Organization and reorganization

The NHS is over 60 years old and has experienced many reorganizations. The satirical Roman author Gaius Petronius wrote ‘We trained very hard, but it seemed that every time we were beginning to form up into teams, we would be re-organised. I was to learn later in life that we tend to meet any new situation by re-organising, a wonderful method of creating the illusion of progress while producing inefficiency and demoralisation.’

Recurrent reorganizations in the NHS try to address the following tensions:

• The market versus central budgets – how can the service be made both more responsive to patient needs, deliver better value for money and yet offer an integrated service?

• Employment of staff versus outsourcing – can one manage a group of staff better by direct line management or via a contract with an independent company which has to deliver to stand a chance of keeping the contract?

• National accountability versus responsiveness to local needs – the NHS was conceived as a national service. Aneurin Bevan famously said that ‘If the bedpan lands on the floor in the hospital in Tredegar, I want the noise to reverberate through the corridors of Westminster’. There is a view that all citizens should have equitable access to the full range of services and that one's postcode should not determine the nature of the services available. Conversely, different parts of the country have different profiles of needs and different patient groups lobby for different investments.

• Capital financing – very expensive projects such as building a new hospital constitute a major drain on exchequer funds. How can the private sector use its capital to fund the build and be reimbursed over time by the government?

• Growth in spend – how can the government cope with both growth in demand for health services and the annual rise in new medical and equipment costs?

• Growth in public expectation – owing to improved standards of living, exposure to more information on what is available around the world and on the quality outcomes from British healthcare, there is a rising expectation of what healthcare should be provided.

• Voter power – the NHS employs more than 1 in 20 British voters.

• Aligning incentives – different configurations confer different incentives and behaviours. Kaiser Permanente, a California-based health service provider, offers high quality care and has many similarities to the NHS. One of the reasons that it is able to deliver very good value for money is the integration between primary and secondary care such that the incentives of both are aligned. Thus the service can make a trade-off in expenditure based on appropriateness and cost-effectiveness rather than artificial budget categories.