I had to take my daughter for a hospital appointment today. Nothing serious, just a consultant follow-up and blood test that she needs to have every few months. The appointment with the consultant lasted 10 minutes, the same amount of time it took to take blood (which is good going when the patient is only 14 months old). However, the consultant was running 40 minutes late, and we then had to wait another hour and a half for the blood test. Including travel – and the hospital is a local one – this meant that these two 10-minute appointments took over three hours out of our day. And this isn’t a one-off – it’s the same story every time.
So does this have anything to do with topics like enterprise risk management, or is it just an opportunity for me to complain about how my plans for the day went out of the window (again)? Well, I admit this is partly an excuse to let off steam, but there are some important underlying issues – although the potential solutions might be unpalatable.
Let’s have a look at the enterprise risk management issues. A key method used to introduce efficiency into the NHS is the use of targets. These have tended to be along the lines of waiting lists for treatments. The problem is that targets such as these can lead to unintended consequences. The classic example involves a version of musical chairs in casualty departments, whereby patients are seen quickly for an initial assessment, only to be moved to another area of casualty where the real waiting begins. Unintended consequences are an issue in enterprise risk management, most noticably in the context of the principal-agent problem. For example, the pay of senior executives might be partly in the form of share options in order to align their incentives with the desires of shareholders. However, it can also lead to excessive risks being taken, or even to a focus on short-term share price gains rather than the long-term profitability of the firm.
Targets are supplemented by regular inspections, but these tend to concentrate on patient safety rather than efficient delivery. It is also another stick rather than a carrot – where are the real incentives to improve the quality of service?
In the financial sector, minimum standards are not used in isolation as a method of risk management. The approach favoured by both the banking and insurance sectors involves the use of both sitcks and carrots in the form of three pillars – regulatory capital (targets), supervisory review (inspections) and market discipline (competition).
Competition is what is missing from the NHS. A good way to improve the performance of an organisation like the NHS would be to scale back targets and to introduce competition through real choice for patients. This doesn’t just mean a choice of which consultant to use when your GP books an appointment, but the option to opt out of the NHS altogether. Private healthcare is already available, but this must be paid for on top of the taxes that go to the NHS. Why can a tax credit not be given to people to put towards this alternative? As well as being fairer, it might take some of the pressure off the NHS, encouraging more people to use private alternatives.
I very much doubt that any moves will be made in this direction – there seems to be a desire to invest in public services, the implicit assumption being that more public services are always a good thing. I’m really not sure that this is the case. When public services are the only choice, or when private sector alternatives are not allowed to compete on a level playing field, it is really hard to get acceptable levels of service. The current approach certainly doesn’t work – I’ve already booked out half a day in July for the next hospital appointment.