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What the Carillion collapse tells us about the unspoken truths governing public sector contracts

January 18, 2018 Leave a comment

Carillion

Carillion is the big news this week, and is likely to remain on the media radar for some time, given the impact that the collapse of a Company of this size is almost certain to have on commercial relationships that are now an integral part of the public sector.

Moments like this are important for reasons which go way beyond the impact that Monday’s announcement is already having on jobs and the potential closures of many small businesses.

It is providing one of those very rare opportunities to glance inside the incestuous workings of contract delivery on behalf of government and gain an invaluable insight into why private interests working at any level within the public sector is in clear conflict with very ideals of what public service delivery is fundamentally about.

Regrettably, the clear focus of the media and political classes has already fallen upon the question and avoidance of blame. Yet if they were to begin to look just a little further and be open with what have for too long been the unpalatable truths, there would be just the merest hope that questions such as whether there can be a future for the NHS when it remains in a perpetual state of financial crisis could perhaps be genuinely answered.

So why are contracts going to private companies outside the public sector?

The best place to begin thinking about the contracting or privatisation problem is to look at why private business is really even involved in the delivery of government services of any kind, when government exists to operate for, on behalf of and for the benefit of only the public.

Man can only ever have one true master after all, and if money is the true motivator, then public service will at best become an oversight – the unwelcome relative left trailing way behind.

Whilst it may feel counter-intuitive to believe or accept it for many of us, the ‘privatisation solution’ has been in the main part created by Conservative governments in response to the consequences of policies created typically by Labour in order to enhance the rights, working conditions and influence of public sector employees.

Positive discrimination and rights, enhanced working conditions, gold-plated pensions and union indulgence within public sector organisations all cost an ever evolving sum of money in an increasing number of different ways, which usually create even more roles and dilute responsibility further and further still.

The cost of employing people within the public sector on conditions which exceed those of the private sector outside – even when salaries appear to be less, has simply made the delivery of services too expensive for government itself to provide.

Against this backdrop, all areas of he public sector have had to go in search of more cost effective ways to deliver services, and have had to do so in ways which also meet the rigorous requirements of providing services and employing staff as a government based organisations.

This has made the ‘marketplace’ fertile for the entry of private contractors who don’t have the same considerations as these former public sector based service providers.

When you consider that private contractors are providing arguably the same level of service, just without the same levels of bureaucracy – whilst making what in some cases is an outrageous level of profit besides, you can soon begin to see that something is inherently wrong with the way that the government system is now designed.

So how does public sector contracting by private contractors become a problem?

Business loves a contract. Contracts give surety. Contracts themselves can be used as a solid-gold guarantee – and particularly so when they are agreed and signed with government. This gives business confidence which can be misplaced, misused, abused and is almost certain to breed a feeling of complacency.

After completing what should be a rigorous ‘tender process’ – the company will sign a contract with the government organisation which agrees what, when and how the ‘contractor’ will provide a service, whether that just be 1 person to sweep a street or 32 bin lorries to collect your rubbish every fortnight for 5 years. On signing this contract, the company will know exactly what it will be paid, know what it will in turn have to spend, will have worked out its costs and borrowing, should have kept back a little for a rainy day and then know what it will make in profit – from which it will pay bonuses to staff and dividends to shareholders after it has paid any tax requirement.

Good managers know that some things change during the lifetime of a contract – such as fuel prices going up, which would be a real concern for a bus service provider or a private ambulance services. But contractual devices or clauses that allow for some variation in charges are usually built in to any contract to allow for this.

As such, genuinely unforeseen events or those which could not have been predicted by anyone within the contracting company itself are very rare to find.

What government contracts don’t allow for however, are lack of knowledge or understanding of the service delivery area on the part of those designing and agreeing a contract. They don’t make allowance for unmitigated trust on the part of either party. They certainly don’t consider the potential greed or indeed malpractice of a contractor or its decision making staff, which cannot be planned for or predictably defined even within the scope of a government contract process.

When a contractor has only a single contract, transparency is bizarrely much clearer and for the management, much more important and kept clearly in mind.

But when you have many more and perhaps and ever increasing number of contracts, the potential for complacency and overconfidence can lead to otherwise unrealistic opportunities, which in more focused circumstances would have been denied.

It may be as simple as paying senior executives massive, over-inflated salaries. But it has the potential to be much much more in terms of investment, questionable projects and big payouts for shareholders when little in terms of adequate checks and balances has allowed an adequate safety blanket to be retained from payouts and quietly put aside.

The overriding problem with a company which has grown to the size, reach and responsibility of Carillion is there is so much in terms of questionable financial activity that it has the ability to very easily hide.

The responsibility for contract design and management doesn’t just fall on contractors themselves however.

In the background to all this and within the protectionist culture in which contemporary public sector commissioning is currently enshrined, purchasing officers simply don’t have the motivation or willingness to do their jobs as effectively as they should. When the money you are allocating isn’t yours, public service and best value isn’t always the overriding priority. Sometimes it’s all about doing anything which proves to be easier, and who gets what doesn’t always work out exactly as it should.

Whether its building maintenance, bin collections, public transport, prison management, forensic services or interim and temporary staff services that contractors provide, contractors are all making unnecessary profit at the ultimate cost to us as taxpayers.

So what can be done to solve the problem and when will anything happen?

What has been outlined here provides little more than a simple snapshot of a very big and complex problem, which those in power are through their actions are continuing to deny.

For these problems to be addressed, it would first be necessary for politicians to accept that the whole system of government delivery is broken, riddled with management focused upon self interest, making decisions based on theoretical premise, and that there are simply too many people operating within the system who are ultimately being allowed to take us all for a ride.

The ‘too big to fail’ mindset has now permeated through political thinking to a level where contracts are being awarded despite very clear warning signals which would tell even very junior civil service staff that something is not right.

This is no longer a question of let’s bail them out so that they don’t fail like Labour did with the Banks in 2008; this is all about awarding contracts because there is a view that they never will.

Solving this problem is far from simple. It is not just about political thinking. It’s about getting the market’s to think differently. But just as much, it’s about getting employees to see their roles differently; to accept that they have a part to play too.

In simple terms, the free for all has to stop.

This bonanza based on self-interest is no longer sustainable.

The perpetuation of the lie that government genuinely works selflessly for everyone has got to be stopped.

No business can perform effectively on the basis that it prioritises the working conditions and needs of its staff before the priorities upon which it was created to deliver. Yet this is how liberalism and rights culture has manifested itself within all parts of government and the public sector.

Not only has the NHS become hamstrung by lack of staff and inefficiency, it is being cut up by the cost of the staff it hires through contracts – thereby being destroyed by the supposed solution itself; by the very respite that additional money is supposed to provide.

Meanwhile local government has its own substantive bogeyman too, finding itself tied up in knots by the cost of the local government pension scheme – the destination of the better part of our council tax, in many of the Boroughs, Cities and Districts where most of us reside.

Then there are the PFI contracts upon which the last Labour Government so heavily relied. A coarse, deceptive instrument designed to hide public spending, whilst fire hosing cash at private contractors over 30 year terms. Just another financial time bomb legacy like the raid on pension funds by Gordon Brown which we overlook daily on the basis that out of sight is very much out of our minds.

The power rests with government to change all of this, if only they would try.

Regrettably, the will doesn’t even exist to even begin doing so today, even if the Government could begin doing so – something that a hung parliament which could last until 2022 will simply deny.

With a good chance that the next Government will be based upon or built around a militant form of Labour, the chances are that politicians will only continue to try and hide the truth thereafter, because action which doesn’t just look responsible is not a pathway to which they are inclined.

As Jeremy Corbyn made clear in his questioning of Theresa May at Wednesday’s PMQ’s, the answer is just to do everything to return everyone to employment in government jobs. No doubt based upon further borrowing, which to those who don’t understand business or economics is a perceived as a policy which when sold looks bullet proof.

images thanks to independent.co.uk, bbc.co.uk, wiltshiretimes.co.uk

Politicians must acknowledge the problems within the NHS before any serious steps can be taken to save it…

November 13, 2014 Leave a comment

David Cameron And Jeremy Hunt Visit A Hospital To Mark The 65th Anniversary Of The NHS

It is because we can all identify or agree with the principles of our healthcare system – to meet the needs of everyone; to be free at the point of delivery; and that it be based on clinical need and not the ability to pay, that it has become such a focus and play thing for successive Governments and the politicians within.

It is also why the NHS now finds itself at a point in its history where these very Principles may have now placed it at the most significant risk.

In time, the size of the milestone which was the creation of the NHS, may be fully appreciated for the very rare moment in time that it was when the political classes delivered a set of policies and principals which were genuinely created to be in the best interests of all.

Such moments are extremely rare. Governments such as those led by Churchill and Thatcher created and determined legacies which still affect us now and which their successors may only ever hope to emulate.

But the arrival of the NHS, much like the formalisation of working democracy through the creation of our Parliament following the Civil War, has the power to touch us all – even if we don’t or won’t openly acknowledge it.

Sadly however, once the principles upon which the NHS was formed were agreed and indeed became cornerstones of both our culture and society; what were soon to become the long-term political arguments over how their processes should operate soon began.

Today, the NHS might be best described as a series of industries within industries; of silos within silos; business unit lapping up against business unit; as an entire ecosystem where ideas, concepts and yes – even Jeremy Hunt’s ‘innovation’ [aka ‘commissioning] are actively competing against and ultimately all working against each other with the regrettable endgame firmly in sight, when some future Government will have no choice but to admit to no longer being able to afford it. Funny perhaps that it’s never this particular one…

Generations of the political masters of the NHS do themselves carry much of the blame for the crisis which the Organisation is in, with it having become the ongoing vogue to stake ideological claim to ensuring the future of the service.

Ideologies are all well and good, but it is such a cultural reliance upon specialists for every function outside of medical practice itself that has bloated backroom functions and created an ideal climate for non-clinical managers to lay claim to the most important responsibilities within what should have always remained a predominantly clinical-led world.

Add the performance-choking and burdensome elements of protectionism which have been fuelled by European red-tape and employment legislation; litigation culture and the motivation of many to look for almost any reason to create blame, and you can soon see why temporary staff, commissioning and the recruitment of managers who can surely only manage if they have a degree or an MBA has become the norm.

The pseudo-sciences do indeed have a lot to answer for not only within the NHS. Somebody somewhere will soon need to realise that blue sky and out-of-the-box thinking are reflections upon the ability and understanding of an individual to apply what they know. It is something which itself can rarely be taught, and the way in which qualification is prioritised above experience is really quite perverse in the age of equal opportunities. The text book technocracy which is now populating all tiers of middle and upper management threatens whole industries, and not least of all the NHS.

As discussed in a previous blog about Government, the NHS is not a business and should not in any way be treated like it is one.

One of the greatest ironies of Jeremy Hunt’s plans for making savings by cutting the hire of temporary staff, is the fact that many of them have and are being employed to manage and grow the processes of commissioning which he himself is stewarding – attracting daily rates for self employed ‘consultants’ which can easily reach £400-500 per day; plus expenses; plus the fees which the Recruiters and Agents who facilitate their ‘employment’ will be charging themselves.

Whilst sold to us as the way to streamline and make healthcare more affordable, commissioning is not only an extremely expensive process to manage, drawing funds, staff and resources away from areas where they are needed most. It is also a major step in the direction of privatisation.

Health service providers – government, NGO, not-for-profit and privately owned alike – are invited to bid to provide services, and all of them will be primarily thinking about the bottom line, and not the holistic level of care they will be giving the end user – i.e. you and me, as they do so.

The Government itself usually recognises a bottom line from fee generation as profit, whatever the legal status of the organisation behind it. The biggest question about the future of the NHS must therefore be how it can possibly be so that other organisations can now provide better services at lower cost whilst they are also making a profit, when the Government itself cannot deliver the same directly and without the need to pay an additional premium fee?

The NHS, like Local Government and many of our NGO’s is in serious trouble, not just because the Country is now effectively bankrupt and cannot actually afford to continue providing the services that it already does. But because it is also incapable of addressing the fundamental need for transformation and use innovation in its real sense to enact top-to-bottom change in working practices and the legislative areas that support them.

Politicians are not prepared to talk about the real issues that the NHS faces, even when they are themselves cognizant of them, because they fear the electoral implications of actually being seen to do so.

Meanwhile, the default approach to making savings is being employed yet again, and whilst savings can almost certainly be made, the decisions which lead to them should be based on the knowledge and experience which comes from the clinical end of the scalpel, and not from the money-counters and political theorists that populate the very fat end of the other.

image: blogs.spectator.co.uk

 

What the US row over the regulation of broadband provision can tell us about the privatisation of public services and why we must maintain the basic right to the same level of ‘public’ services for all…

November 11, 2014 Leave a comment

images-10We have so much news available to us now that it has become very easy to miss the stories which may fail to catch the public eye.

Away from the headlines today, some of our news sources have been covering the growing row between US President Barrack Obama and the Industry Leaders controlling the supply of Broadband Services in the United States.

Obama appears to be pushing for a system of regulation which will ensure the same level of supply across the Net to all customers, whilst the Industry itself is apparently looking for its own kind of controls which will allow differing levels of supply – and ultimately a ‘fast lane’ or optimum service for those to be made available for those who will pay for it.

On the face of it, this could immediately sound like something and nothing. We do after all have a whole range of choices when we buy or arrange our own internet packages and right now, it now seems pretty normal to pay for every little thing that we have.

However, whilst the speed of the roll-out of superfast broadband leaves many of us knowing only too well that different levels of service currently exist and seem to leave us with little choice, this is in itself just an evolutionary or developmental stage of provision. It is much like the experience of the switch from analogue to digital has been for those of us who used the Web from the beginning, and can still remember the rattle and hum of the tones as we hogged the phone line and dialed-in.

We may not like it and in an age where we have been conditioned to expect everything at the touch of a button, slow internet is beyond frustrating. But right now, we are accepting of it, as we are culturally acclimatised to accept that there is a direction of travel at work, which will only see services improve. (Yes, 4G apparently will at some point exist, even if you have already been paying for it for many months…).

But what would it mean to you if the next generations of technology were simply kept from you, when you knew that they existed and other people or businesses had ready access to them?

Your immediate thought might be that you are pretty happy with your iphone 6, or perhaps a Galaxy Smartphone, and that will do you just fine. But technology is moving apace, and if you were to work on the basis of Moore’s Law, which indicates that the speed and capacity of technology doubles approximately every 18 months to 2 years – which affects functionality as well as speed, you can soon begin to imagine what you might be missing out on by the time you are thinking about the phone you will be able to buy AND operate fully in the year 2020. Apply this to the services you receive through broadband too, and there is perhaps no need to say anymore.

The speed of communication through information technology mediums has been and remains a game changer which has impacts upon us all, usually in ways that leave us feeling completely untouched.

However, it is this very speed, and the capacity to move significant amounts of data from one location to another – perhaps even across the world, in timescales that as humans we at present still remain cognizant of, which have for example equipped money markets and traders to create industries within industries which literally create money from nothing as stocks and shares change hands with the potential to do so again and again over the course of a minute, whilst speculators also ‘bet’ on the transactions and the way their vales will go over the same period of time.

Speed – and therefore time, is increasingly becoming worth money where communication is concerned.

Whilst this may not be a thought that drags many of us away from our phones and iplayer-streamed episodes of The Big Bang Theory today, it will surely stand to reason that those who supply much faster internet services will see the opportunity in being able to charge a considerable premium for the product they supply tomorrow; whilst those who have the most to gain from the almost guaranteed technological leaps that are coming, will already possess and indeed have the most to gain financially from paying what will to them be trivial sums.

Not a problem for many of us today. But if the supply of service did really become as diverse as it could, there is no reason to believe that like in many other areas of contemporary life, cost will not quickly price large numbers of people out of the latest technology marketplace, with repercussions that could easily lead to the imposition of a whole tier of barriers to entry to services, apps and anything else which has then become entwined with the internet age.

Look at the behavior of the Industry in the States, and it will suddenly become very clear why our own providers could be so resistant to Government led regulation, and the imposition of a level playing field which will never have the potential for the same levels of profitability as that of the alternative.

Regulation that ensures a basic level of service for all and which is not itself qualified by a premium is essential. It can only be offered by an impartial third-party organisation – ideally good government – which has no financial interest in the services provided.

Government is today painted as the bad guy for any industry that provides either a public-wide service, or one which can ultimately have that same effect on the population and is not currently regulated – or guided with a robust ethical code that prioritises access and consideration of the consequences of profit-making actions upon us all.

This applies to the inappropriately named utility companies; companies such as the telecom providers, and also to the companies within the financial and banking sectors, where perhaps the most clear example of what happens when the fee-earners are left to regulate themselves was demonstrated by the financial crash of 2008.

The relevance of the US example should not be lost on us, just as the importance and argument that now definitely exists for greater Government intervention to regulate what are and remain public services.

The core reasoning of keeping essential services in the public domain was lost to decision makers of that time, through prolonged periods of low productivity and the high cost of running industry sized monoliths which were inherently resistant to change.

Regrettably, the long-term gift of what are effectively now monopolies to the money markets was not considered in terms of the requirements of ethical or regulatory practice, and the escalating costs of heating and electricity are just a symptom of what happens when a service is provided to a captive market by companies that are allowed to focus on nothing but the bottom line.

Sooner or later, Government will have to address these issues which face and surround all of the public services which are now in public hands.

Ed Millliband has to date probably been the most outspoken of the Political leaders in acknowledging the need to tackle the impact of unbridled energy price rises. But as with almost everything else, inflicting price changes, freezes or any kind of formula without regard to the real implications of doing so is akin to madness – and certainly so if the Industries themselves are not given adequate opportunity to reform before doing so.

Existing problems will be very complex to address. But for services such as the NHS it is not too late for politicians to do the big thing and tackle the problems that exist with meaningful reform. With Internet Services, it is in no way too late to ensure that the market continues to serve the best interests of everyone, and not just the few who will otherwise stand to make the most money from manipulating its harnessed profitability to their best advantage.

There is much for Government to do. But before anything there must be a change of mindset to one that genuinely considers the impact of polices on other polices and ultimately upon the consequences for us all.

The Internet will only come close to achieving all that it can for good if access to it is essentially the same for all.

Government will need to address this, just as it will soon have to accept that the parallel world which the Net has created will require its very own set of rules.

The distance which the Internet has created between us is already removing the humanity from relationships. We now need to ensure that our ability to pay is not the system of qualification for improving our lives that we should now be able to take for more than granted.

image: thevoltreport.com

NHS and the predicted £30 Billion deficit: It’s time for change, but change is about much more than simply saving money

A NHS sign is seen in the grounds of St Thomas' Hospital in London

You can’t really help but admire the audacity of Sir David Nicholson, the outgoing head of the NHS, for his latest attempt to sidestep and cover the tracks of his questionable tenure by shining a light on what could become a £30 Billion deficit within the NHS.

His failure to fall on his sword over the Stafford Hospital outrage was beyond what many will agree as being in good taste and was compounded yet further by his indignant refusal to accept any form of responsibility, despite being the Executive Officer at the very top of the tree and arguably placed within the one position where there simply is nowhere to run or hide when it comes to carrying the can for mismanagement on what appears to have been an unprecedented scale.

The most regrettable facet of this latest twist is that the lack of respect which Nicholson holds with people now will surely deflect attention away from the cold reality of his message, which in a perhaps more capable set of hands would have not only been brought to public attention much sooner, but effectively acted upon too.

Many of us already realise and understand just how serious the problems throughout the NHS actually are. In local politics, where we closely scrutinize the real-world impact of ward and department closures; the centralisation of services, and the amalgamation of GP’s practices into so called ‘community hospitals’, there has been little doubt for us all of the real purpose of such changes for a considerable time.

Cost aside, the principles upon which the National Health Service were created and the application of universal care are still however very much valid even today.

But it is the continued compromise of those very principles at their heart which has led to the seemingly insurmountable financial and management problems that we face today.

These were principles that were intended to prioritise the care of the end-user; not the interests of managers, union leaders and politicians, who have all had something to gain at various points by moving those priorities elsewhere; often at everyone else’s cost.

Any commercially run business or ethical organisation is created and run to efficiently provide a particular product or service to its customers. It is not created or subsequently evolved to disable itself by prioritising the working conditions of its workforce and certainly not run for the benefit of harvesting statistics as part of some politically expedient mind warp which is simply designed to spread the message that things are running far better than they actually are.

Tragically, this is pretty much in a nutshell what the NHS represents today and evidence would suggest that people are dying needlessly as a result of it.

It’s not as if health professionals are oblivious to the realities of the situation either. Talking to a career nurse only a few weeks ago who freely admitted that she had been a lifelong socialist and Labour Voter, even I have to admit to my surprise when she clearly told me ‘Adam, I love the idea of socialism and what it stands for; but in my experience, it simply doesn’t work’.

Herein lies the greatest problem with the NHS; Its culture.

The culture within the NHS is the base issue which much be faced, understood and addressed if the Organisation as we have known it and the services that it provides are to be saved and our society is to be protected from the arrival of either tiered health provision across the board or UK-wide service which is only made available to those who can pay as they use.

Right now, we are all witnessing the preferred method of dealing – or I should say – avoiding reform throughout the NHS, NGO’s and the tiers of Government, which presents itself in the form of privatisation. Privatisation of any Government funded service has arguably become nothing more than avoidance of the need for reform at its worst because services are never the same when profit is the master. Furthermore, recreating public-run services once they are lost will be a whole lot harder than the reform which most Politicians already seem to see as impossible.

The only way we will keep and maintain the NHS as we have known and appreciated it in terms of what it offers the public will be the result of transformation and change which must begin with Government and work its way right the way through.

The NHS is strangled by the culture of workers’ rights, tiers of managers who barely understand what practical patient care is, Europe and the rise of the blame culture, where practitioners are increasingly forced to consider the bureaucratic pathways to treatment first, before addressing the urgencies and acuteness of clinical need. Ironically, such delays may of course be little hindrance to treatment for the people who will be looking for an opportunity to sue them either.

Government must act now to change and support the whole working culture of the NHS and put patient care back at the forefront of everything they do, rather than putting everyone else and the profit hungry ambulance chasers first.

It’s not an easy job by any means and most of us do appreciate that. But Governments get elected to take responsibility for big problems just like these; not so they can talk up the delivery of results when what they seem to be doing is looking for the easiest way out of problems they just aren’t responsible enough to face.

The patients of today and tomorrow don’t care about statistics or the money that providing treatment costs.

What they do care about is trusting that they can rely on getting medical help when they need it; where they need it and without worrying whether or not they qualify for it. Every day, the number of people who simply don’t have that trust are growing rapidly, and each new day is a sorrier one than the day before.

If Government keeps treating the problems in the NHS as if they all revolve around money, the cost of running the service will probably lead to its end.

It’s time for change throughout the NHS. But real change is about much more than simply saving money.

image thanks to http://www.channel4.com

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