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Editorial Thursday 22 December 2011: Adam Smith, GOD, risk and failure in the Nicholson Health Service

A fascinating article by GOD - Sir Gus O'Donnell, outgoing head of the civil service, appears in today's Telegraph.


Click here for details of 'Be jolly, bottom-up”, Comrade Sir David tells NHS - 'tis the season to, apparently', the new issue of subscription-based Health Policy Intelligence.


The relevance to health policy is high. O'Donnell questions whether the UK will still be a united kingdom in a few year's time, with the majority SNP government in Scotland driving for independence.

In the NHS, policy already diverges widely. The English NHS is betting its financial stability on a Stalinist power for the NHS Commissioning Board and the purchaser-provider split. Wales, Scotland and Northern Ireland have eschewed the purchaser-provider split.

How are we faring relatively? A National Audit Office report is due out in the Spring, which should make interesting reading. The Nuffield Trust report by Gwyn Bevan, Nick Mays and Sheelah Connolly found in 2010 that "striking differences in performance with some UK countries spending more on health care and employing greater numbers of health staff but performing worse in key areas.

"The analysis confirms that, historically, Scotland, Wales and Northern Ireland have had higher levels of funding per capita for NHS care than England. The research suggests the NHS in England spends less on health care and has fewer doctors, nurses and managers per head of population than the health services in the devolved countries, but that it is making better use of the resources it has in terms of delivering higher levels of activity, crude productivity of its staff, and lower waiting times.

Some of these differences and trends may be because of historic differences in funding levels, which are not directly related to policy differences following devolution. But some will reflect the different policies pursued by each of the four nations since 1999, in particular the use in England of targets, strong performance management, public reporting of performance by regulators, and financial incentives".

The Health Foundation produced 'Quality in Healthcare in England, Wales, Scotland, Northern Ireland: an intra-UK chartbook', a thoughtful and nuanced report in 2009 on the performance of the four NHS systems.

The civil servant as social entrepreneur
O'Donnell writes, "it is not enough now for the Civil Service simply to respond to a dampened economic climate: it needs to become a central part of its recovery and growth ... I am an economist by trade. Indeed, I have been an economist longer than I have been a civil servant, and I believe successive governments have been far too quick to solve problems with regulation and legislation.

"I understand why this is – all our ministers sit in one or other legislating chamber – but we must be more creative and innovative in the way we solve problems without always resorting to the creation of new rules. We must also be prepared to take more risks. In a media environment where failure is punished much harder than success is celebrated, this is more difficult for ministers and civil servants than for our friends and colleagues in the private sector. There are some promising signs that we can, in fact, do this quite well, but taking risks means having a grown-up approach to failure. We should celebrate success and learn from failure".

Hmm. It's an interesting point, although it appears to place extraordinary faith in minimally-regulated markets creating solutions. The most notable thing that minimally-regulated markets have achieved recently is driving the global economy off a cliff.

There is an interesting line of argument that the NHS is non-market. It does (or aspires to do) things that a market would not do: it provides a service to all, based on clinical need and not ability to pay.

In 'Wealth Of Nations', Adam Smith famously wrote, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest".

Many people know that quote. Fewer have read Smith's 'Theory Of Moral Sentiments', in which he write "How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it".

'Theory Of Moral Sentiments' goes on to ask, "How many people ruin themselves by laying out money on trinkets of frivolous utility? What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it. All their pockets are stuffed with little conveniences".

And it suggests that "this disposition to admire, and almost to worship, the rich and powerful, and to despise or, at least, neglect persons of poor and mean conditions, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments".

We need to remember that a partial reading of Adam Smith is worse than no reading of him at all.

The NHS is one of the things that binds our society together. Social cohesion is a good thing, but it should not blind us to poor performance by the NHS, whether through incompetence or indifference.

Is O'Donnell right in the case of the NHS? Has it been burdened by "regulation and legislation"?

That probably depends who you ask. I suspect that if you asked the family of David Gray, killed by the negligence of Dr Daniel Ubani, they would say no. I suspect if you asked Julie Bailey of Mid-Staffs-based 'Cure The NHS', you would get the same answer.

On legislation, it will come as no surprise to regular readers of this site that the NHS could really have done without the Health And Social Care Bill. Very unwisely, Health Secretary Andrew Lansley (saviour, liberator) spent some of this year arguing that he didn't really need a Bill to do most of what he wanted to do. Erm ...

Kings Fund chief executive Professor Chris Ham argues in the BMJ that 2012 will see a new level of focus on the medical profession and its leadership and quality standards.

2012 will see the publication of the Francis Public Inquiry's report: its chair, Robert Francis, warned that "there is a tsunami of anger heading towards the NHS which will overwhelm people paddling in their canoes acting as if nothing is happening".

When it comes to regulation, the views of Peter Homa, founding CE of the Commission for Health Improvement, are well worth a look. Homa gave evidence to the Francis Inquiry seminars, in which he warned "The Government often assumes that newly created inspectorates can operate more quickly than practical. There is considerable risk during a new inspectorate’s early days due to new legal duties, staff, methods, untested Quality Assurance and internal and external relationships".

So, should the NHS not take more risks? That could be the wrong lesson to learn. The problem is not that risks are not taken now, but that 'the system' has a private and highly arbitary way of deciding whether a risk-taker is incompetent, a whistleblower, or someone who took on a task too far.

The fates of promising chief executives Tara Donnelly and Julian Nettel will be known to many of you: I asked Comrade Sir David about them in 2009, but as you can read here, didn't get much of an answer.

Comrade Sir David did say something interesting, though: "When I was a regional director in Trent, we expected top-level performance, and managers had to take risks. Some didn’t pay off, but we'd done a deal with them, with the health community: you push out and do your best; we'll look after and support you in your next job or manage a 'rehabilitation'.

"We're in a position now where because of the nature of the system, we're not able to do that and move people around, so it's incumbent on us all and on organisations to do this collectively. We should get FT chairs together to work out ways of supporting people. In Trent, we had a 'people levy' to support people through that kind of thing. Because it can happen to really good people, and we should support them".

Ahem. Ahem-ahem. Ahem-ahem-ahem.

The New World is seeing Comrade Sir David having plenty of scope to "move people around". Its attitude to innovation and risk-taking is equivocal, as the recent comments to HSJ by NHS South CE Sir Ian Carruthers show "We expect individual organisations to meet it (NICE guidance) or explain why [not]. But the emphasis is on complying".

Adopting NICE guidance isn't innovation: it is competence. It is worrying if the two are confused.

I was struck by a comment about innovation by leading GP Dr Niti Pal: she told the NHS Alliance conference last month, "I have a warning for Dame Barbara about the system’s attitude to failure - playing safe doesn’t mean failure won’t happen; you’ll still get failure, but just without the benefits from successful innovation.".

I wonder how mature an attitude to failure can be expected from an NHS system in England which is utterly reorganising itself, as well as having to make £4 billion of productivity and quality gains a year for each financial year in this spending round (and not anticipate big growth beyond that).

This is, after all, the Nicholson Health Service.