The NHS at 60: Adapting and Surviving

The UK's National Health Service is a remarkable organisation. This is true of its creation, what it was intended to do and what it has become. This special issue is devoted to research with financial accountability implications on the UK's NHS to mark the occasion of 60 years of its existence (1948-2008). The articles included in this special issue cannot be an exhaustive collection of possible such research papers. This selection does, however, capture key aspects of research on the NHS: structural changes (Allen); resource allocation models (Bevan); control systems (Ellwood); new accounting developments in new political settings (Mellett et al.); and the increasing importance of risk in the contemporary NHS (Smith and Fischbacher). These research papers are of interest in themselves, but also as markers for current and future research agendas. However, this brief Foreword focuses on the question of why we should place the NHS in a central position of any research agenda on accounting, accountability and public policy. There are many reasons for researching the UK's NHS from a financial accountability perspective. This includes the distinctive origins and ethos of the NHS and their financial implications. The complexity of NHS organisation and the scope of the services which it delivers also present difficult challenges for financial planning and control. The sheer scale of NHS operations, with it often being considered one of, if not the, largest organisation in the world, presents significant challenges for financial accountability and control. There is also the fundamental issue of the efficacy of a national health care system funded from general taxation. Furthermore, and particularly in times of financial restraint, the existence or otherwise of formal or informal rationing systems in health care presents significant ethical and financial dilemmas. Most importantly, the enhanced visibility and significance of accounting numbers and performance measures in NHS management processes and accountability mechanisms over the course of its life continues to attract the attention of researchers. The birth of the UK's National Health Service was a protracted, painful and contested affair. In this, the antecedents of the NHS were a series of failed initiatives and the evolution of a contest between interested stakeholders (the medical profession, politicians, local government and the voluntary hospital movement) which give insights into the contemporary position of the NHS. The exercise of influence by the medical profession in the many detailed proposals for a national service for health care captures this (Webster, 1998, p. 14): during the war the medical profession had successfully cultivated a regime of continuous negotiation to the point where, by a process of attrition, it had successfully wrenched policy-making out of the hands of the government and effectively annexed it under its own control. This position of influence by the medical profession in the pre-NHS period has been a significant feature of the NHS over its life. The establishment of a nationalised health service is attributed to the decisive actions of Aneurin Bevan, Minister of Health in the Labour government, which had a landslide victory in the summer of 1945 (Edwards, 1993, p. 4; and Webster, 1998, p. 11). At the time of Bevan's appointment, Webster (1998, p. 12) observed that: the objective of translating Beveridge {medical services free at the point of use, funded by general taxation}… into reality was no nearer realisation in 1945 than it had been in 1942. The particular policy of nationalisation had not been considered before Bevan's actions. The newly appointed Minister of Health was confronted with failed negotiations over the course of WW2, with major divisions between the Labour Party, local government and civil servants, the medical profession and the voluntary hospital movement – both of which had gained significant concessions in negotiations (see Webster, 1998, p. 12). The fledgling NHS got off to an inauspicious start with a financial crisis: its budget was exceeded by £63m in 1949 and by £77m in 1950, which led to the introduction of a ceiling on health expenditure of £352m in 1950 and with the introduction of prescription charges for dental treatment, spectacles and prescription drugs in 1951-52 (Edwards, p. 7). The contemporary challenges facing the organisation, financing and delivery of health care in the most advanced economies are the same (Lapsley, 1996). Lapsley (1996) identified the following key pressures on health care organisations: (1) increased life expectancy with a higher proportion of elderly in the population and with their accompanying high demands on health care services; (2) medical innovation, which extends both available health care treatments and facilities and fuels public expectations of entitlements to health care treatments and (3) changing views amongst health care professionals on the best way forward in the delivery of health care. All of the above considerations place increasing demands on the funding of health care systems. The response of successive UK governments to financial pressures on the NHS has been a continuous programme of reform (Lapsley, 2001). The underlying rationale in these various reforms has been the conviction by politicians that health services can be managed rationally, that efficiency will provide health care for the population and that the management ideas as expressed in the Anglo-Saxon literature provide the best means of addressing the challenge of delivering an efficient NHS (Kelly and Glover, 1996). The grand themes of the NHS – history and prehistory – are imprinted with this interplay of the public versus the private, the initiation and response to change and the explicit politicisation of it as an institution. The initial focus of UK governments on the challenges facing the NHS was putting the appropriate structures in place and seeking financial equilibrium. The NHS had only survived eight years when it faced its first major review (Guillebaud, 1996), which was initiated by poor financial results. The NHS survived twenty years before the second major review, which initiated further structural change and the introduction of the then fashionable, consensus management style (DHSS, 1972).The first significant challenge to medical autonomy was the introduction of general management after Griffiths (1983). This was followed by a fundamental challenge to the NHS's ‘DNA’– the internal market (Department of Health, 1989). The advent of the market in health care can be seen as the end of a period of ‘unparalleled dominance, prestige and self-governance by the medical profession in the UKs NHS’ (Harrison, 2009).This market ‘solution’ to the efficient organisation of the NHS can be seen as an attempt to resolve the ‘excess demand’ for health care by stopping short of privatisation. An alternative interpretation would be that this fiscal regime was intended to be a precursor to the privatisation of the NHS. The then Prime Minister admired the proposals for the development of an internal market in the NHS by Alain Enthoven (Thatcher, 1993, p. 607), but acknowledged that the major motivation for this latest structural reform was that the NHS ‘had become a bottomless financial pit’ (Thatcher, 1993, p. 608). A major outcome of all of these reforms was to privilege accounting as a central reference point in the management of the NHS. In the 1950s, 1960s and 1970s, accountants had an insignificant, even a marginal role in the management of the NHS. Lapsley has described this era as ‘financial management by stealth’ (Lapsley, 1992). From the 1980s onward, the role of accounting extended beyond a control function to a role in policy design. This centrality of accounting information was reaffirmed by the reforming Labour administration of 1997 on, which had expectations of budgets being aligned with clinical responsibilities, costs being linked to clinical effectiveness and quality of care, all of which was to enhance scrutiny and benchmarking, nationally (Lapsley, 2001). These developments, and the continuing interest in market like structures in the NHS in England, paved the way for what Freeman (2008) has called an NHS ‘By Comparison’. Such comparison, he argues, can be found in juxtaposing the public with the private, the good performers both clinically and managerially with the bad and so creating an industry of comparison towards the ultimate challenge of a ‘World Class’ comparison (Darzi, Department of Health, 2008). One further outcome of this managerial agenda for the NHS has been the manner in which health care managers have started to ‘professionalise’ themselves (Noordegraaf and Van der Meulen, 2008). This can be seen as behaviour consistent with that displayed by the medical profession over the life of the NHS and could be seen as a logical outcome of the managerialist agenda. What is in store for the NHS of the future? Researchers and commentators on the NHS need to be careful in making projections from the examination of isolated episodes in the life of an organisation as complex as the NHS because of interdependencies over time, and between constituent parts of the service (Lapsley, 2001). An interesting illustration of this is the scenario planning of Smith (1998). As the then editor of the BMJ at the time of the NHS's 50th anniversary in 1998, Richard Smith wrote about imagining future scenarios for the NHS twenty years hence (Smith, 1998). As editors of this special edition we find ourselves in the privileged position of being able to verify the accuracy of the scenarios which Smith envisaged half way through the time period which he chose. He chose to use four familiar drivers of strategic scenario planning for his analysis. These were: new technologies; new power structures; the environment; and social and cultural change; he then mapped these drivers on to predicted changes in the NHS. There is a certain prescience about the predictive accuracy of this exercise when viewed with hindsight in 2008. Technologically, ten years ago, the power of the Web in respect of potentially improving the health literacy of the public could not have been predicted. Nor could we envisage how it has facilitated the knowledge exchange derived from systematic reviews, which in turn have heralded the use of evidence informed protocol based care. In respect of power, the scenario planning exercise referred to the use of ‘transient networks and shifting partnerships’ (Smith op.cit., p. 3). Little did those of yesteryear realise how networks have increasingly been adopted as a managerial and policy solution for coordinating health services ‘horizontally’ across primary, secondary and tertiary care, and across sectors for the coordination of health and social care (Sheaff et al., 2009). Nonetheless, that same special edition of the BMJ showcases some themes that have contemporaneous familiarity a decade hence, such as: clinical governance (‘the new big idea in the NHS, Smith, op.cit., p. 1); the role of the private sector; managing change; and the role of the NHS in promoting social justice. Even with such a diverse evolutionary pedigree it remains that the NHS has to be funded and its activities accounted for both fiscally and clinically. The work which it does comes with related risks, all this activity has to be structured geographically, organisationally and medically. These broad themes of funding, accountability, the conceptualisation and response to risk and how to structure the health service accordingly, are all discussed in the five papers of this special issue. These papers reflect the enduring, yet repeating and evolving challenges that the NHS as both an ideological concept and a service delivery mechanism has had to deal with. Our approach in selecting the papers for this special edition has been to focus on the endurance, adaptability and evolution of the NHS at sixty. The NHS has always had to be financed, accounted for and managed. It is these three aspects of this special issue of FAM which we have concentrated on, celebrating the survival, growth and above all the dynamic adaptability of the NHS. Whilst there is a years difference in its celebration and 140 years difference in his arrival, it is rather fitting that 2009 is Charles Darwin's Bicentenary, who studied medicine at the University of Edinburgh and who taught us all about the importance of adaptability.