From Target to Market: The Reform of Health Services

1
From Target to Market The Reform of Health
Services

• Julian Le Grand
• Richard Titmuss Professor of Social Policy
• London School of Economics
• Third International Conference on Health Policy
• Jerusalem 11 December 2006

2
AIMS OF PUBLIC SERVICES

• Efficiency
• The maximum quality and quantity of service from
  given resources
• Equity
• Equal access to high quality services for all
• Responsiveness
• Service is responsive to needs and wants of user
• OR
• A good local service

3
WAYS TO RUN PUBLIC SERVICES

• Four models
• Trust
• Command and Control.
• Voice
• Choice and Competition

4
TRUST

• Government sets budget.
• Professionals (doctors, nurses, teachers,
  managers) determine how budget is spent
• Individual agencies/networks/partnership working
• Advantages
• No monitoring costs
• High morale

5
But

• Makes crucial assumption about the motivation of
  all involved. Assumes they are altruists or
  knights rather than self-interested knaves.

6
Of Knaves and Knights

• In contriving any system of government, and
  fixing the several checks and controls of the
  constitution, every man ought to be supposed a
  knave and to have no other end, in all his
  actions, than private interest. By this
  interest, we must govern him and, by means of it,
  notwithstanding his insatiable avarice and
  ambition, co-operate to the public good (David
  Hume)

7
But

• Makes crucial assumption about the motivation of
  all involved. Assumes they are altruists or
  knights rather than self-interested knaves.
• Knights have own agenda. Can be paternalistic
• Evidence is that there are many knights among
  those who work in public sector
• ..and a few knaves
• Institutional self-interest can impede
  partnership working.

8
COMMAND AND CONTROL

• Version Performance management
• Sets targets and monitors performance
• Provides sticks and carrots to staff for
  achieving or failing to achieve the target.
  Promotion /demotion/the sack.
• Advantage can work, at least in short-term.

9
patients waiting for hospital admission gt 12
months
Source Are improvements in targeted performance
in the English NHS undermined by gaming A case
for new kinds of audit of performance data? Gwyn
Bevan and Christopher Hood, British Medical
Journal (forthcoming)
10
patients waiting for hospital admission gt 12
months
Source Are improvements in targeted performance
in the English NHS undermined by gaming A case
for new kinds of audit of performance data? Gwyn
Bevan and Christopher Hood, British Medical
Journal (forthcoming)
11
patients waiting for hospital admission gt 12
months
Source Are improvements in targeted performance
in the English NHS undermined by gaming A case
for new kinds of audit of performance data? Gwyn
Bevan and Christopher Hood, British Medical
Journal (forthcoming)
12
patients waiting for hospital admission gt 12
months
Source Are improvements in targeted performance
in the English NHS undermined by gaming A case
for new kinds of audit of performance data? Gwyn
Bevan and Christopher Hood, British Medical
Journal (forthcoming)
13
But

• What is targeted is resourced what is not, is
  not
• Distorts priorities. Hit the target but miss the
  point
• Encourages gaming and fraud
• Demotivates and demoralises staff - especially
  professionals

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VOICE

• Mechanisms
• Informal face to face talks with professionals
  and managers
• Hospital Board membership
• Public meetings
• Complaints procedures
• Petitions
• Elected representatives

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Voice Advantages/Disadvantages

• Advantages
• Rich range of information about users find good
  and and bad about service. Bottom-up
• Personal interaction
• Disadvantages
• Sometimes difficult to mobilise
• Lack of incentives without adding in other models
• Inequity

16
parents keen to participate more in their
childrens education
Source Education Strategy Review, Prime
Minister's Strategy Unit (Dec 2001)
17
Choice and competition

• Providers are independent. Non-profit or
  for-profit. Keep any surplus they make on their
  budget.
• Users or agents choose provider. Money follows
  the choice. Providers compete for custom
• Cash payments/individual budgets in social care

18
Choice and competition advantages

• Provides strong incentives for responsiveness and
  efficiency
• Can appeal to both the knight and the knave
• Promotes equity through diminishing the power of
  voice

19
But

• Alternatives must exist, so that competition is
  possible
• Users must be properly informed, or have an
  informed agent
• Transactions costs low
• Opportunities for cream-skimming low.
  Cream-skimming selecting easiest, least costly
  patients, clients. Favours less needy and better
  off.
• Challenges the public realm

20
Ways of dealing with cream-skimming

• Stop-loss insurance
• No discretion over admissions
• Risk adjustment
• Incentives. Larger amounts of money associated
  with each child from a poor area

21
The Challenges

• People dont want choice they want a good local
  service
• The better off will make good choices the poor
  will be left with the sink schools/hospitals
• Choice and competition in public services
  especially from the private sector- will
  undermine the public service ethos. More
  generally, choice threatens the public realm

22
People dont want choice they want a good local
service

•  
• In some cases personal well-being could even be
  enhanced by the elimination of the need to choose
• For example, how many parents would prefer to
  send their children to the local school, with no
  choice in the matter, knowing that the education
  on offer met a national standard of high quality,
  rather than plunge into the positional
  competition known as parental choice? Roger
  Levett et al (2003) A Better Choice of Choice
  Fabian Society. p.55.

23
Who wants choice Gender
Source Public Responses to NHS Reform, John
Appleby Arturo Alvarez, British Social
Attitudes Survey 22nd Report (2005)
24
Who wants choice Social Class
Source Public Responses to NHS Reform, John
Appleby Arturo Alvarez, British Social
Attitudes Survey 22nd Report (2005)
25
Who wants choice Educational Achievement
Source Public Responses to NHS Reform, John
Appleby Arturo Alvarez, British Social
Attitudes Survey 22nd Report (2005)
26
Who wants choice Income
Source Public Responses to NHS Reform, John
Appleby Arturo Alvarez, British Social
Attitudes Survey 22nd Report (2005)
27
The Audit Commission found the groups most in
favour of choice were

• The least privileged
• Those from the North and Midlands
• Women

Source Audit Commission Choice in Public
Services, National Report (September 2004)
28
Minorities and Choice in the US

• 52 per cent of parents, and 59 per cent of public
  school parents, supported school choice.
• 60 per cent of minorities supported vouchers.
• 87 per cent of black parents aged 26-35 and 66.4
  per cent of blacks aged 18-25 supported vouchers.

29
Parental Choice in New Zealand

• 96 of parents indicated they would like to
  select the school their child goes to
• 80 of parents agreed that education should be
  funded such that parents can afford to send their
  children to the school of their choice.
• A higher proportion of parents with annual income
  of 30,000 or less strongly agreed with the
  statement than parents with an annual income of
  over 30,000.
• Source Steven Thomas and Ruth Oates The Parent
  Factor Report Four Access to Education.
  Auckland the Maxim Institute, 2005

30
The Challenges

• People dont want choice they want a good local
  service
• The better off will make good choices the poor
  will be left with the sink schools/hospitals

31
London Choice Pilot opting for an alternative
hospital
Source Evaluation of the London Patient Choice
Scheme, Picker Institute (July 2005)
32
The Challenges

• People dont want choice they want a good local
  service
• The better off will make good choices the poor
  will be left with the sink schools/hospitals
• Choice and competition in public services
  especially from the private sector- will
  undermine the public service ethos. More
  generally, choice threatens the public realm

33
Which words do you think apply to public services
in Britain these days?
Source MORI (2005) survey of 2000 GB aged 18
34
Source The Spectator 4th February 2006
35
Who is best at.
Source Public Responses to NHS Reform, John
Appleby Arturo Alvarez, British Social
Attitudes Survey 22nd Report (2005)
36
The NHS will now pay for patients to have their
operations in private hospitals - how do you feel
about this?
Source MORI survey (April 2005) of 1,201
Birmingham and the Black Country residents 16