Very very quietly a long era in NHS history might just be ending.
I started writing a short history of NHS Management. My original jumping off point was this article from Warwick University Business School
Warwick University offer a specialist healthcare management MBA which absolutely isn’t a conflict of interest with this research at all. Not one bit. And I am an unhappy former Warwick student which means that I haven’t got a conflict of interest either.
In any other industry the finding that managers improve performance might not be controversial, but in the NHS this claim would be treated with open derision by any clinician. NHS Managers are universally regarded as at best a necessary evil, at worse some kind of sinister cult undermining patient care. I have worked with Senior NHS Managers whose nicknames were POD (Prince of Darkness) and The Jim Reaper, both of whom were very good at their jobs.
As I wrote it I realised that it was difficult to write about NHS management without writing about privatisation. A history of NHS management is the history of financial transactions, as much as it is a history of management structures, and the history of NHS financial transactions over the last 30 years has been shaped by attempts to create private sector style market structures in the NHS.
The best place to start with NHS management is 1947. Healthcare was one of several nationalised industries established by the Attlee Labour Government: Coal mining, railways, road haulage, canals, Cable and Wireless, civil aviation, electricity, gas, and steel. The majority of these industries shared a similar structure – a centralised bureaucracy with homogenised business units with little or no autonomy under tight political control. Workers in these industries found their terms and conditions improved but they were offered little or not say in how the businesses were run. Old fashioned Fordist management techniques which actively disempowered workers in their day to day jobs were common to all. EF Schumacher’s critique of centralised bureaucracies – Small is Beautiful – was based on his dispiriting experiences with the National Coal Board.
The NHS was set up very differently to these other industries. Rather than a monolithic public corporation with a command and control management style the NHS was set up as a series of small local units, with little overall political control. Individual units were allowed lee way to set their own processes and patterns of treatments, and were led by their senior Doctors and Nurses. James Robertson Justice and Hattie Jaques may have been caricatures but the management structures described in the Carry On films were accurate.
Not all healthcare was nationalised. The Pharmaceutical industry was kept in private hands, GPs were allowed to remain as independent contractors, and some hospitals like Great Ormand Street were charities funded by the NHS rather than part of the formal NHS structure. Right from its start the NHS had a mixed economy.
This wasn’t necessarily by choice, Nye Bevan had wanted the NHS to be structured in the same way as Steel and Coal, a centralised, wholly nationalised, politically controlled bureaucracy.
“If a bed pan drops in St Thomas’ Hospital it reverberates down the corridors of Whitehall”
He lost the argument, largely because the NHS needed the support of Doctors, who demanded a more empowered, less centralised service. The final version looked more like the kind of mixed economy of Lord Keynes and Stafford Crips than the National Coal Board.
While this was a compromise I believe that this compromised, flexible structure and mixed economy is one of the main reasons why the NHS survived while the rest of Attlee’s nationalised industries fell into inefficiency, crisis and ultimately Privatisation. It allowed different varieties of administration to change the balance of public, private and 3rd sector provision without upsetting the overall establishment, while decentralised structures put clinicians in the lead.
Not all on the left agreed and there has been a long tradition from Bevan to Benn to Corbyn of left wing politicians who regard the 1947 establishment of the NHS as original sin, and who want return to a centralised, wholly nationalised service in line with the other nationalised industries of the Attlee Government:
This structure of the NHS lasted in one form or another from 1947 to 1979. Calculating management and administrative overheads is hard in a decentralised service, with few formal senior management structures. Some functions shifted from the NHS to Department of Health and back again which complicates matters.
My best estimate is that by 1979 the NHS spent between 5-6% of it’s total budget on non-clinical management.
And then came Thatcher. Contrary to what some left wing politicians and commentators might tell you most Tory MPs don’t want to sell off the NHS or get rid of it. There are a small number of loud mouths like Dan Hannan who don’t share this view, but they are the exception. There are however a large number of Conservative MPs who want to shift the balance of NHS provision in favour of the private sector, particularly if it means that profits flow through finance companies they sit on the board of.
NHS Management as we know it dates from the Thatcher era, which probably explains why they are so unpopular. The 1983 Griffiths report led to 2 massive changes in how the NHS was run.
The first of these was the internal market, a split within the NHS between the provision of Healthcare, and the Commissioning or Financing function. This has had a number of different names… the internal market, the purchaser/provider split, commissioning, fundholding are all variations on the same thing. This was supposed to spark off a big increase in the amount of NHS funding flowing to the private sector, but in all honesty it was a dud. The private sector like stable predictable revenue sources, and the chaotic jumble of patients arriving at GP Surgeries and A&E Dpts doesn’t fit that business model
The other change, which is less well known in the public debate was Unit General Management. NHS services were chunked into Units each of which had a General Manager. For the first time the most important decision maker wasn’t a Doctor or a Nurse, but a Manager. From this point on management and organisational structures got bigger and bigger, and the nomenclature got grander and grander. UGMs became Chief Executives, with Boards of Directors. Units became Trusts, then Foundation Trusts, each different variation with a different range of freedoms of action.
The Internal Market and Unit General Management cost a lot of money. By the time Thatcher was defenestrated Management costs had doubled to 12%, and given how parsimonious she with NHS funding this was a massive chunk of money. Once again Neo-Liberalism proves to be more expensive and bureaucratic than the expensive bureaucracies that it replaced.
Incredibly John Major managed to make NHS Management even more expensive. Major combined the clinical leadership model of pre-83 NHS Management with Thatcher era internal market and came up with GP fundholding. There is no doubt that GP fundholding was popular with lots of GPs who used it innovate services. It was, however, the most expensive, most bureaucratic system of NHS management ever devised. NHS management cost increased to 14% of funding, and huge new buildings were commissioned just to house administrators. Quarry House on the Leeds ring road is the most startling example of Major’s army of bureaucrats:
There is nothing sinister or totalitarian about Quarry House at all. Nothing.
In 1997 New Labour arrive and appoint Frank “Dobbo” Dobson as Secretary of State for Health. Dobbo is the most forgotten of all New Labour politicians, and he presides over the biggest reduction in NHS management cost of all time. The 1997 Act starts dismantling the internal market, Fundholding is wound up, and savings in management costs are reinvested in cancer screening. Most of New Labour’s increases in NHS funding happened in the 2000-2008 period, but Dobbo was able to release money into the service by cutting administrative costs.
This probably seems contrary to the popular narrative about New Labour and management costs best represented by this Daily Mail headline:
As you might have spotted I don’t have much time for the Daily Mail but this story really is utterly bonkers. I am sometimes staggered at people’s willingness to believe daft things, but this story really stretches credulity. This is a photo of Benton Park View in Newcastle, the largest Public Administration site I have ever visited:
It houses roughly 10,000 Civil Servants, and you can take it from me that it is massive, a vast fortress of bureacracy. If the NHS really had 200,000+ managers you would need a building that big in every large City in the UK. I think you would probably spot them. At the time the article was written the NHS had about 35,000 senior managers, and about another 60,000 admin staff, including people like clinic clerks and medical records.
Dobson was pushed into a failed campaign to win the London Mayoralty and was replaced by his former Junior Minister Alan Milburn. By the time the NHS Plan was published in 2000 attempts to dismantle the internal market had gone, and instead a new, Clinically led, version of the Internal Market was promoted, including Primary Care Groups and Trusts. From this moment on Labour’s policy was to reform the internal market and make it more clinically led rather than to replace it. Milburn’s shift in emphasis was certainly due to lobbying from GPs, who wanted to reclaim the system leadership they had lost when fundholding was abolished. I am sure that there was also lobbying from the private sector, but I can’t say whether or not this was an influence.
There is a lot of noise about the extent to which Milburn and Blair privatised NHS services most of which is a bit misinformed. Lots of money was spent in the private sector buying up empty operating theatre slots to treat patients who otherwise would have spent a long time waiting for an NHS operation. I am not aware of any services which were transferred wholesale to the private sector in this period.
The difference between spending NHS money in the Private Sector to deal with the backlog waiting list and the wholesale transfer of services to the private sector isn’t really explained well in the media, and I suspect it suits some politicians on both sides to blur the distinction.
I will declare an interest here – I was one of the NHS managers who did this- I ran a Primary Care Trust whose local NHS Acute Trust had insufficient operating theatre capacity to achieve the targets for reducing Orthopaedic waiting lists. We did a deal to offer any patient waiting a long time the chance to go to the then BUPA Hospital in Washington while new theatre capacity was built
It does annoy me rather to hear this shift of NHS activity into the private sector described as some kind of sinister creeping privatisation. I met some of the patients who had suffered for years on waiting lists and I have no doubt that this was the kind of pragmatic action to ease suffering that Attlee would have approved of.
There was also quite a bit of creeping nationalisation. The proportion of GPs employed directly by the NHS increased sharply. We took over a GP surgery and established our own Dental practice to make it easier for people to access care. Informing our Non-Executive Directors that I had successfully Nationalised Primary Healthcare in Marske was a particular highlight.
There was also a shift in the distinction between Private and Public within Pharmaceutical R&D – an area which the 1947 Act kept in the Private Sector. The NHS and Healthcare Charities took a greater role in R&D, filling the gap left as Pharma Companies shifted priorities to areas like Obesity and Erectile Dysfunction.
By the time New Labour left office the management and admin over head was rising again, driven the increase in regulation after a series of scandals such as Bristol and Shipman. By the time I left the NHS there was 1 regulator for every 3 managers, and any kind of flexibility of approach was becoming stifled.
Andrew Landsley arrived in 2010 with a mandate from David Cameron that there would be no top-down reorganisation of the NHS.
He of course then spent £2bn on a top down reorganisation of the NHS, which weakened the Purchaser and Commissioning function to the extent that it was no longer fit for purpose. The structures which were established by 2012 Health and Social Care Act are currently being reversed to create bigger, strategic NHS management organisations spookily similar to the Strategic Health Authorities that the Act expensively abolished.
The rationale behind this was pretty obvious – to make it easier for NHS Services to be transferred wholesale to the Private Sector. There was also a move to make it easier for the private sector to run the commissioning of services, although this was largely blocked by some sensible and strategic obfuscation by Senior NHS Managers.
The costs of market testing, procurement, and legal challenges associated with Landsley’s new model have driven management costs higher still, although it is becoming harder and harder to track management costs from the data the NHS providers as structures are so opaque.
If I had written this a year ago I would have had only 2 things to say about Jeremy Hunt. Firstly that he is an inadequate, thin skinned, neurotic weirdo who has surrounded himself with like minded people, and who collectively have allowed a neurotic, micro-managing culture to seep throughout the service. Not all of the senior managers who have worked for Hunt are in that mould, but the ones who aren’t don’t stick around for long.
The second is that he has presided over a long era of relative decline. In order to achieve the savings targets set by the Government the NHS needs a radical reconfiguration of services. But the radical reconfiguration of services needs a big majority in the House, which the Government hasn’t had since 2010. Instead the savings have been achieved by in year measures, a long slow reduction in quality, and an increase in mortality.
A year later however, things look a lot different. Stealthily around the country the NHS internal market is being wound up. No-one is actually telling the public this, instead it is being presented as a way of reducing costs and simplifying organisational structures.
The words being used to describe this are Accountable Care Organisations, or Strategic Health and Social Care Partnerships. These are organisational structures based on large geographical areas without an obvious purchaser/provider split. One of the key figures in all of this is Andy Burnham, former New Labour Health Minister and now Mayor of Manchester, who is using Devo-Manc to unpick chunks of the 2012 Health and Social Care Act, and along with it parts of the internal market. Manchester, parts of Cumbria, and Northumberland are all adopting aspects of this model. If it works I expect other parts of the UK to follow suit, there are “vanguards” exploring similar approaches across the UK.
No-one is going to remember Hunt with the affection that Nye Bevan attracts, even though the NHS that he created wasn’t the one he wanted. But maybe like Bevan Hunt is having to make compromises against his ideology which end up benefitting the NHS in the long run.
The question is – does Hunt actually know about this? Is he quietly nodding through a radical shift in healthcare policy? Or is he so utterly wrapped up with his team of Special Political Advisors that he has no idea what he is signing up to?
I had lots of fun working as the Chief Executive of a Primary Care Trust, and I worked hard to make Commissioning and the internal market work for patients. I was able to use commercial mechanisms to reduce waiting times and waiting lists, and improve the quality of care. But the current commissioning systems are broken, and the cost of fixing them is too high.
Time for the NHS to move in to a new era
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