Management issues in the NHS
Whilst it is wrong to derive any satisfaction from this Audit Commission report, it seems bizarre that there remains a view (at least in parts of the Treasury) that universities are run as badly as parts of the NHS. Yet, there aren't many insitutions which would survive for very long with these kind of problems – and some of the findings in this about management problems in the NHS are really quite staggering:
We found that the origins of financial failure in the organisations we reviewed typically lay in ineffective management and weak or inadequate board leadership. The report identifies three crucial aspects of board–level culture that suggest trouble may be ahead: inadequate calibre of leadership, particularly in the key posts of chief executive and finance director; lack of board cohesion and inability to challenge, frequently compounded by a high turnover of board directors, both executive and non–executive, impeding the board’s ability to work effectively as a team; and the board’s eye being off the ball. We found this typically meant the board had other time–consuming business: the after–effects of a merger (or the preliminary stages of the next one), a large building project, responsibility for a shared service or consortium, or any combination of these.
These factors were often compounded by weaknesses in the information available to the organisation, particularly in financial monitoring and the forecasting of the year–end position.
Some boards surrendered to the view that the problem lay elsewhere within the local health system, usually on the other side of the commissioner/provider divide. Others looked for future funding increases to resolve their difficulties, with some NHS trusts believing that Payment by Results (PbR) will mean significant and justified income growth even if it is known that the local commissioners also have a deficit. The effect is for the organisation and its management to believe they are not in charge of their own destiny, waiting for external solutions rather than searching out internal improvements.
This, arguably, is analagous to the attitude of some HEIs – but in the mid–1980s, rather than now!
Even where boards operate better, operational problems were separated from financial ones with the finance director expected to solve them. Increasingly, this led to a reliance on short–term fixes: asset disposals, slippage and the use of non–recurrent funds to cover recurring (and growing) deficits, and borrowing from other NHS organisations. Finance directors rose to the challenge, but the results were damaging in the medium term with underlying imbalances not being addressed. Financial problems are operational ones. They require cost structures, service design and productivity to be addressed in detail.
We also found, among this small minority of organisations we reviewed, a tendency for the medical leadership and other senior clinicians to be disengaged from the core management processes of the trust. This dislocation, if allowed to continue over a period of years, appears to be a reliable indicator of impending financial trouble. It is, after all, clinicians who spend most of the NHS’s money.
The obvious analogy here is with problems faced where you have academic staff being disengaged from central University activities.
Anyway, a desperately depressing read in many places but at least we can feel a bit better about the calibre of management in many universities. If only parts of government would see it the same way.