Irwin Brown of the Socialist Health Association looks with sympathy at the roles and uses of NHS managers and management consultants

I am staggered that Andrew Lansley is staggered at the extent of bureaucracy and the cost of management and management consultants in the NHS.

Where has he been for the past six-and-a-half years?

Received wisdom (with a large invoice)
For years now, the prevailing received wisdom has been that the solution to every NHS management problem could be found in the private sector. Everyone from the DH upwards was expected to take advice and use the expertise in the likes of KPMG or McKinsey, or tap into the private sector through the use of consultancy. Framework agreements were negotiated to make this easy.

Then there was outsourcing; the use of interim directors / managers; employment of experts on short-term contracts; and so on. I am amazed that this does not add up to far more than £300m (I bet it does, really).

Both the use of consultants of all kinds, and the increase in cost of line management have risen because of the endless stream of top-down policy initiatives and the new complexity of a fragmented NHS. Almost all of this related to the drive for marketisation, which has been estimated to have added between 10 and 14% to NHS transaction costs for little evidenced return.

The price of the pretence of trusts’ independence
Breaking the NHS up into hundreds of apparently discrete component organisations - each with its own board, directors, reporting, auditing, insurance, and on down a long list - plus all the costs of a system to performance manage, contract manage, regulate, inspect and on down the list, ensured a huge increase in bureaucracy and cost of management.

’Moving from being a trust to a FOUNDATION trust effectively guaranteed the use of management consultants on all sides.’

Trying desperately to convert some kind of PCT into ‘World Class’ commissioners led to the DH virtually instructing PCTs to use external advice.

Moving from being a trust to a FOUNDATION trust effectively guaranteed the use of management consultants on all sides. Financially -challenged trusts were expected to pay for external “turnaround” advisers. And so on.

Known unknowns
Nobody really knows whether the cost of actually managing patient care has gone up at all. Alongside the direct costs of managing any organisation, there are the additional costs involved in trying to manage change within and around the organisation. In well-managed organisations, these additional costs are included in the costs to be set against the benefits of the change being sought – all in a business case.

Within the NHS, we get the costs - but the benefits are rarely realised, as some further development overtakes every worthwhile move. (For anorak insomniacs, find the original business case for a major PFI-based project and compare the benefits claimed with what is actually happening.)
The NHS has been in a state of perpetual change for nearly two decades, often characterised by organisational redisorganisation, and the pace has accelerated. We have had the costs of change but not the benefits the changes claimed would result.

The NHS is very poor at managing meaningful change as you would expect, with a top-down shouting at people management culture having been the model for six decades.

The DH - which demands and leads the changes - is expert at policies which conflict with other policies; which have unintended consequences; and which get overtaken by other initiatives long before they deliver the assumed benefits.

Running for a bus doth not an athlete make
Those faced with having to manage complex change, often driven by top-down initiatives, may well resort to using external expertise of some sort. You simply can’t take a traditional NHS line manager, call them a project manager, and expect them to deliver a complex organisational change programmes.

Many trusts realise they lack both capacity and capability to manage change on this scale and they bring in people who have actually managed projects and been successful. (Ironically, one of the key skills the NHS often lacks is around procurement of consultancy, so they often get poor value from their consultancy spend.)

So, anyway, Mr Lansley if you want to avoid being “staggered”, and to keep down the costs of management, bureaucracy and management consultancy then why not:
1) stop creating ever more organisations;
2) stop the pointless drive to use the market where it is not going to work; and
3) stop all top-down DH led changes, and give the NHS a period of five years of policy stability.

Much that is in the White Paper will increase both management costs and the prevalence of use of external support: little therein will decrease either of these management opportunity costs.

The whole purpose of the policy changes is to increase use of the private sector, whether through consultancy or otherwise. The costs may be in foundation trusts or social enterprises or in arms length bodies - all somehow no longer NHS - but the costs will still be there.