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9 Dec 2003 : Column 53WH—continued

NHS Management

3.30 pm

Mr. Archie Norman (Tunbridge Wells) (Con): First, I should like to draw Members' attention to my declaration in the Register of Members' Interests. Secondly, I thank the Minister for making time available to respond to the debate. I have a high regard for his expertise, and he has a reputation for being one of the less partisan Ministers. I hope that he can respond to my remarks in the spirit in which they are made, and can perhaps cast away his pre-prepared script and respond directly to my points.

Management in the health service need not be a party political issue, because it concerns how we can deliver effective results for patients. In 1983, Sir Roy Griffiths stated in his landmark study of management in the NHS:

The world has moved on since then, and the NHS has moved on substantially. With larger NHS trusts the challenge is greater than ever. We have aggregated groups of hospitals into single trusts, which are more complex and technologically advanced than before and are under intense financial pressure. They are complex people-management organisations that depend on the attitudes, motivation and good will of the nurses, doctors, administrators and others who work in them for their success.

That people-management challenge has also moved on in the outside world. People's attitude to employment, whether it is within public or private service, is different from that of 20 years ago. The days when people went to work to earn a daily crust and hung up their brains at the door when they arrived are gone. People are no longer motivated regardless of how they are treated, and they expect their bosses to show them respect.

The world of employment has moved on substantially, but it is not clear whether it has moved on commensurately within the NHS. The Government's policy on the health service is clear: simply put, there has been a substantial increase in funding. In order to get value out of the funding, the Government have sought to retain accountability through a network of targets.

3.33 pm

Sitting suspended for a Division in the House.

3.43 pm

On resuming—

Mr. Norman: The Government's model for delivering value from the new investment in the health service has been built around a network of targets and performance measures, which are designed to ensure that patients and the taxpayer get value for money. However, it has been motivationally blind. The emphasis has been on mechanics and finance. There has been relatively little emphasis on the motivation of people and the need to attract talent for what is an increasingly demanding task.

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The results are well publicised and are a matter of fact. Hospital chief executives now have 420 different targets. According to my research, which uses answers to parliamentary questions, there are 151 different performance indicators, which is up from 86 last year. There has been an enormous increase in administrators and senior managements, which is not necessarily a bad thing in itself, but the scale is out of proportion with what must be delivered. Between 1995 and 2001, there was a 48 per cent. increase in senior managers and only a 7.8 per cent. increase in nursing staff over that period. The increase in senior managers and middle managers has continued since that date.

Dr. Ian Bogle, the British Medical Association chairman, has said:

Nobody would criticise the Government for making sure that we get value for money by measuring outcomes. The question is the management culture created within the health service and the productivity that it delivers. All the evidence shows that the productivity outcome is depressing.

Between 1999 and 2001, we spent 21 per cent. more on health care for a 1.6 per cent. increase in completed operations. The Minister may say that that is not the whole story, but the challenge is not to spend taxpayers' money—anybody can do that—it is to achieve successful outcomes and to create a health service that is more capable in the long term. I fear that we have put a donkey into the Derby. When the Government came to power, the management structure was not capable, but they invested with money rather than investing in people. Having put the donkey into the Derby, they attached performance targets to it and wondered why it did not go fast enough. The charge facing the Government is not whether they invested in health care but whether they invested in the people with leadership and motivational characteristics to deliver a worthwhile outcome for the money invested.

The evidence shows that there are few more demotivated and demoralised institutions in Britain today than our struggling NHS trusts. A recent MORI poll sought the views of NHS chief executives. The Minister will know the results: 62 per cent. of chief executives think that their role is becoming increasingly unattractive and that it is harder to recruit people into the profession. Some 66 per cent. of them—two thirds—think that the NHS risks losing its best leaders, and 69 per cent. think that negative perceptions of the NHS make it hard to attract clinicians into management and leadership roles.

The Minister will know that the models of success elsewhere are very different from the model that the Government have pursued, and I shall give three primary examples. First, successful hospitals the world over tend to have fewer administrators and clearer management accountability. Research by Solutient in the United States shows that the 100 best US hospitals employ on average 25 per cent. fewer managers and administrators per hospital, yet they deliver better health care by US standards—let alone by our standards.

Studies in the private sector conducted both over here and elsewhere also show the need for absolute clarity of accountability. Obviously, private sector hospitals in

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the UK tend to be much less complex and are less likely to have acute services, such as accident and emergency, than hospitals in the NHS, but none the less the point is clear—it is not only a question of resources. National health service chief executives are unusual by world standards in being bereft of the powers to manage. A conspicuous example of that is their inability to move staff who have underperformed in their duties out of the hospital. They also cannot manage and deploy their own team of consultants.

Last week's announcement of the new methicillin-resistant Staphylococcus aureus tsars in every NHS trust shows how little the Government have changed. It must have been greeted with a groan by every chief executive up and down the country, all of whom will be hoping that it is just another shallow political initiative and not something that will impose extra costs and extra administrators on them. The management of MRSA is centrally a line management responsibility, and not something that can be dealt with by sticking on an elastoplast in the form of an extra administrator.

We should collapse the 420 targets into six or seven rounded measures of performance, which would give an effective audit while allowing chief executives the discretion to manage and interpret which of those targets they can exceed and beat and to focus on local clinical priorities.

A characteristic of successful health care models all over the world is the deep clinical involvement in management. In the United Kingdom, the best performing hospitals typically have a shared clinical vision between doctors, consultants and administrators, which they work hard to achieve. That is true in Great Ormond Street hospital in this country and in the John Hopkins University hospital in the United States. That common clinical vision depends on the intense involvement of clinicians and consultants in management, and on their understanding management pressures.

The British Medical Journal study of the Kaiser Permanente network in California, published in January 2002, demonstrated the same point: it delivers better care at the same costs partly through superior integration of clinical management. That study found:

Those are joint leadership between administrators and clinicians, alignment of objectives and management training for physicians—all characteristics on which this country lags seriously behind.

Worse than that, the culture of targets and the stress that that places on local priorities and on chief executives drives a wedge between consultants and clinicians, and administrators. That is why there is a serious problem, creating huge resentment among clinicians. They do not like the sight of large amounts of money being spent on administration and additional staff, particularly as many consultants are extremely highly qualified and very able people, often with views on management. Some are much more capable than we would allow of moving in and contributing to the management process.

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I refer again to the British Medical Journal article of 22 March, which studies the attitude of clinicians to management and chief executives to clinicians. It cites just short of 60 per cent. of clinical directors as disagreeing with the statement:

I do not have time to go through all that survey, but it is very clear that in this country there is a growing divorce between clinicians and management, which is exactly the opposite of what we need. Commission for Health Improvement reports show time and again that the most frequent causes of failing hospitals or serious service failures—where there is the highest correlation—are poor team working among clinicians, lack of clinical leadership and poor doctor-manager relationships. Those are CHI's words, not mine.

The Government have not invested substantially in the development of management talent in the NHS. I know that latterly, in 2001, we had a new initiative in the NHS leadership centre, apparently costing £150 million. It is not easy to discover exactly what goes on in the leadership centre for our £150 million, but I am sure that some of it is welcome. However, we are aware that, of nine skill development courses for chief executives, five are essentially to do with public services and politics, including relationships with the media, Government, Whitehall and Westminster, rather than with the management and involvement of clinicians and the management of the hospital.

We know that what chief executives say is very disillusioning. The recent Centre for Policy Studies report quotes one chief executive as saying:

That is not very encouraging. So little interest have Ministers shown in how we are attracting people into management, and what their quality and backgrounds are, that, as my parliamentary questions reveal, they do not even know the background of most of our chief executives or what qualifications they have for the job.

According to the answers that I have received, we have no data on the career background of 60 per cent. of chief executives. If that were the slightest priority for the Government, one would have thought that they would at least be tracking the small, elite group of chief executives to see if we are getting the quality that we need. However, they do not even know where 60 per cent. of those chief executives have come from, what degrees they have and whether they have clinical qualifications or outside experience. Of the 40 per cent. on whom the Government do have information—which is pretty depressing—only 1.5 per cent. have any medical background, and 3 per cent. come only from the private sector. That shows what a narrow career path this must be. It is very introverted, with very little attempt to bring in people from outside and very little emphasis on the quality and calibre of leadership being introduced.

Furthermore, according to parliamentary answers, Ministers have no information on career progression, turnover and wastage rates, and no systematic tracking of career succession. The Minister may want to correct me, but whatever he has to say, it appears that to all intents and purposes the Government have negligible interest in the quality of management that is developing. Yet a stated objective in the 2001 NHS plan was:

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Since then, it is evident that nothing has been done to follow that through.

Many other issues are involved in NHS management, which I do not have time to address, including the fact that many of the wrong things are centralised or decentralised. However, there are also some welcome developments. If I had time I would discuss the new investment in information technology systems. I know that that has attracted some criticism from some of my colleagues but I think that, generally speaking, it is a welcome development.

The major NHS trusts are complex, intensely pressured organisations that depend fundamentally on people. We have not moved on with management culture, and given managers the ability and power to make things happen, within a framework of decentralisation. A very different culture and approach are required. We must move with the times and enable hospitals to create a collegiate organisation with clarity of responsibility and the freedom to deliver the real changes in people and approach that are needed.

We need substantial reduction of administrative costs and redeployment of resources to the front line. We need clarity over what is decentralised and what chief executives are entitled to do. We need some job security, because according to Hoggett Bowers, most chief executives have a life expectancy of 700 days in their job, which means that many are so insecure that they cannot make the bold moves that are needed. We need a strong emphasis on people, motivation and attitude, all of which should be measured regularly in every NHS trust and reported back. If there is one measure of leadership, surely it is the attitude and motivation of the people who work in the team. NHS trusts must be protected by a firewall against the corrosive interests of capricious political initiatives, which simply cut across their powers and degrade and erode morale throughout the health service.

3.57 pm

The Minister of State, Department of Health (Mr. John Hutton) : First, I warmly thank the hon. Member for Tunbridge Wells (Mr. Norman) for his kind words at the beginning of his speech. He described me as the least partisan Minister in the Government; I am not sure whether that will help me at all, but I thank him very much for it.

I shall probably discard most of my notes, but not all of them because I do not want to make a mistake on the substantive issues that the hon. Gentleman raised. All the issues that he raised are substantive. At the risk of embarrassing him, may I say that I thought that the thrust of his remarks was constructive and that I agreed with a great deal of what he said on the importance of good management in the national health service, not as an end in itself but as a means to an end? The end, as I am sure that he would agree, is a better health service, which can deliver for the people of our country—his constituents and mine—the sort of service that we are entitled to expect in the fourth largest economy in the world. Clearly, we have much work to do in that regard.

For the record, I want to contest one or two assertions that the hon. Gentleman made. The first is his claim at the end of his remarks that the Government have a

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negligible interest in the quality of national health service leadership. I strongly take issue with him on that. Improving the quality of leadership, including the motivational skills of senior managers, is of the utmost importance to the NHS. I agree that the problems and challenges that the NHS faces are not entirely down to resources but are about how those resources are used, how we motivate key staff at all levels in the organisation and how we constantly strive to make our services more responsive and to give patients in England more choice over what their NHS is capable of delivering for them locally.

Much of that is, of course, dependent on the overall amount of resources available to the service locally and nationally but a great deal, in my experience over many years in the Department, comes down to good management at local level and good performance management at the level above that. The hon. Gentleman has extensive experience in all those regards—much more extensive than mine. The Government would be remiss if they failed to take into account some of his constructive remarks today, and I shall say later how I intend to go about that.

Given the long list of initiatives that we have taken, I disagree strongly with the hon. Gentleman's claim that we have negligible interest. I shall go through those, although perhaps I could deal with that point by writing to him instead. Some of those initiatives emerge from the leadership centre, some from other parts of the Department and some locally, from primary care trusts and NHS trusts themselves, which is a good thing. Not everything has to be dictated and managed from the centre. There is a great deal of activity going on.

I would say to the hon. Gentleman and critics of NHS managers and management that we have a better framework for improving the quality of NHS management now than at any time in the history of the NHS. The hon. Gentleman will probably say that that is not saying very much because we started from a low base. I agree about that, but it would be remiss of him, in the spirit of fairness and balance that characterised most of his remarks, not to at least nod in the direction of the fact that the Government have spent a significant amount of time—not just money because I agree that that is not the main issue—focusing the efforts of the local NHS and strategic health authorities on that issue.

Based on my own experience—I hope that the hon. Gentleman's experience will confirm this—I sincerely believe that the NHS has some of the best managers in the country. I agree with him strongly that NHS organisations such as acute trusts and primary care trusts are highly complicated organisations to run. They have large numbers of staff and high turnover, and they operate in an environment of intense public scrutiny and accountability, which, to be fair, is not directly analogous to the private sector. It is an intense and robust environment in which we expect a lot from the NHS and we demand a lot from local managers.

It is a sad tradition in this place—it has become something of the folklore—that the first people we bash around the head in relation to such issues are NHS managers. There are times when NHS management fails the service and we need to act robustly to deal with that failure. The attempts we have made in NHS franchising where poor management is simply shipped out and new managers—some from the private sector—are brought

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in to replace failing managers is part of the right response to the problem. The growing portfolio of initiatives and courses in the leadership centre will help deal with that, and there are other initiatives, which I shall go through quickly.

My view is that NHS managers do a tremendously difficult job and many of them do it brilliantly, but the performance of some NHS managers is not good enough. The challenge for any Government, and Ministers of this Government in particular, is not to pass the buck on that. For too long in the NHS, we have not acted when we should have done to correct failing management. The result may have been a quiet time, but it led to a poor service for our constituents, which is not acceptable. It goes with the territory of being in Government that one cannot avoid making some difficult decisions about intervening on, and replacing, failing management.

The main focus should not be on remedial measures, but on how we can constructively engage with the many thousands of committed, able, talented and skilled brilliant young men and women who will be the next generation of managers in the NHS. We need to improve the performance at the very top of the organisation and I shall set out in a moment how we intend to do that. I take great comfort from the fact that the NHS management graduate scheme is the most popular of its kind in the country. It has been voted as such by university graduates, and our financial management scheme was the fourth most popular management training scheme operated by any employer in this country. The signs are that people see NHS management as a constructive career, which contradicts the thrust of the hon. Gentleman's argument that people are worn out, burnt out and want to quit. I do not think that that is a fair or accurate description of most NHS managers.

I would be the first to acknowledge that things are difficult for many managers because the pace of change in the NHS has increased. We are often criticised by Opposition Members for not reforming the NHS enough. If one put that point to any NHS manager, one would quickly get a brush-off. Most NHS managers to whom I have talked complain about the process and the pace of change—the depth, breadth and scale of the changes that have taken place in the NHS. I shall give one example of that to the hon. Gentleman because he mentioned repeatedly the issues of motivational leadership and human resource management. That has been an issue on which the NHS has not been as effective as I would have liked for many years, and we are trying to make progress on that.

There have been expansions in capacity, an effort to make the NHS more responsive so that people have more choice and efforts to improve the health of the poorest at the fastest possible rate and raise the quality of care. If all of those were not sufficiently large management challenges, on top of them, during the next 18 months, the NHS is to introduce three major new contracts regulating the employment of its staff covering general practitioners and primary care, hospital consultants and doctors, and every other group of staff—from nurses to porters, from cooks to cleaners, and managers. In any organisation—I suspect the same

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would hold true for Asda—one would think, "Goodness me. That is an awfully tall agenda." We are redesigning every aspect of the service during a very short period of time and we are asking a relatively small number of managers to do that.

The hon. Gentleman drew an analogy between the NHS and health care in the United States. We could argue the toss about that; all the evidence I have seen suggests that in the United States the overall cost and burden of administration in the health service is significantly higher than it is here. The burden of the cost of management to the NHS is falling as a percentage of the overall NHS budget, not rising. One might have thought that the hon. Gentleman was saying that the costs were going up as a proportion of the overall budget. Those costs stood at 5 per cent. when we came to office, and they are about 3.9 per cent. now. Most people would regard that as a sign of progress in any well-run organisation.

The motivational side of human resource management is very important, and we have an opportunity through the contract modernisation to engage some of the skills of NHS managers in trying to turn that around. I agree with the hon. Gentleman that we need to place more emphasis on motivational management. I would take issue with his comments about productivity and how we measure it in the NHS because, as he knows all too well, the number of operations in the service is simply one measurement of that. We are dealing much more with health prevention—people are seeing their GPs more quickly and receiving treatment in accident and emergency departments more quickly. We are treating more patients according to every objective measurement, which is a result of the investment going in.

I shall make my last general point about the hon. Gentleman's remarks before I move on to the substantive comments that I have to make in the last two or three minutes. I agree with him that we should learn, and be prepared to learn, about best management practice from other countries, including the United States. I have been to California and talked to senior managers in Kaiser Permanente, and I have no doubt whatever that the NHS can learn from some of their management approaches, particularly in the area of chronic disease management, which is one of the biggest health care challenges that the NHS faces. We have to up our game in relation to chronic disease management, and there is plenty of evidence to suggest that Kaiser Permanente has some of the solutions to that problem.

I want to draw attention in the substance of my remarks to the following points. A huge amount of change is going on in the NHS at the moment, and in relation to management those changes can best be described as taking place on two levels. First, there is organisational change of a substantive nature to ensure that the management function adds value at all levels of the service. Secondly, there is a systematic drive under way to raise management standards in order to deliver all aspects of the NHS reform programme. In organisational terms—I do not intend to spend a lot of time on those today—the Department is changing the way that it manages the NHS.

We are halfway through an 18-month programme to change radically the way in which the Department works. It is moving the institution away from attempts

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to manage the NHS daily—the hon. Gentleman described that as not being a terribly good idea—and towards providing effective leadership in a much more devolved health and social care system. In future, the job of the centre should be to set the overall direction, ensure national standards are set, ensure the appropriate resources and best value are in place and oversee major investment decisions. However, I do not think that we should be in the business of micro-managing the NHS. As a result, we shall be losing about 1,400 posts from the centre by October next year. That is a major change by anyone's standard.

Management at trust level is focused on service delivery. Managers are working side by side with clinicians to improve the services provided to patients, and in the process ensure effective levels of patient safety. By way of an illustration to the hon. Gentleman, let me point out that in the past 13 months we have introduced new programmes to attract middle and senior management levels. We have introduced the first career development and succession planning scheme called "NHS Leaders". The hon. Gentleman said that we were not doing enough about that; I would acknowledge that we have not done so in the past, but we are attempting to remedy that.

Incidentally, the NHS Leaders programme is tracking the progress of all of our chief executives. The hon. Gentleman said that we had no effective tracking mechanisms; I do not think that that is true, but perhaps I should write to him and set out the position in more detail, if that would be helpful. That tracking is linked to a more systematic executive search function. We have

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also introduced the first national performance review scheme for chief executives, a new programme to draw on management talent from black and minority ethnic backgrounds, and a range of programmes where clinicians and managers work together to deliver improved services.

I do not think that good management is just about those at the top. The NHS leadership centre, with the Modernisation Agency, is working to develop effective leadership and management skills at all levels in the service. Our priority has been to strengthen managerial and clinical leadership in all NHS organisations to improve patient care. We are doing that and involving not just managerial grades, as many people would have thought, but also nurses, allied health professionals and doctors, all of whom are involved in the programme.

The popularity of graduate recruitment programmes in the NHS, to which I have already referred, is an encouraging sign. I also said that it is important to learn from other parts of the public sector and, indeed, the private sector in developing future strategy. The new gateway to leadership programme was developed to do that by attracting good managers from other sectors, and the NHS has recruited significant numbers from the private sector.

I have not been able to respond to all the hon. Gentleman's points. In the time that has been available to me, I have tried to point to areas on which I believe he and I probably could reach agreement and to assure him that it is our intention to invest in NHS management.

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