NHS Pay- A Triumph Of Simple Shopping 1

Mike Denham Burning Our Money

The magic beans were even more useless than we imagined

Our very first blog about the Simple Shopper was on the new GPs contract (see here). We asked how the Department of Health could possibly have given away such a heavy milking cash cow in exchange for a few magic beans that never even germinated.

Right across the NHS, the Department stuffed mouths with Gordon’s Gold (make that our gold), and got virtually nothing in exchange. The authoritative King’s Fund reckons around 80% of the extra money went on higher costs (eg see this blog). What’s more, right across the board, the pay reforms cost much more than planned:

Yesterday we got confirmation of just how badly the Department of Health fumbled the new GPs contract:

"The NHS work of the average GP in England has been cut by about seven hours a week since the government introduced a new contract in 2004, official figures revealed yesterday.

The contract, which removed GPs responsibility for treating patients outside normal office hours, increased their earnings by 25% in the first year, raising the average for a dispensing partner in a GP practice to £117,000. Many doctors boosted earnings by selling out-of-hours services to their primary care trust that they used to provide for free.

A report from the government’s information centre for health and social care showed the average GP worked 36.3 hours a week for the NHS in 2006-07, compared with 43.5 hours in 1992-93. The reduction was due to more part-time working and fewer out-of-hours responsibilities.

The latest figures showed only 62% of GP partners and 22% of salaried GPs work full-time."

But why? Why would the DoH give away all that money without getting anything in exchange? We know they’re incompetent, but surely even a two year old would want at least a few sweeties in exchange.

It turns out that the DoH really did believe they were getting something in exchange: staff and contractors’ buy-in to reforms with portentous titles like Agenda for Change. The idea seems to have been that in exchange for a mountain of cash, workers would consent to being managed by the commissars and their legions of bureaucrats.

Earlier in the week the King’s Fund reported on the implementation of Agenda for Change, which was the reform programme for pretty well everyone in the NHS except doctors.

The bottom line is familiar: this was a top-down programme imposed on local managers and staff without any detailed consideration as to how it was to be implemented.

A key part of the "reforms" was to be a much closer dialogue between staff and their managers, based around all the usual paraphernalia of the HR consultant’s art: formalised "job design", personal development plans, regular appraisal/performance reviews, more training, etc etc.

Now, anyone who has ever attempted to implement such schemes in the real world knows they are much easier to talk about than to use. Even if you manage to tick all the boxes- making sure everyone has a job description and a regular documented appraisal review etc- that by no means assures better management. Badly handled, they can make working relationships much more difficult.

Which is precisely what seems to have happened in the NHS. The King’s Fund reports its own survey results showing that actually things have gone backwards since the reforms (see report table 4). Fewer staff now have appraisal reviews, fewer staff think their job is "well designed", and fewer staff express job satisfaction.

The appalling upshot is that only one quarter of staff now feel their work is valued by their employer. A total collapse in morale.

Finally, fewer than half of staff now "have a positive view of patient care" (42% vs 54% in 2003). Alarming.

As we’ve said many times, there’s simply no way of managing a guargantuan blob like the NHS. Top down perestroikan reforms like Agenda For Change will never work.

The government has now hit the panic button and put in union man Johnson to stop the engines. So we are now into a long and dangerous drift downstream.

What we desperately need is a government that will bite the bullet, grasp the nettle, and carpe the diem. We need to break up the whole monstrous edifice. Competing social insurers is the way forward.

Sadly, our centrist first past the post electoral system looks incapable of delivering it any time soon.

Which is A Problem.

Mike Denham

Mike is a former Treasury economist who worked extensively on public spending and fiscal analysis during the 1970s and early 1980s. His work included cost benefit appraisal of public projects, analysis of public sector cost inflation and value for money studies.

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http://www.civitas.org.uk James Gubb, Civitas

None of this should come as much of a surprise. We released a report on Tuesday to coincide with the release of the GP Workload Survey you mention above. It argues that the findings are symptomatic of deep-seated inefficiencies in NHS staff planning,largely caused by pressures to meet an explosion of central direction that has forced a focus on targets and (later) financial pressures, thereby creating an upward-looking service with short-term goals, rather than one that is truly patient-centred and able to match supply and demand.
People like to lay the blame for all this at the feet of managers, but this is far too simplistic.
Yes management in the NHS is far from perfect, and the rapid increase overall in management (that has been over double the rate of clinical staff since 2000) can be questioned. But it would be folly to rile managers without considering the system they are working in. In the NHS, managers, administrators and staff as a whole have tended to increase in the wrong places and for the wrong reasons: to meet the latest government targets and objectives, rather than to add value to patient care.
Faced with a cash-rich, but target driven environment, it was all to natural for NHS organisations to throw new staff into the task of meeting stringent government targets, rather than make real efficiency improvements. Symptomatic of this:
i. Little attention was paid to long-term costs when expanding the workforce. The number of people employed by the NHS now stands at 1.3 million – a staggering increase of nearly a third since 1999, and far in excess of projections in the NHS Plan (DH, 2000). This is most acute in the case of nurses, whose employment has increased by an astonishing 340% above that expected.
But as boom turned to bust, the over-shooting of workforce growth targets has caused the current bizarre situation of job cuts at the same time as recruitment drives. Employment in the NHS actually fell by c.9,000 between 2006 (Q1) and 2007 (Q1) according to the Office of National Statistics and of the c.9,000 nurses that qualified between May-September 2006, 31% were unemployed 6 months later.
ii. Inadequate attention was paid to getting the best staff mix. Expansion has not always occurred in the right areas and demand significantly exceeds supply in some specialities. This is most acute in midwifery, where staff increases have fallen far short of matching the 12.5% increase in the number of births since 200.
The House of Commons Health Committee have also found evidence that ‘the current trend of job reductions has ignored future service and workforce requirements’, with, for example, the number of specialist breast cancer nursing posts frozen, in spite of recent demand for breast cancer services.
iii. Little attention was paid to getting the best out of NHS staff. Significant pay increases were given to hospital doctors and GPs even before the new contracts were introduced for them, of 29% and 14% between 2001/02 and 2003/04.
And, as you refer to above, the pay reforms – once they arrived – cost some £540m more than expected in 2004/05 alone, and have had questionable, if any, impact on productivity. It seems as though NHS organisations assumed that paying consultants and nurses more would cause them to become more efficient. But again, this should not be seen as just the fault of managers – more the system. Take the consultant contract as an example: it was the DH that negotiated the form of the contract, under-estimated the costs of them, offered guidance to NHS organisations implementing it that was often issued late, lacked clarity, was rushed and put intense pressure on them to push the contracts through as quickly as possible (NAO).
It’s time for a change. Central planning doesn’t work. It can’t respond to demand, it can’t efficiently direct how contracts should be negotiated and it causes massively perverse incentives, that even the managers know aren’t anything like long-term solutions.
If providers were genuinely independent and there was effective decentralised commissioning – best served by social insurers which would have the proper market-based incentives to respond to patients needs and wishes – much more localised and efficient staffing patterns would emerge.