Tag Archives: health service journal

The NHS: how the accountants are hiding dubious policies

The NHS is quite high up the news agenda these days. From the media there seem to be two big issues: culture and privatisation. The mainly right-wing press say that much of the NHS lacks a caring culture and this often leads to a breakdown of service. Left-wingers, and NHS insiders, worry about the new commissioning rules, and whether unscrupulous private companies will bid their way into contracts that destroy what is good about the service. These are both valid concerns, but a third issue should be causing more controversy than it does: funding. Not so much the NHS’s overall budget, though that too is worthy of debate, but how it allocates what it has. Recently the Health Service Journal has highlighted no less than three quite distinct issues on the topic. Politicians should be paying attention.

The first was an opinion article on 14th February by Robert Royce, a visiting fellow at the King’s Fund, the health think tank. His subject was the Mid Staffordshire Foundation Trust: but not the Francis report, but the preceding report by Monitor, its regulator. This report questioned the trust’s financial viability, suggesting that the hospital lacked scale. Hospitals like Mid Staffs are funded mainly through something referred to as “the tariff”, and which used to be called by Orwellian name “Payment by Results”, which was put in place by the New Labour government. This puts a price on every service episode the hospital performs: payment by activity, rather than by results. This system is often portrayed as being a commercial, market type discipline, but the tariff looks like no market tariff that I have ever seen. It is massively complicated, requiring big information systems resources to work.

What the tariff does remind me of is a transfer pricing system to allocate costs internally between two fractious units of the same organisation, who hope that by referring the problem to management accountants they can find an objective resolution. As the accountants grapple with the complexity of the problem they add layer upon layer of detail, in a hopeless quest to replicate the infinite complexities of real life, resulting in something which is nearly useless for management purposes. The system is designed for a political rather than a commercial environment, with the aim of pretending that strategic value judgements are mere technical problems. In the NHS almost all commentators go along with this pretence.

Mr Royce points to one pernicious value judgement in the tariff. It is that emergency services are bad, and elective services are good. Mid Staffs is perfectly viable financially on its elective services, but is being dragged down by losses on its emergency services. What if the tariff were raised for emergency services and lowered for elective, to genuinely reflect the underlying costs? The the hospital’s viability might look altogether different.

The second article was in the magazine’s “Resource Centre” section on 14th March, and is entitled The real reason for “failing” hospitals. It is by Sheena Asthana and Alex Gibson from Plymouth University. This is dressed up a piece of academic data analysis, but it is politically pointed. The authors look at the funding formula for Primary Care Trusts (PCTs: the bodies that fund the hospitals, at least until 31 March), and tries to correlate troubled hospitals and underlying population characteristics. They find that there is a strong correlation between hospital stress and a high proportion of older people in their catchment area. Their claim is that the funding formula is diverting financial resources away from these areas of greater need towards areas that are less wealthy – and this is the fundamental reason why so many hospitals are failing.

The last government was obsessed with addressing “health inequalities”, an expression that I hate because it implies that the solution is making things worse for the better off, rather then improving the lot of the worse off. And if Ms Asthana’s and Mr Gibson’s study is to be taken at face value, that is exactly what is happening. The present government show no sign that they want to address this awkward issue, and, according to the authors, much the same allocation is being ported into the new system.

The third article was another opinion article, this time by accountant (sorry, independent consultant and former NHS finance director) Noel Plumridge on 21st March. This looks at something that has been bothering me. If the NHS budget is protected, and increasing at a rate faster than most people’s pay is rising (2.6% as against 1%), how come so many NHS organisations are under such financial pressure? He finds the figures for next year’s budget less than transparent but concludes that there are no plans to spend a large chunk of the money at all: they are destined for unspent surpluses or contingency funds to “mitigate risk”. These surpluses are a point of difficulty: the individual trusts that make a surplus are supposedly allowed to reinvest them in future years. But under Treasury rules the NHS as a whole must hand the funds back to the Treasury for good. Is this just a backhand way of breaching the promise to ringfence NHS funding?

I only subscribe to the HSJ because I forgot to cancel it after my attempt to find a job in the NHS ended in failure – now I find interesting articles nearly every week. What these three articles show is that there aren’t enough accountants in politics. NHS leaders are being allowed to get away with some highly contentious political policies by dressing them up in complicated accountancy.


Why are NHS managers so unpopular?

Health Service Journal (HSJ) was on its high horse last week.  Its front cover says “The Big Lie exposed: the truth about NHS management”.  The proximate cause is a report by the King’s Fund called The Future of Leadership and Management in the NHS.  This report suggests that the NHS doesn’t have too many managers, and that, if anything the service is under-managed.  The HSJ is directed at NHS managers, and it is easy to see why they are so fed up.  But the HSJ coverage has a blind spot.  It doesn’t ask how the NHS got itself into this situation, and why NHS managers have become politically toxic.  It’s no use waving around King’s Fund reports; if NHS managers don’t understand of this, they will struggle to reverse it.

But let’s clear the decks first.  The idea that the NHS has too many managers as opposed to those “front line” staff is silly, and the political target to reduce their number is at best unhelpful and at worst positively damaging.  In order to deploy those front-line resources most effectively, they need to be properly managed.  Huge strides have been made by the NHS through more and better management over the last couple of decades.  Furthermore, my impression of the quality of NHS management is that it is easily up to the same quality as the private sector.  That, of course, is not as much comfort as it might be, given that crass management is pretty rampant in the private sector.  So a lot of the political comments made about NHS management are unjust, unfair and often just plain untrue.

So what’s gone wrong?  Well a clue comes in the frequent use of the word “bureaucrat” by politicians.  This is a word thick with negative connotations, of insensitivity to people’s real needs and of the arbitrary exercise of power.  Many of the public’s interactions with NHS management have left just this sort of impression.

The NHS is a hierarchical organisation, with pretty much all accountability through a single man at the top, the Secretary of State.  To most people this is no accountability at all.  One man can’t possibly grasp the intricacies of any particular local situation.  So local NHS officials have huge amounts of effectively arbitrary power.  And they rub our noses in it.

When the local NHS where I live executed a 180 degree turn and decided to close a local hospital rather than develop it, they rode roughshod over local feeling.  A local official just told us the area was too posh to have a hospital.  After a kerfuffle involving the local Labour (at the time) MP, more facilities were promised nearby in an appropriately less posh place – but of course these were soon cut, even before last year’s election.

The problem for most NHS managers is, I think, that they don’t remotely get what the problem here is.  Tough decisions have to be made.  If we followed local opinion all the time the NHS would go bust in days; if we kept consulting nothing would get done.  We have clear mission and we execute it.  NHS managers seem to bristle at the idea of genuine local accountability.  HSJ itself opposed the Lib Dem proposal of directly elected health boards.  Chaos.  Postcode lotteries.  Working for people that don’t understand.  And so on.  NHS managers are all too happy with their hierarchies, allowing them to pass the blame upwards the whole time.

But the local NHS is taking political decisions all the time.  For example, reducing health inequalities, a key local NHS objective, is loaded with political judgements.  A key political objective is to maintain middle class consent for the service; without middle class users the NHS would collapse (and we already have the example of NHS dentistry to show that).  So treating them like muck because they are on the wrong side of the equality equation should be a no-no.  Politicians can see that easily; bureaucrats can’t – it’s just not their problem.

And once you are perceived as an insensitive bureaucrat, the rest follows pretty quickly.  An organisation as large as the NHS will always throw up examples of crass management, which will be gleefully reported by patients and clinical staff alike.  And if managers are overstretched, they are bound to drop some balls too.  Episodes such as the Mid-Staffs fiasco add grist to the mill (and incidentally I did not sense much outrage from other NHS managers in the HSJ coverage of that sorry affair).  Throw in the management consultant blather dropped on the NHS (World Class Commissioning and such), and you have a massive stock of ammunition.

So NHS managers need a lot more political sensitivity, and should welcome more genuine political accountability instead of resisting it.  The NHS reforms are meant to help this, though whether do, of course, is another matter.