How about a good news story about the NHS?
In 2008, the acute stroke unit at Plymouth’s Derriford Hospital was under as much pressure as its patients. It was bottom of the regional mortality table, the experience for both patients and relatives was poor, and every patient it treated was costing £2,000 more than it got back in payments. That added up to a deficit of more than £1m a year.
Yet while stroke was under scrutiny, there was no prospect of extra money for more beds. Counterintuitively, that was the best thing that could have happened. If money had been on the table, Plymouth neurologist and stroke specialist Steve Allder, the only person who believed that improvement was possible without spending any, would never have had the chance to put his ideas to the test.
Less than 12 months later, Allder was proved right and everyone else wrong. Plymouth now sat near the top of the mortality table. The patient experience was dramatically better. Quality was up. Yet far from increasing, the number of acute and rehab beds had fallen from 56 to 39. And instead of making a loss, the unit was now in surplus as the cost of (much superior) treatment was halved.
This transformation so flatly contradicts the universally accepted NHS narrative that less money equals worse service that it is hard to believe. Where could such a result have come from? The answer is simple: a different way of thinking.
This is the starkest illustration I know of something that politicians, and most other people, criminally ignore – the extraordinary leverage of management, for both good and ill. Viewed through the lens of conventional management, the NHS, and public services generally, are doomed to penny-pinching mediocrity as ever-increasing demand hits finite or diminishing resources. But under another lens a very different reality comes to light. Underlying demand is not going up – indeed, it is both predictable and stable. And while there is indeed a resource crisis, it is about the way resources are deployed, not the amount. There is scope for improvement; there is hope!
When Allder studied Plymouth stroke patterns, he found that Derriford predictably and regularly admitted 1.5 stroke sufferers a day. Much more variable was patient length of stay, which when analysed revealed that by far the greatest resource – 75 per cent of bed days – was absorbed by a small number of already frail people, suffering from massive strokes from which they were unlikely to recover. They (and their relatives) were also least well served by the existing system, often kept tenuously alive only to prolong agony and distress. The answer was to redesign the pathway for this group to accord with their and their families’ wishes, and to be more proactive with other groups – systematically ensuring that those who could benefit from rehab got it, for example. The result: the blockages caused by the long-stay group were resorbed, more patients could be seen in timely fashion, and the perceived need for extra beds went away.
Looking at the rest of the hospital, Allder found exactly the same patterns for other conditions: stroke was a microcosm of the whole. The consultancy Vanguard, which has been working in the NHS for the last three years, would go further and say that the same things are true of the NHS as a whole. That is, overall demand over the system is stable, a disproportionate amount of resource is absorbed by a small proportion of intensive users, and understanding the pattern of demand is the key to the Rubik’s cube of reconfiguring resources for permanently better and cheaper results.
Why is this evident in one optic yet invisible in the other? Back to Allder. He explains that the current stroke regime has more than 120 quality measures; when problems arise, they are addressed successively, in isolation. ‘After you’ve done six, there’s no money left, everyone’s exhausted and nothing has changed.’ At a more abstract level, conventional managers view a hospital as an asset to be sweated like any other kind of plant. They aim for efficiency through economies of scale, leading them to develop functional designs that use cheaper resources for simpler activities which they then run for high utilisation and low unit costs.
Unfortunately, as W. Edwards Deming taught many years ago, you can’t optimise the whole by optimising the parts. The first complication, notes Vanguard’s health lead Andy Brogan, is that fragmenting the world and running it for productivity makes for complicated governance and accounting across functional jurisdictions as each seeks to optimise and defend its own domain.
Second, it assumes that lower unit costs (making an appointment, seeing a nurse, doing an assessment) equates to lower overall costs. This is a fundamental error. It blinds managers to the fact that not all demand is equal. Much of it consists of what Vanguard terms ‘failure demand’, that is knock-on demand created by the failure to do something or do something right the first time – repeated appointments, referrals and assessments, people shuttling between A&E and GP surgeries to get their problems fixed. Failure demand accounts for all the apparent demand increase in health and many other public services, and often an enormous proportion of the total – up to 80 per cent in the NHS, Vanguard estimates.
Failure demand explains why lower unit costs don’t result in lower overall costs. Standardised services can’t meet the variety of need, and however cheap are a false economy – they end up increasing cost. Failure demands explains why organisations can be simultaneously frantically busy and highly ineffective. As Brogan puts it: ‘We can solve the wrong problems until we’re blue in the face, or we can get under the skin of what demand is, how we can create value for people, and what expertise we need to do it’.
Pause to consider the implications here. The measures that managers use to run critical environments like hospitals not only do not tell them the things that really matter, like quality and value to the patient, they actively mislead. So they don’t see that the effect of the focus on efficiency and productivity is to create more failure demand faster. In other words, not only are they not improving things, across the health system they are making them worse. Here is the explanation of the damning finding that with all the money spent on it NHS productivity, like that of the public sector in general, is actually going down. We have designed organisations that not only don’t know how bad they are, they don’t know that they don’t know it.
So what is the lens that makes this dynamic visible and in so doing opens up the organisation to change? In this case it is an approach to service organisation developed and honed by Vanguard over the last over 30 years that treats the organisation not as a collection of parts but as a whole system.
For practical purposes it starts with a definition of purpose from the point of view of the citizen or user – for stroke victims, timely and accurate diagnosis and treatment, safe recovery and earliest return home. It then asks how well the system meets the purpose (usually, as with the stroke unit, no one knows, because the measures in use have no relation to purpose). Then, having deconstructed the work to see what contributes to purpose and what doesn’t (usually a lot), it reconfigures resources predictably and reliably to meet the demand. As the organisation gets more closely aligned with purpose, costs drop out of the system in the form of less wasted effort and above all reduced failure demand – although crucially how much is impossible to specify in advance because cost-reduction is a side-effect of doing something better, not an end in itself.
While none of this is hard to comprehend, the challenge is putting it into practice. Although redesigning a medical pathway is in itself non-trivial, the issues are not primarily technical. One factor is the cross-functional governance issue described by Brogan. More challenging yet, the cheerful landscape projected through the new lens is so unfamiliar and disconcerting that ironically people are frequently more sceptical of it than of the familiar topography of failure.
Precisely because the approach is conceptually simple, it’s easy for senior managers used to dealing in top-down abstractions not to ‘get’ its full import. Understanding that there is a dynamic between purpose, measures and demand is one thing; realising that accepting it means rejecting all previous management certainties (economies of scale, standardisation, targets, conventional performance management, outsourcing...) is quite another. As Brogan notes, a niche for it can’t be found in the existing management worldview – it replaces it with a different one. Allder acknowledges: ‘At the start I thought I was doing a bit of improvement. As it went on I realised that it was an entirely different strategy.’
This is not a fad. In effect, a new management paradigm is struggling to be born. The infant is undeniably vulnerable to changing circumstances and personnel – Allder recounts that after the last election, promising initiatives at Plymouth were cut short when money became available for easier management options, while managers appointed to ‘get a grip’ often do so literally, reverting to default postures of top-down control and short-term cost-cutting that are incompatible with the new approach.
On the other hand the personal ratchet goes one way: for those who get it, there is no going back. This is why eventually a tipping point will come. The old ways are no longer affordable and, if painfully slowly, confidence that there is a better alternative is growing. ‘It’s a call to action,’ says Allder. ‘The potential for improvement using these methods is fantastic. Across conditions 40 per cent of our cash goes on long-stay emergency in-patients. I have no doubt that adopting a similar study for each condition we could do it 50 per cent better and cheaper.’