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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Changing the NHS in order to save it. The alternative to central command.

Filed Under (Health Policy, Reform of the NHS) by Paul on 19-04-2012

On Tuesday I tried to make the argument that one of the main aspects of the NHS that some people were campaigning to save is that of central control. I suggested that there was some confusion between means and ends and that it was perfectly possible to save the basic principles of funding and preserving the equality of the NHS without the necessity of having central control for the whole organisation.

Unsurprisingly this is a contentious issue – and I want to come back to it on several occasions because it matters so much to so many of us and we very strongly believe in different and opposing things.

A number of people were interested in the argument but felt that I had inadequately explained what the alternative to central control might be.

In organisational terms I make sense of this by describing the move that the NHS has made from the time when it was viewed as a single organisation to where, over the last 20 years of reform, it has been moving to being a system of different organisations.

This is much more than semantics. There are still signs that the NHS exists as a single organisation. It has, for example, someone called a CEO, and usually if something has a CEO then it is usually a single organisation. The CEO of a single organisation usually feels responsible for everything that goes on within it and feels that they have the right and duty to make some things happen and prevent others from doing so – within the organisation. This is what has been referred to as ‘command and control’.

A system of organisations works in a different way. Rather than, for example telling people to do things, a system of organisations recognises that the autonomy of organisations to run their own affairs is important. The job of the system is to provide incentives for the organisations within the system to act in certain ways. These incentives persuade the organisations to act in their best interests to achieve wider system goals.

I stress that I am not saying that a system of organisations has no centre. In the case of the health service there is an ‘N’ in NHS. The difference is in the methods by which the centre influences the delivery mechanism and the experience that the delivery mechanism has of being in charge of its own destiny within that system.

Bringing down maximum waiting times is an interesting example here.

Quite rightly people saw this is a central target issue. In my real day-to-day experience of this the target was set by the English people in the 2001 Labour Manifesto and as I was working at the centre at the time, I and many others took that seriously.

The old style NHS – being run from the centre in Whitehall – picked up the phone and told hospital CEOs that they had to reduce maximum waiting times. This had some impact because the people who work as CEOs in the hospitals recognised that they worked in a single organisation, and that if they wanted to continue to work in the health service then the only way they could maintain a career was to work for the person who was shouting at them to reduce waiting times. So out of fear they tried to do things.

As I say this did have some impact but it fell some way short of success.

Much of the culture of the NHS still works this way. There is still a lot of shouting.

But from 2002 onwards the Government (the centre) introduced a new scheme of payments for hospitals which, for the first time, paid hospitals that did more work more money for doing it. This provided hospitals with a direct incentive to do more work – because they get paid for it.

In the British society of 2002 this was not a weird thing to do. In fact in most walks of life it was a normal thing to do. If in any service or industry you wanted someone to produce more things you paid them more money to produce them.

But it was a new way of doing things in hospitals. Some hospitals were not capable of getting on top of their costs and their productivity, but some recognised that this incentive would ensure that they did more work.

This is an example of how a system of organisations can incentivise organisations to achieve something. In 2002 this incentive was added to by another, patients were given the right – if they had been waiting longer than 6 months – to move their operation to a hospital that could carry it out more speedily – and if they moved to hospital x, then hospital x got the money for doing the operation.

Again, in British society, this was not a weird thing to do. It was quite normal for money to follow consumer preference. But it was new to the NHS and in 2002-5, because patients did not want to wait longer than 6 months, more than 50% of them chose to go to a place with shorter waiting times.

The combination of these two incentives reduced waiting times in a way that shouting at people down the ‘phone would not have achieved.

It then became obvious that if you were going to encourage hospitals to work harder for more resource, then they had to be allowed to hold on to the resource that they had created by doing so. This created Foundation Trusts and a further incentive – the incentive to become more autonomous – entered the system.

So the reforms have been trying to create a system of incentives for autonomous organisations and those who do not want these reforms have been trying to maintain and revert to a single command and control organisation.

It’s a piece of jargon but let’s called the system of organisations a system of distributed power as opposed to central power.

I was specifically asked how a system of distributed power might be able to improve equality of access when a system of central control could not.

I am not saying that this is true for the whole country, but I will use as my exemplar the work of Tower Hamlets PCT 2005 to its abolition 2011. This was a local organisation that was only interested in developing the health and health care of the people of Tower Hamlets. It was a distributed form of power.

The centre constructed a series of incentives to encourage Tower Hamlets to improve. Some of these were reputational. For example, how well were they doing when compared to other PCTs as commissioners? They were to be judged in world class commissioning against how well they were serving their specific community and what were they doing about inequalities.

Every year the money for commissioning NHS health care in the borough left the Department of Health and went to Tower Hamlets (The PCT was actually working in Aneurin Bevan House) It was then up to the local organisation to spend this in such a way as to improve the life chances of the population.

One of the areas they were expected to improve upon was to ensure that the life expectancy in Tower Hamlets started to catch up with the life expectancy of the country as a whole. For that to happen, life expectancy had to increase in Tower Hamlets faster than the national average.

They achieved this. In one of the poorest boroughs in the country people’s life expectancy was beginning to catch up with the national average.

How and why did they achieve this when central control could not? First and foremost because they had a very good relationship with the locality and understood what local people meant. It’s only about 5 miles from Whitehall but I suspect that it is some time since a Permanent Secretary has lived there. So a local organisation understood local people better than a national one.

But this was a local organisation within a very ‘N’ational system called the NHS. So it couldn’t do whatever it wanted, it had to work within a set of national incentives for improvement and change.

They were exceptional people, exceptionally led. And they were incentivised within a national system.

As we shall see in the future when the National Commissioning Office has an outpost in the East End of London it will be entirely different from there being a local community facing organisation.

Other very large organisations have recognised this for some time.

Over the last century the army has moved from herding soldiers in their thousands across no man’s land into machine gun fire by a very strict ‘top down’ authority to recognising that very small groups of soldiers have to make a very large range of decisions on the literal front line. They are the people who are actually at the sharp end and they can see what is happening – the more autonomy they have to react, the better.

The strategic approach to any battle starts from the understanding that no strategy survives first contact with the enemy. The enemy will do something unexpected in the first minute and you’ll have to change. This is not what happened on the Somme. That strategy continued for hour after hour – walking into machine gunfire.

It is now recognised as wasteful in the very biggest sense of ‘waste’ to simply plough on with a central strategy. The patrol on the ground needs to be in charge of what is going on.

So soldiers on active services are now trained to take charge of their interactions with the enemy. They fight within a framework, with weapons developed and delivered on a national basis, but modern armies only work because the platoon is in charge of what goes on at the sharp end.

From war to the NHS may seem a big step. But in the modern world a move away from command and control is necessary for them both.


One Response to “Changing the NHS in order to save it. The alternative to central command.”

  1. John Seddon has written extensively about the failure of command and control and a better way of making the work work here You will also find a different view of incentives to the one expressed in your blog too. Our experience in health is that much of what we do in the name of incentives drives up cost and causes waste. You can read about specific examples in health here should you be interested.

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