My mission statement

The times we are working in now need a great deal of accelerated change and there must be no negotiating that down. So my mission statement for this part of my consultancy career is to be clear that there needs to be and will be a lot of change from the work that I do with individuals and organisations and if organisations don’t want that, then it is probably best to go somewhere else.

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One man’s incentive is another man’s ideology….

Filed Under (Culture of the NHS, Public service reform, Reform of the NHS) by Paul on 19-01-2010

In December 2009 David Nicholson Chief Executive of the NHS gave an interesting interview in the Financial Times in which he said,

“One of the mistakes that the ideologues around reform make is that they think that all you have to do is put the right incentives and penalties into the system and the service will respond”

NHS culture always demonstrates it’s a bit rattled when it calls people it disagrees with ideologues.

What they mean is that we inside this warm and cosy NHS culture work with common sense. Those people outside trying to change us only have a nasty foreign thing called ideology which we don’t need.

As David Nicholson knows, the issue about incentives is a really important one. And he is right – most of the reforms have been based upon introducing incentives into the system. Reform believes, for example, that a provider will work better and harder if they get paid for the work they actually do and don’t simply get a block grant irrespective of the amount of work they do.

So David Nicholson is quite right – the introduction of the tariff and the way in which it works as an incentive – is one of the crucial aspects of reform. And it’s important when he says that such things are ideological and outside the NHS.

His view is important both because we have a General Election coming up where the nature of incentives will be a part of that campaign. Even more significantly the NHS is going to have to start to face very large scale change brought about by tightening resources. I think productivity improvements will depend upon incentives working as an integral part of the NHS.  

This may be an arcane reform issue, but it is these sorts of issues which will determine whether the NHS will succeed in improving productivity or will fall and become too inefficient to survive in its present form.

In December I posted about the current contradiction contained within the leadership direction of the NHS. On the one hand there are those that believed in reform and would try and improve productivity by bearing down on the cost of acute secondary care by reducing the tariff.  On the other hand there are those who see the decrease in the price of procedures as being too difficult for the hospitals to survive and therefore want to be able to suspend the application of the tariff in their area.

The danger of having a leadership that believes both in reform through the tariff but also in allowing people to opt out of the tariff is that the productivity levers will cancel each other out. Tariff with be deflated to improve productivity and yet precisely those hospitals that need to improve their productivity the most will be able to opt out of the tariff and duck the productivity drive.

This is the situation with which we start the New Year. The publication of the tariff is delayed until February but anything less than a sharp deflation in the price of procedures will demonstrate that in an election year the DH has given up on reform-induced productivity. So we can expect tariff to be used to increase productivity.

However the operating framework published in December provides a get-out clause 

“3.43 In additions SHAs may exercise discretion to temporarily suspend contractual arrangements between PCTs and providers in their region where these arrangements are demonstrably not operating in the interest of patients”

So an SHA can say that because an inefficient hospital can’t work to tariff we will ask to opt out of the main way we have of improving productivity in that hospital.  This still leaves the power to decide whether the tariff is allowed to work as an incentive or not to the NHS at the centre.

And here is where David Nicholson and his common sense come back in. In December he told the NHS that incentives – essentially ideological things – were external to the NHS. When an SHA comes to him and says “Can we say that the incentive of the tariff won’t work in my area?” will he agree with the SHA – the tariff as external to his NHS – or will he stand by tariffs as necessary incentives?

A lot will turn on whether the ideology of incentives has penetrated the NHS.

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