Health and efficiency

(No, not H&E!)

Dr Malcolm Kendrick, in the third part of his inquiry into the UK's National Health Service (NHS) What is wrong with the NHS?, summarises the problem: 

[I]n the last four to five years, productivity has fallen by around twenty per cent. ...[W]hat we have is twenty per cent more staff, working just as hard, probably harder. Yet, they are creating no additional clinical outcomes. Where does this leave us? ...There is only one possible conclusion. Which is the following. At least twenty per-cent of the work that clinical staff are doing is non-productive.

A large part of the problem appears to be the lamentable proliferation of regulatory oversight and overseers in the NHS. He quotes from a report (pdf) by the Institute of Government:

We found that hospitals that had more managers or spent more on management were not rated as having higher quality management in the staff survey, nor did they have better performance. The implication being the overall hospital performance is dictated by clinical actions and behaviour, while hospital management is focused on administrative tasks ensuring regulatory constraints are met. The number of managers in each hospital was largely determined by the administrative tasks that needed to be fulfilled, with the scope of management circumscribed to these well-defined tasks. (Dr Kendrick's emphasis)

Dr Kendrick illustrates this point by showing a picture of Dr Gordon Caldwell lying beside the paperwork necessary to admit one patient to the Accident & Emergency department of an NHS hospital.

'These are the forms that now have to be completed to admit one patient in Accident and Emergency.'

It's not uncommon, in my view, for large institutions, be they public or private, to lose sight of their original goals. After enough time these organisations' existence is taken as a given, and they cease to be judged solely on how good they are at achieving their stated objectives. In the case of NHS hospitals, the original goals would have been expressed in terms of clinical outcomes but, because of regulatory pressures from outside, those outcomes have ceased to be the over-arching measure of success. 

This is where a Social Policy Bond regime could help. It would set down our long-term social and enviornmental goals and inject market incentives into their achievement. At every stage of progress toward achievement of our goals, investors in the bonds would have efficiency as their over-riding criterion. The bonds would always be owned by those who can maximise the speed and cost-effectiveness of the targeted goals. 

A bond regime targeting the health of a country's population would express its goals in terms that are stable, and long term. A health bond would target a range of indicators that could include such goals as improvements in longevity, reductions in infant mortality, and improvements in Quality Adjusted Life Years. (It should exclude such indicators as five-year cancer survival rates, which can mislead.) Broad measures such as those a bond regime target would be readily comprehensible to the public, and so would attract more buy-in. Links to my work on applying the Social Policy Bond concept to health can be found here.