3 min read

The Maynard Doctrine: It’s the incentives, stupid!

Professor Alan Maynard looks at what a future based around outcome measurement and new incentives will mean.

The Coalition’s reforms depend for their success on the creation of an efficient set of incentives which “bring the horses to water and makes them drink” in a co-ordinated and efficient way.

This task has been fudged for 60 years, with incentives currently a jumble of ill-co-ordinated initiatives strung together in an evidence-free way over decades of good intent. Among the questions it begs are ‘why is there a quality outcomes framework in primary care and not in secondary care?’

Starting point:  doctors try to do the right thing
The basic assumption from which to start is that people go to work to do a good job. This is what Weber entitled the “duty of office”.

We expect physicians to be efficient diagnosticians, to know the relative efficiency of competing treatment regimes and to be able to inform us about the probabilities of cure. This is an ambitious set of expectations, given the diversity of clinical skills evident in the profession and the variety of human needs and characteristics.

‘Problems arise when the doctor does not act as the patient’s efficient agent’

Problems arise when the doctor does not act as the patient’s efficient agent. In a fee-for-service system, they may act inefficiently to increase their income as happens in the USA with, for instance, excessive diagnostic scanning of patients.

In salary and capitation payment systems such as exist in the NHS, increasing activity does not, apart from the GP-quality outcomes framework (QOF), generally increase provider income. Such systems may incentivise reducing workloads by, for instance, diverting primary care demand to hospital diagnostics and using non-medical staff to reduce workloads in both primary and secondary health care.

These behaviours may or may not be efficient.

How are the current Lansley proposals dealing with incentives? The government makes mention of them in relation to CQUIN and PbR and how these will be further developed to “improve” efficiency.

In the absence of evidence about how these schemes have worked, this is bold and may be foolish.

’If … more careful co-ordination of financial and non-financial incentives … is absent, we can expect perverse results as un-evidenced incentive mechanisms conflict’

What is needed is more careful co-ordination of financial and non-financial incentives. If this is absent, we can expect perverse results as un-evidenced incentive mechanisms conflict.

Stanislavsky and corpsing: on the motivation of GPs
The nice issues are what motivates GPs and how will these incentives drive GP consortia to be efficient?

Primary care is characterised by small firms; usually based on a partnership arrangement.

In recent years, these firms have begun to collaborate to varying degrees in response to local self-interest and the incentives offered by GP practice based commissioning – DH primary care czar David-Colin Thomé’s infamous “corpse”. (Given PBC’s riotous success, Czar David must surely have meant 'corpse' as in the theatrical definition - to break into unexpected and unwanted fits of laughter.)

Nelson’s column or Stalin’s statue?
This system is now in turmoil as participants respond with unknown mixtures of enthusiasm and the ‘Nelson touch’ i.e. ignoring the reforms and hoping they will go away!

However the reforms will not go away as presently constituted, since Comrade Lansley’s White Paper makes it clear that he prefers good Stalinist compulsion (rather than namby-pamby gradualism).

So what may happen? GPs will urgently need enhanced management capacity, which they will purchase from the private sector and / or out of displaced PCT staff.

The first priority will be management systems to monitor the flow of money. After that is in place (no mean feat), analytical skills will be needed to create more efficient trading with competing public and private providers.

The White Paper is nicely vague about the size and number of GP consortia. This silence may be a product of the number 500 floated by Whitehall village before publication of the plans last week – and now being disowned as premature by the Department of Health.

This vagueness is a product of ignorance about how to proceed. Having 500 would require consortia to form consortia (called area health boards, perhaps) in order to get the economies of scale separately advocated by the Department of Stealth in their “merging back office” policies.

Show me the money
How will all this be funded? The government has earmarked £1.7 billion to lubricate the implementation of the reforms. This includes redundancy and pension costs of the 45 per cent staff cost-cuts, as well as creating the unknown number of GP consortia.

At present, GPs appear to be offered no direct financial gain in return for compulsory compliance with the reforms. Obviously, once the new system is working, GPs may be able to re-cycle consortia funds to their advantage.

However, the rules for transparency and accountability are yet to be defined. Government faces a nice dilemma: lax rules may incentivise development, but profit-taking may cause political pain!

The nagging issue is incentives, incentives and incentives! Get them wrong, and chaos and continued inefficiency can be guaranteed.

However to repeat, getting them right requires an integrated approach to incentive design - and in the English NHS, that has never been evident

“Discipline and punishment simply yield prices, to be paid upon breaking the rules” - Akerloff and Kranton (2010)