is a bacterium which causes
many problems in hospitals. Bacteria are constantly evolving as different antibiotics
have been introduced over the years. The type of bacterium known as MRSA is
particularly resistant to such substances (of which methicillin is one). High bed
occupancy, high workloads and insufficient nursing staff have encouraged practices
that have led to increased risk of falling victim to MRSA attack. Skin-wound and
blood infections can result. The NAO has commented about occurrences of poor
hygiene. Some of this results from individual staff not following basic standards.
Some will no doubt have resulted from overworked staff having insufficient time – or
feeling they may have. The net result can be increased incidence of nosocomial
(hospital-acquired) diseases. Hospitals are meant to be there to help people become
well, not make them ill. To be sure, they are not risk-free establishments. However,
there are safeguards that can be set in place to minimise unnecessary risk.
These are comments about practices. Practices are amenable to management. It has
been said that only 10% of NHS hospitals have proper infection control plans and
only 15% infection control budgets, although apparently all now have infection
46
control teams in place . Would a delicatessen remain in business very long – let alone
17
18. stay out of trouble with environmental health officers doing their job – if it failed to
take seriously matters of food hygiene and allocate appropriate resources to do so, as
part of the normal running of the business? We think not. Yet this is another area where
basic health and safety considerations seem to have been bypassed in the
deliberations of too many NHS boards until fairly recently.
“Is there a clear understanding by management and others within the company of what risks
are acceptable to the board?”
Internal Control Guidance for Directors on the Combined Code, Institute of Chartered Accountants
47
in England & Wales (ICAEW) .
Many different aspects of corporate governance are converging on general health and
safety issues. For example, there are the Department of the Environment, Transport
and the Regions (DETR) and Health and Safety Commission (HSC) plans to update
the Health and Safety at Work Act 1974 (reference 48). In particular, the topic of
internal control has been on many board agendas in recent months. The Combined
Code of the Committee on Corporate Governance, issued by the Stock Exchange,
contains provisions requiring directors to review and report at least annually on the
effectiveness of the group’s system of internal controls. The ICAEW set up an
internal control working party chaired by Nigel Turnbull, an executive director of
Rank Group plc. Among other things, its guidance includes specific reference to risks
and risk management. For example, boards of directors are recommended to discuss
the nature and extent of risks facing the company, and the extent and categories of
risk that are regarded as acceptable for the company to bear. This Turnbull guidance
for London Stock Exchange listed companies is being discussed and implemented
not just by large public companies. The ICAEW is keen to promulgate the principles
of risk management – including ensuring the existence of management processes that
are adequate to identify and monitor risks – in all sectors; private, public and non-
49
governmental .
Referring to health and safety in general (not specifically about health services), the
Royal Society for the Prevention of Accidents (RoSPA) has suggested that more
should be done to improve protection of the public by focusing on Section 3 of the
Health and Safety at Work Act 1974 (reference 50). RoSPA considered that this
aspect of health and safety law was underdeveloped in spite of good guidance having
been issued on control of risk to the public at sports and leisure events, for example.
“It will be important to establish a bridge between risk management in the non-clinical areas
51
of health care (controls assurance) … and clinical governance” ,
Professor Liam Donaldson, Chief Medical Officer, DoH.
A recent Home Office consultation document on “corporate killing”52 floated the idea
of a new law that would apply to a wide range of organisations, not only large
incorporated businesses. This was against a background of notorious disasters
involving large companies. These included the Paddington rail crash of 1999, one at
Southall in 1997, and the Herald of Free Enterprise capsizing of 1987. The
Government’s intention is to define a new offence of corporate killing in situations
where general failure by management could be held responsible for breaches of
health and safety rules that led to death. The IoD has welcomed the intention to
allow prosecution of the body corporate (but not individual named directors).
Opposition was expressed to any extension to cover undertakings in general – which
could lead to many voluntary organisations being included within the scope of new
legislation. This could be a sledgehammer to crack a nut, as it were. It is conceded
18
19. that an anomaly could be thrown up. This could come about in the healthcare sector
if private incorporated providers of care could be prosecuted for corporate killing
whereas NHS providers could not.
Nevertheless, in the context of health services, whether public or private, there are –
or we think ought to be – very clear implications as to health and safety per se. Boards
of directors are the leaders of corporate bodies. They set an example in strategy and
direction. NHS boards are now showing signs of more explicitly considering risks
within the ambit of health and safety. Bearing in mind that health and safety
legislation applies not just to employees but also to customers and visitors, boards
should focus far more on what this means for a typical NHS establishment. They
should spend more time understanding the nature of risks, both clinical and everyday
“normal” risks. Crown immunity has already been removed from NHS trusts for a
number of years, although subsequent practices seem not always to have
demonstrated the seriousness of dealing with issues of health and safety. There are
still examples such as that of an NHS trust being fined the maximum possible under
health and safety law after an 88 year-old patient on a supposedly secure ward fell
from a window after wandering through an unlocked door, which illustrate the need
for action. As the Health Service Journal put it, “It would be easier to defend the NHS
as the guardian of high standards if stories about avoidably poor care cropped up less
often”53. It should now continue to focus the collective NHS mind, as it were.
In response to a request for the views of IoD members about various aspects of health
and safety, one director was interested in the liability of NHS board members under
54
health and safety law . Another commented that it was ‘iniquitous that senior
managers in the public sector are able to “play at health and safety”’. In the
meantime, there could be an iceberg approaching. Hundreds of millions of pounds’
worth of court cases relating to claims against the NHS could be looming over the
next few years. If even some of these were to be successful, then large sums of
money could be removed from health services via payment of legal fees and fines,
and this is apart from the diversion of management resource tied up in dealing with
litigation. This is a stark reminder of the eventual costs of prolonged failure to
address many of the fundamentals. (It has been said that most complaints about the
NHS that do end in formal legal proceedings could have been settled if the NHS had
demonstrated that somebody actually cared about the person’s situation. Thus even
before matters of health and safety there is a vast gulf to cross with regard to
“customer care”. For example, a study of five anonymised cases by Professor Chris
Ham and Shirley McIver of Birmingham University’s Centre for Health Services
Management, contains the suggestion that even if decisions about treatments or the
withholding thereof are explained to patients face to face, the patients may still be
prepared to go to the media or the courts if they feel that the NHS does not allow
55
scope for decisions to be changed .)
The Home Office proposals on creating an offence of “corporate killing” could lead
(by good example rather than legislation, perhaps) to NHS trusts, local authorities
and public utilities having to ensure that there are adequate management systems in
56
place to better protect employees and users of services .
The Government’s new systems of clinical governance, which are now being rolled
out into all parts of the NHS, are welcome signs of remedying some of the lapses that
have gone on over the years. Clinical governance is an important element of
improved quality, but not the whole picture as we outlined above. In this respect it is
pleasing to note the recent comment of the Government’s Chief Medical Officer
19
20. that, “It will be important to establish a bridge between risk management in the non-
clinical areas of health care (controls assurance) … and clinical governance”51.
“Labour will not accept any excuse for poor performance”,
57
Rt Hon Alan Milburn MP, Secretary of State for Health .
3.4 Hippocratic or hypocritical?
The GMC, which was established by the Medical Act 1858 is the main overseer of
medical practice in the UK. A system of self-regulation exists. The law has permitted
doctors to define medical knowledge and which practices are acceptable58. It has been
suggested that – instead of being reformed – the GMC be abolished because one of
its practical effects has been to protect bad doctors rather than removing them from
59
the system . As Dr David Green put it in support of that suggestion, concentrated
monopoly power is the problem. He postulated that, although the various medical
royal colleges would have some influence in licensing doctors, consumer
organisations might get involved.
Society effectively countenanced the establishment of a “medical elite” which was
highly trained and rewarded, but who also had duties including (literally) powers of
life and death decisions. Because of the complexities of function of the human
organism – or rather its dysfunction in the case of medicine - there is an enormous
information imbalance between trained doctors and most patients, and as to how to
treat many illnesses. This is so despite the large proportion of medical interventions
for which evidence of effectiveness is at least lacking (see section 3.2). It can be
argued that the relative financial rewards for most doctors are now somewhat less
than they used to be, yet much of the power (and burden) of decision-making lies
with people who have undergone long and intensive periods of training at higher
educational establishments and elsewhere. (Some observers think that training in
dealing with patients as human beings has not necessarily kept pace with that in
medical science and technology, however.)
The GMC has produced proposals for regular monitoring of doctors with
60
“revalidation” checks every five years . The revalidation proposals have met with
opposition from hospital doctors, who called them bureaucratic and unworkable.
Parliament has passed legislation to permit the GMC to suspend doctors who are
being investigated and also to inform NHS trusts if a doctor’s practices are being
61
looked into . This was by way of the Medical Act 1983 (Amendment) Order 2000.
The NHS Plan refers to the in-principle Government agreement with the BMA for a
new contract with consultants that will make annual appraisal and job plans
62
mandatory . Additionally, for GPs, there are proposals to introduce a greater
63
emphasis on quality of services provided .
There must be few examples of an employer apparently allowing such public
criticism of particular groups of employees – as has been going on in Britain with
regard to recent “blame” stories about doctors and nurses. One actual example – the
reference to the “dullards” who run London Transport, by one of the candidates for
the office of London Mayor – serves to illustrate an important principle. Both the
NHS and London Underground are examples of bodies that are – or should be –
providing high-class public services. There is widespread concern that both are not
doing so. Therefore criticism, when it is due, should be directed at those responsible
20
21. for the oversight of the organisation. That means the board of directors and not
particular groups of employees. Thus Ken Livingstone’s comments were hardly
likely to be aimed at train drivers, say, or ticket sales staff specifically. They were
directed at senior management. The situation should be the same in health. Ruth
Lea used the phrase “corrosive cynicism” to refer to the management culture within
the NHS which has progressively demoralised key groups of professional staff64.
The UK Central Council for Nursing, Midwifery and Health Visiting announced that
more nurses were struck off for misconduct in the financial year ending 31 March
2000 than ever before – although the actual total was 96 nurses, midwives or health
visitors. Yet the Health Service Journal reported that that figure was in fact equal to the
corresponding total for the year 1996-1997 (reference 65). NHS staff do difficult work
often in far from adequate conditions. The Government should act sooner rather than
later to try to stamp out the current emphasis on the casting of aspersions and blame
on individual clinicians who have erred. Doctors, for example, have felt unjustly
66
criticised . The IoD in no way condones negligent behaviour or malpractice, but the
naming and shaming of key groups within the NHS will do nothing to rectify matters.
The “blame” – to use the word again – should quite properly be directed at the very
top of the organisation. Depending on the circumstances this may mean ministers,
senior DoH managers – and the boards of directors of NHS trusts and health
authorities. Certainly at NHS trust and health authority level boards have a collective
responsibility, not one that allows abrogation of responsibility or allocation of blame.
This should be remembered.
“If the hon. Gentleman, as the local representative, is so worried about the matter, he should
take up the trust’s performance with the people who are responsible for it”,
67
Alan Milburn .
Health minister Lord Hunt of Kings Heath has referred to a new statutory duty of
quality on NHS trust chief executives to ensure that they and the trust boards have
68
responsibility for overall quality of service . This will include taking forward
initiatives on clinical governance.
If recent remarks by the Secretary of State for Health are indicative of how it is that
the local parts of the UK’s health services should be held to account (see the box
above), then this is a move in the right direction. In the next chapter we shall
examine ways of doing even better in this regard.
21
22. 4 Management and medicine
4.1 Trust in management
According to the NAO, Members of Parliament are frustrated by the difficulty in
making beneficial changes to the NHS69. It has been said by some that management
within the NHS may be pictured as a matrix, in which the various professional groups
make up one dimension and the actual patients and other stakeholders make up the
other. Unfortunately, in the matrix there are very few intersections that would be
expected to occur if there were genuine lines of management accountability and
responsibility. Thus nurses, health visitors and physicians may have had their own
channels of communication and professional demarcations, which may or may not
have coincided with those who were supposed to have management responsibility for
the organisation. One experienced Health Service manager who had worked in other
sectors than the NHS told the author of instances of isolated projects underway in
parts of individual NHS organisations, about which nobody seemed to care whether
they were ever completed. A tale of a newly formed NHS trust having had its first
senior management meeting eight months after the trust’s formation seemed,
although anecdotal, to be not untypical of a certain lack of meaningful leadership in
too many parts of the NHS. At least any leadership did not seem to connect in an
integrated way with the diverse managerial, clinical and other groups within the
Trust. Other initiatives have been known to get underway from time to time that the
local boards appear to have little interest in. Many people have felt that the NHS
does in fact perform quite well in areas such as emergency care and many aspects of
primary care. Management is in need of improvement to underpin such areas, but
also to take forward other much needed changes.
“Government promises it will pay attention to ‘the customer’s experience’ of the health
service. Patients would rather they paid attention to how well the service treats and prevents
disease. Patients and staff need neither charters, visions, values nor any of the rest of ‘modern’
70
management.”
In its annual report 2000 the NAO recommended that managers in the NHS needed
to use developments in both financial and clinical governance to demonstrate and be
accountable for improving NHS performance. Clinical governance has been
promoted within the NHS since 1997, against a background in which the pursuit of
quality was somewhat fragmented within the Service, with management initiatives
and professional clinical specialist initiatives having very little connection with each
other51. Indeed, there has been at least a duality of lines of accountability as between
the doctors and the management – to put it crudely. Sorting out this out must be at
the heart of making real progress. A statutory duty concerning quality has since then
22
23. been placed on every local NHS body. This could have important positive
implications if it is translated into action.
The Government wants to ensure that each NHS acute trust has a board member
with responsibility to monitor hospital cleanliness71. One journalist has written, “If a
hospital has to be told, at top level, to keep its wards clean … what hope is there … of
reducing the maximum waiting time for an operation …?”72. This is a fairly
fundamental question.
4.2 Dichotomies: cutting through extremes of
care
Much of the discussion about changes to the NHS have focused on two extremes; on
the one hand, a totally publicly funded and run centrally-directed health service, and
a patchquilt of pay as you go private provision on the other. In reality the
overwhelming majority of health services in the world are neither totally state run nor
totally privately run. Oft times the United States of America (USA) is held out by
people in the UK as a negative example of “look what can happen when you have a
private health system!”. In reality perhaps 67% of non-state hospital care in the USA,
73
50% of daycare and 20% of primary care is accounted for by mutual organisations .
Even in the UK prior to the formation of the NHS, hospitals were voluntary
institutions that were run by local committees who shared an ideal of wanting to serve
74
the public .
“No other organisation worth more than £45 billion would allow £100 million units (the
average cost of running a hospital trust) to be managed by people who have little or no
management background except a diploma in health management”,
75
Dr Kailash Chard, GP .
There must be improved management techniques (which should include both
clinical governance and patient participation) to rid the NHS of the ridiculous – and
costly – bureaucracy which can lead to multiple appointments for the investigation of
the same condition: “… people …were going for … operations … they saw eight sets
76
of health professionals and every time they had to wait” . A car repairer faced with
multiple faults on a vehicle is hardly likely to want to tell the customer that the
brakes will be fixed on Monday, but that if the owner would like to bring it back two
weeks Thursday then somebody might be able to look at the engine – or if it did give
that sort of response very often would not expect to remain in business for long.
‘In the face of modern consumer expectations the NHS can no longer continue in a culture of
“producer knows best”’.
77
Alan Milburn .
On the administration front, a consultants’ report by the Virgin Group that was
commissioned by Alan Milburn, referred to the “dead hand of bureaucracy stifling
78
staff who had lost pride in their jobs” . This corroborated Ruth Lea’s comments
64
about “corrosive cynicism” . Another commentator has pointed out a common
experience of many people working in the public sector, including the NHS. This is
one of employees being prevented from focusing on purpose by the requirement
instead to focus on those things that the hierarchy has decided are important. He put
it as bluntly as, “people are dying while the health service is being distorted by
23
24. targets”70. This was not merely about the nonsensical and entirely process-oriented
waiting list target*, but a remark meant to focus the mind on the notion that asking
people working in huge bureaucratic organisations to fixate on targets is likely to
produce an effect of managing the numbers rather than improving working methods
and healthcare outcomes. The comment seems highly apposite to much top-down
management in the NHS over the last several years. Unfortunately there has been a
culture of delusion of infallibility. This has been allowed to continue over the years
by politicians, health professionals and the public. It has to change – the Government
having at least recognised the problem, in the NHS Plan.
“… if the government insists on learning from the private sector why does it learn all the
wrong lessons and apply solutions which the private sector long ago rejected or found
79
wanting?”
4.3 Managing medics
Professor Karol Sikora, formerly in the NHS as clinical director at the Hammersmith
Hospital and now working in the private pharmaceutical sector tells the tale of having
80
had eight consultants under his management when he was in the NHS . He
described them as unmanageable. “The chief executive can’t tell them what to do,
no one can … In my company … if I’m told to get on a plane … tomorrow, I go – that
wouldn’t have happened in the NHS”.
NHS Plan initiatives such as the “traffic lights” system81 have been described as a way
82
of encouraging “managerial infantilism” . This traffic lights system is intended to be
a way of summarising the performance of NHS organisations according to a crude
three-step scale that is analogous to the three colours of British traffic lights. Colours
would be assigned after an assessment of a number of different factors+. If the fears of
some turn out to be justified, perhaps boards and managers in other sectors of the
st
advanced world economy of the 21 century may look forward to receiving similar
reports in the regular management accounts which they use to monitor the progress
of the business. Some people of a mischievous nature might even spot a market
opportunity for NHSE brand coloured pencils for the purpose.
Rather than a comparison with road transport, an analogy with an airline is particularly
appropriate. Airlines have to operate systems that ensure aircraft literally deliver
passengers and goods safely. The companies have to ensure compliance with national
*
The (now slightly reduced) emphasis on waiting lists (it was formerly not even waiting times, which at
least has more relevance to individual patients), without any consideration as to severity of condition or
likely response to treatment, is a wonderful example of a target that is pretty far removed from
considerations of how to optimise health gain. It was acquiesced to by politicians, boards and many
others in the NHS, despite warnings from experts, including health economists and public health
practitioners prior to its introduction as one of the objectives of the Service after May 1997. “Doing
more” of something without considering other factors is not necessarily the best way to utilise resources.
+
Linked to this, the Government intends to introduce incentives by establishing a National Health
Performance Fund in 2001, building up to £500 million a year by the year 2003-2004; about £5 million for each
health authority’s geographic area. Funds are to be allocated according to performance against annually agreed
objectives. “Green” health authorities, NHS trusts, PCGs and PCTs would get their share of the Fund as of
right. “Yellow” NHS organisations would have to use their share for improvements agreed by the NHS
regional office. Red would signify bad performance. For these the allotted fate would be monitoring by the
Modernisation Agency.
24
25. and international safety rules. They have management systems that allow managers
to work with highly trained pilots and other technical staff. In this way they find it
possible to allow the pilots and engineers to have the freedom of using their skills
while at the same time complying with the business requirements. Thus they may
ask a crew to fly from Sydney to New York according to a certain schedule, but
managers will not sit in the cockpit and tell them how to fly the aircraft. It would be
wasteful of resources and almost certainly downright dangerous. Doctors tend to work
in isolation whereas pilots are subject to random breath tests and are constantly
monitored by colleagues and also electronically.83 Interestingly, the Government has
borrowed some aviation terminology, with the introduction of adverse incident
84
reporting, as part of the NHSE’s “controls assurance project” . Launched in 1999,
the project is meant to include risk management. A key criterion is that NHS
hospitals should systematically identify, record and report incidents (“including ill
health”) to management in a positive, non-punitive, way. To this has been added
reporting, recording and analysis of “near misses”85.
86
There have been instances of dismissals of incompetent doctors . However, some of
these have taken years (two years not being untypical, perhaps) and then after
campaigns by aggrieved patients and their relatives. The Government has been
87
negotiating with the BMA to introduce employer-based appraisals of all consultants .
It was intended that, alongside tighter job planning procedures, consultants’
performance and time could be managed by NHS managers.
Detailed management of such a huge body by politicians should be undesirable (cf.
to the aircraft flightdeck analogy above). The new national plan for the NHS states
88
that the principle of subsidiarity should apply within the NHS . The stated aim is
that there is to be progressively less central control and more devolution as standards
get better. The Government had already taken steps to reduce the number of explicit
instructions sent out by the NHSE to the NHS. However, it is still sending out up to
89
100 health service circulars a year (down from 305 in 1996) . The Government now
90
wants that cut to one a week . The idea of centralisation in private sector
organisations, with concomitant restrictions on autonomy and so on, went out of
91
fashion around a decade ago . The Virgin report for the DoH specifically blamed
over-centralised bureaucracy for the poor state of too many dirty hospital wards,
92
chaotic arrangements for booking treatments and a lack of consideration for patients .
Before the 1997 General Election the Labour Party promised that its approach was to
move away from unresponsive and heavily centralised monolithic government
93
structures . Professor David Hunter of the University of Durham has proposed three
94
ways of controlling the NHS . These are:
• loose-tight (tightness as to purpose, looseness as to means)
• tight-loose (tightness as to means but looseness as to purpose)
• tight-tight (tightness as to both means and ends).
His preference is for the loose-tight approach, but thinks that governments usually
tend to go for the tight-loose way of doing things. He has expressed the opinion that
the present Government in fact prefers the last of these styles, which he thinks is a
poor way to proceed. Professor Hunter has also set out the view that managers be
allowed to manage the overall workflow rather than the individual functions within
79
it .
The corollary to any desire for removal of centralised direction so as to permit local
management to make decisions is that the local management should be up to the job and
25
26. be wholly prepared to take responsibility for those decisions, good, bad or indifferent. There
would then be no more buckpassing (“it’s not our fault, it’s the Government/NHSE
regional office/local council/incompetent doctors/difficult patients [insert any one or
more of the preceding]”) nor would there be some of the crasser failures of
management, either by commission or omission. But how could such an aim be
achieved?
The Prime Minister, launching the National Plan for the NHS, did say that if
necessary, the worst performing trusts would have new management put in. The
Commission for Health Improvement may yet have a big job to do.
‘The more NHS management-speak talks about “the people we serve”, the less it feels
obliged to actually do anything about it. It is much easier to put up a lot of meaningless
mission statements on the walls than take the time to find out what patients would like, how
they consider money well spent and thereby save money.”
95
Vanessa Bourne, chair of the Patients’ Association .
Others have commented on the quality problem in NHS management. The chief
executive of the National Association of Primary Care has been quoted in this context
as saying that “’Many problems confronting the NHS now are managerial in
96
nature” .
80
“Who makes the decisions, at what level and on what criteria?” .
4.4 2001: managing the monolith?
The chief executive of the NHS Confederation has said that “… we cannot find
answers by tinkering around the edge. We need really radical change in the way
97
doctors are trained, managed, judged, hired and fired” . Perhaps, but the same plea
should be made about NHS managers. Another of the NHS Confederation’s ideas –
that of a “leadership academy” for the NHS – might be worth serious examination,
provided the concept did not degenerate into some of the ultimately meaningless
management gobbledegook that has been so endemic in various NHS initiatives in
recent years. When hospital matrons’ roles were revamped as those of “quality
98
assurance managers” in the mid 1980s, such jargon reached new heights of
obscurantism. The Government’s intention to establish a national NHS Leadership
Centre for Health by 2001, under the auspices of the planned Modernisation Agency,
99
to develop skills needed in all parts of the Service, could be worth watching . It is
intended that it target chairs and NEDs and also heads of departments.
100
An alternative view is that what is needed is implementers rather than leaders . Dr
Jonathan Shapiro, of the Health Services Management Centre at Birmingham
University, has suggested that the NHS Plan is too centralised. He commented that
top-down prescriptions, the work of NICE and such matters as the traffic lights
scheme (see section 4.3) is likely to diminish any merits that any improved
“leadership” could bring about. This view is certainly in accord with the notion that
the NHS as it exists today is far too big a body to manage efficiently and effectively.
Judging by a recent tale, reported in The Observer, that the NHS was hiring outside
consultants to produce a picture of how many managers there actually were in the
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Service and what it was they were doing, there is a very long way to go . One non-
26
27. manager in the NHS was reported to have remarked acidly to the newspaper, “’can
you imagine a firm like ICI or the Royal Bank of Scotland – or even your local
MacDonald’s – not knowing how many managers it has? It’s a joke.’” Whatever the
future of the Leadership Centre, it ought to seriously consider best (and appropriate)
practice from sectors other than the NHS. In the meantime, a NICE conference
programme for November 2000 contains a session on how to feng shui one’s office. Is
there any hope?
27
28. 5 Is there really no alternative to
the NHS way of providing
healthcare?
5.1 Alternative forms of healthcare provision
This Research Paper is mainly concerned with the organisation and running of health
service provision, rather than the funding thereof. The IoD has already set out
support for healthcare delivery to be free at the point of use for defined core
102
services . As well as that, Ruth Lea suggested that the NHS be broken up into much
smaller units. In this Research Paper we take a brief look at other possible models
than that run by the NHS. Despite the very many and great successes of the NHS,
we consider that it is a somewhat arrogant view to assert, as some do, 52 years after its
founding, that all is still sweetness and light. It is interesting to note that the
Government’s NHS Plan, whereas it is very firm indeed about having examined (and
rejected) some overseas models of funding of healthcare does not contain similar
analysis of extant examples of providing healthcare.
The IoD sees no case for supporting wholesale privatisation of the NHS. Even if one
believed in it, it could not be brought about and there is no point in having a
philosophical debate for the sake of it. Private health insurance, also, is not the total
answer to the problems of the NHS. Private insurers are not generally very interested
in people who are long-term sick, for example.
Ruth Lea proposed that provision of health services be delivered by way of self-
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governing mutuals . The Government’s NHS Plan throws out a challenge to those
who think that the present NHS is not sustainable: “Often the alternative
prescriptions for healthcare in our country are presented as simple panaceas, rather
104
than subjected to adequate discussion and analysis” . We concur with this approach,
but also strongly believe that turning a blind eye to some models of healthcare
provision in other countries runs the risk of perpetuating some of the apparent
management complacency that the Government itself is trying to tackle in its
ambitious NHS Plan. The following chapter attempts a short overview of some of
those possibilities.
“I have headed up and been part of some large organisations and I tell you, I would not know
how to run efficiently an organisation of a million people and I do not know anybody who
would”.
105
George Cox, IoD Director General .
28
29. 5.2 Mutuality and medicine
Ruth Lea has advocated that NHS trusts for both hospital and community care
should be taken out of the public sector and become independent non-profit-making
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mutuals . Subsequently others have made similar suggestions (for example,
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Professor John Kay, a director of London Economics ). John Kay set out several
reasons for bodies such as hospitals becoming mutuals. He made the general point
that there are specific needs that a competitive market may not meet very well.
These include situations where:
i. customers alone have knowledge that is specific to the business;
ii. there are not only individual, but community, benefits from the activity;
iii. the service is a local monopoly;
iv. the market has missed an opportunity.
For health services the last three of these criteria apply. For the first there is a large
107
asymmetry of knowledge as between trained clinicians and many people . Despite
the still largely paternalistic nature of the doctor-patient relationship, it is the case
that medicine and its underlying science and technology is not a simple matter, and
there has to be some reliance placed on the body of medical knowledge. This is
analogous to passengers having to have faith in the abilities of the aircrew to handle
the passenger plane in a variety of conditions. There is a change underway – for
example with increasing numbers of patients accessing a wealth of material via the
Internet. To be sure, there is no guarantee that the information gleaned in this way is
necessarily accurate, and there is always the issue of needing to interpret it and set it
in context. Nevertheless, patients and indeed doctors are coming to recognise a
change in the nature of their relationship to become more consumer-oriented – at
least for articulate patients with Internet access (by no means all patients).
As far as the IoD is concerned other reasons for considering such possibilities as
mutual organisations crop up in addition. These include:
1. Recognition that trying to manage a workforce of a million is unrealistic despite
the intentions of trying to improve matters by a variety of quangos, national
leadership initiatives and potential “naming and shaming” exercises as outlined
in the Government’s NHS Plan. A proliferation of quangos may lead to some
improvements in certain specialist areas. As a means of managing the NHS it
seems unlikely to succeed. For one thing cross-organisation management
authority is lacking. For another, the very number of potential interlinks between
the new and existing bodies seems highly likely to lead to wasted bureaucratic
effort. In the case of the Government’s plans for transport, we have criticised the
setting up of a talking shop quango (the Commission for Integrated Transport).
On the other hand the IoD gave a cautious welcome to the actual spending plans
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and DETR’s intended practical actions .
2. The fact that the IoD supports giving meaningful freedoms to organisations to
most efficiently manage their resources and pursue their objectives. Better
objectives
decisions could be made, with better corporate governance, and the freedom to
take some of the difficult decisions that we fear the NHS Plan will still leave
unmade in too many cases, thus not achieving the most efficient and effective use
of the nation’s resources to improve the healthcare of the nation. Health policy
expert Professor David Hunter has expressed doubts as to whether NHS
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30. managers “have the capacity or support to deliver what is increasingly expected
of them”109.
3. Although the Government, in its NHS Plan has set out many commendable and
ambitious aspirations to create a “patient-focused” set of health services, the
public sector is not the most appropriate sector to do so. Some element of market
power – albeit restricted – would naturally arise from organisations whose
directors could be made far more subject to scrutiny and judgement of their
performance than are those currently charged with stewardship of local parts of
the NHS. It is not possible to replicate a true consumer culture in a large public monopoly
(the present NHS) – and certainly trying to do so via a public monopoly is a fairly
inefficient way to do so. As one questioner put it at the IoD policy seminar on
health held in May 2000, has anybody heard of a nationalised monopoly industry
becoming consumer-led? Many commentators have made similar points about the
state’s inability effectively to target and respond to individual needs For example,
see reference 110. Apart from any desire to make the NHS more patient-centred,
the coming into effect in the UK of the European Convention on Human Rights
will no doubt exert some fairly strong influences, one way or another, on the
NHS.
4. Despite some of the ills of the NHS, there is still much goodwill towards the
nation’s health services, and neither outright privatisation nor an emphasis on
health insurance is being advocated as a solution. Research by bodies such as the
Institute for Public Policy Research have shown that there is still a high level of
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support for the principles of a health service that is free at the point of delivery .
To contemporary British readers, mutuality and healthcare are actually probably most
familiar in a funding context. Mutual insurance is one way of covering healthcare
costs. In France compulsory health insurance covers 99% of the population, although
the insurance only meets 74% of all health treatment expenditure, which is paid at
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the point of service . The remainder is met 13% by the patients, 5% by private
insurers and 7% by voluntary mutual funds. Germany is but one other country where
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there are mutual non-profit sickness funds . The British Government does not
favour social insurance schemes for funding healthcare, and indeed has criticised the
114
French system of mutuelles for being wasteful of resources . Nevertheless other
countries do indeed run viable health services that operate according to different
115
principles and practices to those of the NHS . Thus it is disingenuous to suggest, as
is done in the NHS Plan, that “The systems used by other countries do not provide a
116
route to better healthcare” . Does the Government mean nowhere on Earth? As
David Green put it, when paying money to a mutual organisation, it means paying
money to an organisation which is on the patient’s “side” in the system, as compared
with paying taxes to the Treasury, which has different priorities to those of the
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patient . This point should be borne in mind when considering what follows below.
“Bureaucratised committees, politicised inquiries and endless review bodies tend to be
inherently conservative and unresponsive to change. Using taxpayers’ money and monopoly
suppliers, modern governments and their agencies inevitably lack the information and
incentives needed to respond to the subjective desires of the millions of individuals they are
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attempting to serve.”
30
31. 5.3 Overseas examples of mutual healthcare
provision
There are examples of mutually run systems elsewhere. The United Nations (UN)
published a survey in 1997 on the global extent of the mutual health (and social care)
sector117. Much of what follows up to and including section 5.3.6 is derived from this
UN survey.
The UN Survey provided a detailed classification of mutual (or co-operative) health
and social care. The terminology used varies around the world. Thus there are
“health co-operatives”, “medical co-operatives” and “joint health/medical co-
operatives”, “group health associations”, “community health centres”, “group health
plans” and “health maintenance organisations (HMOs)”, for example. Note that not
health (HMOs)
HMOs)
all HMOs (which occur in the USA) are co-operatively organised. In terms of type of
ownership,
ownership three broad categories of health co-operative or mutual are:
(a) Those owned by users: these include fully independent self-governing
users
enterprises owned and directly controlled by their members. In respect of
ownership they resemble the British retail consumer co-operative societies, which
as far as their structure and style of operation is concerned are the descendants of
a co-operative society set up in Rochdale in 1844. In the case of the health and
social care entities, members are the actual or potential users of the services.
Members may in some instances not only represent themselves but also relatives,
households or other dependents. (This type of enterprise includes some that
combine both health insurance and service provision, of which they directly
deliver at least part of all healthcare services required by the members. In the
USA this type of enterprise is thought of as a subcategory of HMOs – some of
which are for-profit and others are not-for-profit.)
(b) Those owned by individual providers: including enterprises owned and
providers
controlled by groups of health professionals. In this respect they resemble in
structure the general class of producer or worker co-operatives, of which there are
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currently perhaps 1200-1500 examples in the UK . The healthcare examples
looked at by the UN are usually owned by doctors but sometimes by dentists,
nurses or community health professionals.
(c) Those owned by non co-operative enterprises which include health services
enterprises:
owned in common by groups of enterprises. These include self-employed doctors
or independent for-profit medical practices, which may set up a joint purchasing,
supply or marketing organisation. In this respect they would not be dissimilar to
certain agricultural co-operatives.
5.3.1 User-owned health co-operatives
At the time of the UN Survey these were known to exist, to varying degrees, in Italy
Italy,
Spain, Sweden,
Spain Sweden the USA Canada Costa Rica Panama Argentina Bolivia Brazil
USA, Canada, Rica, Panama, Argentina, Bolivia, Brazil,
Israel, Senegal,
Israel Senegal the United Republic of Tanzania, Zaire South Africa, India Sri
Tanzania Zaire, Africa India,
Lanka, Russia, Japan, Malaysia, Singapore and the Philippines. In only one of these
Lanka Russia Japan Malaysia Philippines
countries had they developed to a highly advanced stage. Imagine a nation where
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32. 67% of non-state hospital care, 50% of daycare and 20% of primary care is accounted
for by mutual organisations73. That country is the USA.
5.3.2 The West: The user experience in the USA
Co-operatives have been involved in healthcare in the USA for over 60 years. Every
day in the USA over 200 thousand people have medical appointments with doctors at
co-operative and not-for-profit HMOs119.
Many HMOs have concentrated on primary care as a means of avoiding more
expensive hospital care. According to a document prepared by the US National
Cooperative Bank, typical HMOs attract 20% more patient visits than do the fee-for-
service equivalents. One of the biggest HMOs – Group Health Cooperative of Puget
Sound – provided services to about 480 thousand people, some 86% of whom were
covered by health insurance through their employment (one in 11 of the population
of the State of Washington). In May 1993 it was the seventh largest non-profit HMO
and the 18th largest HMO of either the profit or non-profit variety in the USA. It was
established in 1945 and was consciously based on the principles of the original
Rochdale consumer co-operative. Interestingly - because it was more or less a
contemporary of the early NHS – the Group Health Cooperative purchased a hospital
where the doctors already considered that to capitalise on people’s illness was
unethical. The purchase was completed by relying on members’ share capital and
personal loans, and also further capital was raised by the sale of interest-bearing
bonds. One sixth of the 480 thousand “enrolees” were members, who had paid a
lifetime membership fee of $25. Furthermore, they elected a board of volunteer
trustees. There were also three elected regional councils and 23 medical centre or
local advisory councils, made up primarily of elected volunteers. Special interest
groups were set up from the membership to deal with consumer issues such as elderly
persons, women and with mental health. By the close of 1994 the number or enrolees
had reached 510 thousand. By 1999 it employed about 9800 people.
As a co-operative it was described as consumer-controlled and as an HMO it was a
consumer-controlled,
scheme that provided comprehensive medical care for a fixed prepaid fee together
with small copayments. By way of illustrating the scale of the organisation, it was the
ninth largest employer in Washington State (1007 doctors and other medical staff,
1533 staff nurses and 7274 other personnel). It operated two hospitals, an inpatient
centre, nursing facility, five specialty medical centres and 30 primary care (or family)
medical centres, with 694 beds. The Cooperative contracted with 38 other
organisations for health services, had a network of primary care community doctors
working under its guidelines and arrangements with 1950 other non-staff doctors to
provide healthcare in places where there were no staff doctors or temporary staff. It
also worked with the University of Washington on patient care, research and
teaching. These and other activities described in the UN Survey read like a
microcosm of the NHS; they also include long-term care, health promotion services
and a 24-hour telephone helpline staffed by nurses (recall the present NHS Direct).
By 1996 it was reported that membership of HMOs organised as co-operatives had
reached perhaps 1.5 million people. The largest physical concentration of HMOs was
to be found in Minneapolis, where nine HMOs provided coverage to 1.2 million
people (70% of the local population). They, like most HMOs, undertake to sell their
services to local employers. As a result, business-sponsored purchasing coalitions
developed to help broker the best deals. Companies established member-owned
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33. cooperatives to purchase healthcare in a dozen cities across the USA. These included
Minneapolis, Detroit, Memphis, Sacramento, Salt Lake City and Seattle. These
healthcare purchasers and providers have to negotiate to achieve optimum deals.
The Health Insurance Plan (HIP) of Greater New York had 914 thousand members
by 1994, 39% of whom were enrolled via employer-led health plans and another 30%
were members of health plans provided by the New York city government. The
figures also included dependents. Only 6% of members came within the category of
“other”, and the remaining 25% were people entitled to Medicaid, Medicare or other
publicly funded health programmes. The HIP owned and ran primary care medical
centres, with routine laboratory and X-ray services on site in many of them.
Another form of mutual in the USA is the community health center Mainly to be
center.
found in rural areas and inner cities, such centres are democratically owned medical
care providers. They provide healthcare services mainly to low-income people who
are not adequately served by doctors who practise basic medicine. Each day some 60
thousand people receive care at these community health centres120. There were
estimated to be over 500 centres which received the greater part of their income from
federal funds but about 400 which did not receive federal funds at all.
In New England a non-profit coalition of 65 private and public companies represents
more than two million residents in purchasing healthcare121. The Massachusetts
Health Care Purchaser Group provides its member firms with information tools to
assist their choice of health plans, negotiation of contracts and rates, and employee
education.
A different kind of mutual is the United Seniors Health Cooperative in Washington
DC, which was set up in 1986, with members who are almost all elderly persons. It
promoted the idea that informed consumers of health and social services are those
best able to help themselves. The UN reported that by the end of 1993 it had seven
thousand members.
Other types of user-owned health co-operatives in the USA included some that
operated on a fee-for service basis. Hospitals and medical professionals across the
country have also set up co-operatives to achieve economies of scale in services such
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as hospital supplies, laundry, computer and medical equipment .
The UN estimated that about four million people in the USA were served by their
own user-owned health co-operatives.
5.3.3 Going East: Japan
Two kinds of health mutual operate in Japan. They are based on the consumer co-
operative and the agricultural co-operative movements.
5.3.3.1 Consumers and health
Japanese health co-operatives developed originally in the 1930s, and were then
reinvigorated after the Second World War, in response to dissatisfaction with both the
public and for-profit health services. When the government introduced a public
health insurance scheme for the whole population of Japan in 1961, it was thought
that health co-operatives would become redundant. This did not turn out to be so,
and indeed subsequent privatisation of both public health and social security services
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