Professor Alan Maynard on the specious McKinsey Report, mushroom management and the whereabouts of £4 bilion a year over the next four years

Comrade-In-Chief Nicholson has decreed that the NHS has to re-cycle £20 billion over the next 4 financial years, following his absorption of McKinsey’s so-called report, with its several references to McKinsey data! President Lansley has concurred.

With neither of our bold leaders apparently capable of a critique of the McKinsey alchemy, NHS managers are busy seeking to meet the demands of these latter-day Stalinists.

The mushroom school of management
To do this, the NHS has been exposed again to the mushroom school of management i.e. keep them in the dark about how resolute Whitehall will be in adhering to proposed reforms, and feed them generously on the horse manure of equivocation and changes of mind!

Or is this too harsh a critique of the storm of initiatives rolled out by Whitehall policy wonks to ensure ambitious efficiency savings of 4% per annum?

A couple of questions

’Efficiency is a relationship between the value of outcomes and the value of what is given up to achieve outcomes - i.e. cost. Thus to demonstrate efficiency, managers (be they clinicians or non clinicians) must show that outcomes are maintained at a lower cost, or improved outcomes are achieved at the same cost’

Two questions spring to mind: what is an ‘efficiency saving’; and where is the evidence that recent performance-orientated policy initiatives have affected the behaviour of PCTs and hospitals, let alone primary care?

Efficiency is a relationship between the value of outcomes and the value of what is given up to achieve outcomes - i.e. cost. Thus to demonstrate efficiency, managers (be they clinicians or non clinicians) must show that outcomes are maintained at a lower cost, or improved outcomes are achieved at the same cost.

’Increasing or maintaining process activity at the same or lower cost does not necessarily mean outcomes are improved‘

Demonstrating efficiency in healthcare is not easy, particularly because outcome measurement is rare and productivity efforts focus on processes of care.

Increasing or maintaining process activity at the same or lower cost does not necessarily mean outcomes are improved. For instance a recent book from authors at the US Dartmouth Medical School warns us about over-diagnosis i.e. investing in increased activity which produces little or no health gain (Welch, Schwartz and Woloshin, 2011).

’Supply creates demand: are the health gains produced by the expansion of elective capacity always worth the investment?‘

Thus in the NHS, a nice issue is whether treatment thresholds for elective procedures have become more generous – i.e. lower - as a result of capacity increases over the last decade? It seems that surgical productivity over the decade has been relatively static, with activity increases being produced by hiring more operatives.

Supply creates demand: are the health gains produced by the expansion of elective capacity always worth the investment?

Variation, variation, variation
Difficult questions such as this have been buried under advocacy of QIPP. Part of QIPP is the NHS atlas (www.rightcare.nhs.uk/atlas). The purpose of this is to get PCTs to look at their relative positions in a series of activity distributions and the question their relative location.

This is a noble intent for many management folk facing redundancy and unemployment, and a central task for the emerging GP consortia.

You may recall the NHS Innovation and Improvement organisation had the same goal. Where is the evidence of success? As ever, it is noticeable by its absence!

Belief that feeding the NHS on more information is A Good Thing keeps folk employed, but may have all too little impact on the achievement of efficiency savings.

’The traditional NHS ‘efficiency saving’ policy involves reducing bed capacity and sacking staff, and neglecting to pay bills, particularly at the end quarter of the financial year, thereby carrying debts over to the new year.’

Thus the central issue remains: how are cost savings being made and do these changes increase efficiency? The traditional NHS ‘efficiency saving’ policy involves reducing bed capacity and sacking staff, and neglecting to pay bills, particularly at the end quarter of the financial year, thereby carrying debts over to the new year.

There is media coverage of staff cuts happening now and planned over the next few years. Are these predicated on the basis of maintaining activity, process quality and outcomes? Or do they imply reduced capacity and increased waiting for patients? Greater clarity about such issues would be welcome, if politically difficult.

On not busting the budget
Given the paucity of funding increases and inflation what can managers do to stay in budget? Currently some PCTs under-spend and overspending PCTs are bailed out by loans. This means that needy PCTs such as Bradford and Hull may under-spend and bail out overspending PCTs which may be less deprived.

Gradually, this elbow-room will be squeezed, particularly if GP consortia in needy areas prove effective in spending their allocations, with a little help from the private sector!

The Department of Stealth hopes that QIPP will improve productivity, and hopefully they will evidence this with research evidence rather than anecdote. Without productivity gains, the NHS will have to cut capacity and the focus of such action will be elective care, as emergencies have to be dealt with.

’Should we expect the NHS Commissioning Board to set quotas for hips and knee replacements, hernia repairs and cataract operations?’

Should there be national quantity quotas for elective care? Should we expect the NHS Commissioning Board to set quotas for hips and knee replacements, hernia repairs and cataract operations? Leaving such choices to GP consortia will lead to nice “postcode rationing”!

However, proceeding in this Stalinist fashion goes against the rhetoric of “localism” in the Coalition reforms. If pursued, it removes the need for a purchaser-provider split. Such a development could contribute nicely to efficiency savings: who needs PCTs and GP consortia when the national tariff and quantity dictates of the NHS Commissioning Board rule?

Alternatively, will Comrades Nicholson and Lansley do another u-turn and allow price competition in elective care? With PROMs emerging for the main elective activities, contracting on PROM standards to maintain quality and competitive pricing may be very tempting. Could such a policy mitigate the impending waiting time inflation produced by managers desperate to stay in budget in harsh times of austerity?

The risks are obvious:. are PROMs robust enough to use in contracting? Would such data facilitate quantity rationing? And how would you control ‘creaming’ of good risks by providers?

Meeting the £20 billion re-cycling target by QIPP is largely unevidenced and ambitious: we need evidence of effect urgently. If QIPP does not produce the goods, ‘slash and burn’ may keep managers in employment temporarily but will produce media-induced hysteria in Whitehall Village.

Is it time to look at complementary policies, with experimentation with elective quotas and some price competition where robust PROMs exist? What would be the costs and benefits of such a policy?

Without some radicalism, all that will be left will be stoical clinical and non-clinical managers and patients praying that Sooty waves his magic wand! With the current Government, such prayers may not be answered.

P.S. Do we know how much the McKinsey ‘report’ cost the taxpayer? It was not a report, of course, but a collection of pretty Powerpoint slides!