Structures of Control in Health Management

Rob Flynn

• Publisher: Routledge
• Year: 2012
• Topic: Social Sciences
• eBook ISBN:
  9781134945177
• Subtopic: Sociology
• Index: Social Sciences

Using a variety of evidence the author documents the rise of general management, the application of new techniques to reduce medical costs and improve efficiency, and other methods to control use and evaluate clinical performance.

1 Restructuring health services

Health care is one of the most important, indeed vital, resources necessary in all social systems. It takes a variety of forms, and may be provided formally or informally through households or specialised institutions. It may be based on folk tradition as well as rational scientific theory, and comprises a range of different methods of assistance and intervention, corresponding to different concepts of health, illness and disease. Professionalised medical and surgical treatment, especially in hospital settings, is commonly regarded as the conventional model for modern health care systems, but this is only part of a more complex and differentiated pattern. The organisation of health care generally, and medical services in particular, differs between societies, reflecting their economic, political and ideological characteristics. It also varies over time, depending on the distribution of power and the outcome of social conflict between competing groups and interests.

Health care, because it is ultimately concerned with concepts of normality and pathology, with social reproduction, and with regulation and control of bodies and lives, is thus of fundamental importance in all societies. Similarly, it is of great sociological relevance, not simply for its intrinsic features and interest, but also because it reveals many aspects of societal, institutional and interpersonal processes. It can be studied in different ways and at different levels of analysis—for example, the phenomenology of illness, medical interactions and the political economy of health-care systems. Consequently, this poses challenging and difficult conceptual and theoretical problems which are unlikely to be cogently and exclusively explained within one theoretical framework (Turner 1987).

This book discusses the context and consequences of major changes in the organisation and management of health services in Britain during the 1980s. It is not intended as a contribution to the sociology of health and medicine as conventionally understood (Morgan et al. 1985; Stacey 1988) but, rather, is more generally orientated towards the political sociology of state intervention, and analysis of public policy (Ham and Hill 1984; Offe 1984). The focus is upon the implications of recent changes in the welfare state, and their effects on the budgeting, planning and delivery of medical services within the National Health Service (NHS). The central theme of discussion is the application of successively bureaucratic and managerial control structures in a formerly professionally dominated system, and the emergence of market and quasi-market rationality and practices. These developments are related to a diffuse but none the less systematic political strategy to restructure the economy and the welfare state.

RESTRUCTURING WELFARE

During the 1980s, in Britain and many other western capitalist societies, the welfare state became the site of intense political struggles. A period of relatively continuous economic growth and political stability from the late 1950s to the early 1970s coincided with the gradual expansion of state involvement in the collective financing and public provision of education, health, housing, social security and other forms of welfare. After the conflicts in the Middle East and oil price increases in the mid-1970s, governments in Britain and elsewhere were faced with the problem of dealing with economic recession, price inflation and rising unemployment.

Efforts to reduce public expenditure to deal with short-term crises were gradually consolidated in longer-term programmes to roll back the state. This shift was linked with other social and political trends—public dissatisfaction with economic management, and growing ideological disenchantment with the effectiveness and equity of welfare policies. In Britain, the Thatcher governments embarked on a series of measures designed to revive capital accumulation and enterprise, restrict or reduce the burden of taxation and public spending, and to move from a universalist to a selectivist model of welfare and social policy. The postwar social democratic consensus was overthrown, and New Right precepts were put into practice (Gamble 1988; King 1987a; Klein and O’Higgins 1985, passim; Papadakis and Taylor-Gooby 1987a).

The common assumption that during the 1980s there were large-scale cuts in state benefits and services is not entirely borne out by the evidence. Total public expenditure in Britain continued to increase, but there were important changes in its internal composition and its distributive effects. Very broadly, spending on defence, law and order, unemployment and social security rose, support for education and health was maintained, and public expenditure on housing was reduced absolutely and relatively. While it is conceptually and methodologically difficult to operationalise and identify cuts in welfare, it is known that they occurred in a selective and uneven way, and that together with the effects of other changes in social policies and taxation arrangements, they were socially regressive (Duke and Edgell 1984; Edgell and Duke 1986; Flynn 1988a; Judge 1987; Robinson 1986; Taylor-Gooby 1989).

Instead of the radical dismantling of the welfare state expected by some, there has been a ‘restructuring’ of state activity in the economy and polity, linked with encouragement for competitive individualism, self-reliance and market mechanisms. Economic deregulation has occurred, government assistance for capital investment has expanded, trade unions’ powers have been reduced, key nationalised industries and public sector monopolies have been transferred to private ownership, and privatisation has been applied in certain local government and health-service activities. Public sector bodies have experienced ever more stringent cash limits and financial controls, as well as measures to rationalise their organisational structures and improve efficiency.

The goal of reducing public expenditure which preoccupied the Thatcher governments proved difficult to achieve, mainly because increased spending was necessary to support growing numbers of unemployed, low-income and elderly retired households, and ever-increasing demand for services like health care. However other goals—promoting market forces in all spheres, encouraging competition among suppliers of public services, enhancing individual choice and minimising state provision—have been partly attained, or at least securely established as dominant objectives in the new political agenda.

In education, income maintenance, health, housing and personal social services, the institutions, policies and practices which had become part of the Keynesian social democratic consensus have been challenged. New Right doctrines about inefficient and paternalistic state bureaucracies and professional monopolies converged with New Left critiques and public disquiet about the quality and effectiveness of welfare provision, and this convergence has provided a firm platform for the advocacy of market solutions and consumerism in the public sector (Flynn, N. 1990).

The ‘crisis’ of the welfare state has not led to its catastrophic demolition, but rather to attempts to bring about its redesign. The economic and social structure associated with values of citizenship and collective provision has been derided, and liberal values of individualism and competition have been revived. While the amount of resources devoted to welfare programmes has not decreased significantly, there has been a fundamental change in the context of, and rationale for, social policy, and a move towards diversity, pluralism and a mixed economy of welfare. In this new context, the state is expected to play only a minimal or residual role, to compensate for, or to supplement, the market. The state is being transformed from a provider to an enabler, and private sector organisational models are being used to reform its structures and methods of operation.

Many of these changes have been observed in other western capitalist societies, but they are most closely linked with Thatcherism in Britain. Despite adjustments caused by external economic events, and subtle shifts in ideological nuance and political emphasis, there is an identifiable pattern which allows us to describe Thatcherism as a systematic attempt to restructure the British economy and society. As Gamble (1988) has argued, this has comprised a New Right programme which has attempted to reform state institutions, preside over rules and inculcate a culture, in order to assist capital accumulation and individual freedom.

There has not been a completely consistent or coherent set of policies, nor has the Thatcherite project been ‘hegemonic’ or wholly successful to date. Ironically, it has involved a paradox in so far as the free economy requires a strong state: to achieve deregulation and liberalisation in some areas has necessitated dirigiste intervention and increased control in others. Moreover, it has encountered various forms of political opposition and institutional obstacles, in the form of continuing widespread public support for key components of the welfare state, and difficulty in implementing market reforms in relatively non-commodified sectors like education and health (Gamble 1988; Taylor-Gooby 1989).

Nevertheless, one of the dominant features of British society in the 1980s has been government determination to expand the role of the market, to reorganise the state and reconstitute the system of social relations. This book examines one aspect of this much broader set of processes—the restructuring of the NHS—and tries to analyse the means by which this has been attempted, as well as the implications of changes in the management and production of state-funded health care.

‘Restructuring’ is used here in a very general sense, to refer to a process by which significant changes are made in established arrangements in resource allocation, in the division of labour and organisational structure, and in the criteria and objectives of service provision. This raises the question about how significance is determined, and whether recent trends indeed constitute a radical departure from previous patterns. At this stage it will simply be asserted that, cumulatively and gradually, the NHS has been subjected to processes which have attempted to transform its structure, management and rationale. Later chapters will indicate the substantive importance of recent changes in comparison with earlier policies and reforms.

As already noted, there are several justifications for a sociological interest in these processes. First, the restructuring of health services can be used to gain a clearer understanding of New Right arguments, and the consequences which flow from them. Second, policies designed to extend managerial control over medical professionals, and/or to introduce an internal market within the NHS, pose questions about bureaucratic and professional power, and about medical autonomy and proletarianisation, which have wider relevance to important debates in the sociology of organisations and the professions.

Third, the trends discussed below may be expected to produce changes in the criteria of health-service provision (away from accessibility, comprehensiveness, equity, and treatment according to need) as well as changes in the social relations of production and consumption, and, through changes in distributive impact, directly affect life-chances. Fourth, as will be noted further below, NHS restructuring provides a useful point of entry for enquiry into the internal operations of the state—a topic usually shrouded in vague abstraction rather than empirical observation. The NHS in Britain receives the third largest amount of public expenditure, is an enormous organisation employing more than 1 million people, and for many represents the keystone of the modern welfare state. Major modifications in its structure and policy processes demand sociological analysis.

COST-CONTAINMENT IN HEALTH-CARE SYSTEMS

While it is correct to emphasise the distinctive character of Thatcherism in restructuring the welfare state, and important to recognise the particular significance of changes in the NHS in the 1980s, it must be noted that retrenchment and reform in health and and other social welfare policies have been common in other capitalist societies (Cameron, 1985; Friedmann 1987; Gillion and Hemming 1985; Moran 1988).

Many countries have adopted policies of cost-containment in health care, largely as a reaction to fiscal stress and economic recession which coincided with a large and rapid increase in demand. Governments have endeavoured to limit growth, and introduced cutbacks, irrespective of the structure of health service delivery and funding mechanisms. Some countries have a national health service model in which comprehensive services are provided free, financed from general taxation, and the state owns facilities and employs the majority of health-care workers. Others have adopted a social insurance model, with compulsory insurance paid by employers and employees, in which services are provided by a variety of public and private, for-profit and non-profit, institutions and professionals. Others have a private insurance or market model, where individuals purchase private health insurance and receive care from a mixture of private for-profit and non-profit institutions and professionals. In fact, there are variations in the public/private mix within each system, but in virtually all countries controls on expenditure have become a major, if not dominant, objective (OECD 1987; Schieber and Poullier 1986, 1987, 1988).

Various methods of cost-containment have been applied, especially since the mid-1970s and the onset of inflation—preventing costs from rising in real terms, reducing costs in real terms, restricting the rate of growth as a proportion of gross national product. Changes in organisational structures, improved productivity, controls on staff costs (especially doctors’ remuneration) and direct and indirect constraints on demand have been observed in most health systems (Abel-Smith 1984; Maxwell 1981). There has been increased scrutiny of medical efficiency and effectiveness, linked with political debate about the capacity of economies to absorb ever-expanding volumes of demand, given demographic shifts which add to the proportion of the elderly in the population; scientific and technological advances in medicine; and greater claims on and use of services.

Despite the methodological difficulties of international comparisons, the OECD (1987) concluded that systems originally intended to increase access and to extend provision had not achieved adequate levels of efficiency, and indeed had created allocational and distributional inefficiencies. The remedy recommended was cost control: further efforts to improve medical effectiveness and value for money, especially through market-oriented measures, were deemed necessary.

In many countries the entire basis of medical services has been reviewed, and a restructuring of health policy has taken place. As one observer has noted: ‘Various forms of incentives for conservation of health care system usage and behaviour modification on a societal scale are now being implemented by many nations’ (Virgo 1986:1). Severe budgetary restraints are being imposed to stabilise or reduce health expenditures, and in some countries there have been major shifts away from public finance, planning and co-ordination of supply towards private market or quasi-market mechanisms (Flynn and Simonis 1989; OECD 1990).

In Britain, government concern about the level of spending incurred by the NHS has been evident from its inception in 1948. Since that date there have been several official inquiries into health-service funding and numerous attempts to impose financial controls and measures to improve cost-effectiveness. In 1956 the Guillebaud Committee carried out an investigation into what were then regarded as higher-than-anticipated costs, and a Royal Commission on the NHS reported in 1979 on inadequacies in the use and management of financial and staff resources. It became evident that there was no simple and unequivocal way of determining the ‘correct’ amount of funding necessary for the NHS because finance had to reflect continuous changes in demand, innovations and increases in supply, heightened expectations and political preferences (Office of Health Economics 1979; Klein 1983).

However, it was also clearly recognised that efficiency and effectiveness had to be improved. Cost-control was linked with other objectives— ensuring local adherence to central government policies for different components of health care, and achieving greater co-ordination among health-service agencies. Concern with finance and value for money inevitably merged with wider political demands for more accountability, better planning and management.

The administrative and structural reorganisations of 1974 and 1982 (and subsequent changes described in the following chapters) can be seen as stages in a long process of bureaucratisation and rationalisation. In this process, corporate planning and centralised control were introduced and extended to cope with an almost open-ended and professionally dominated health system. For successive governments (of all parties) the problem has been that of controlling costs, and securing an effective and efficient national health service. The crucial limiting factor in this is that the NHS is a system in which clinically autonomous medical professionals have ultimate power over the rationing and use of resources, delivering services according to professionally defined criteria of need. However, during the tenure of the Thatcher governments, committed to reducing public expenditure, rolling back the state, and challenging public sector and professional monopolies, this problem was tackled with new determination and vigour.

FINANCING THE NHS

As already noted, throughout the 1980s there does not seem to have been any dramatic reduction in NHS finance—instead there has been apparent continued growth. But this does not accord with popular perceptions, professional claims and independent analysis, which suggests that the NHS has been ‘underfunded’. In the last decade there has been a prolonged media and parliamentary debate about the adequacy of funding, and complaints from health service professions and consumers about the effects of economy measures and cutbacks in services. During the 1983 and 1987 general elections, the future of the NHS was a significant political issue, and much argument surrounded the level of expenditure in the hospital sector.

Controversy about finance intensified because of a combination of factors. Annual growth in the NHS budget did fall, compared to the rates of growth sustained in the 1970s. In many districts there were reductions in their allocations, as a cumulative effect of the national mechanism for redistributing resources away from relatively well-provided areas to less-resourced areas. Tighter central controls on local spending, and rigid enforcement of cash-limits were reinforced by managerial reforms (the introduction of general management in 1983) and instructions to obtain efficiency savings and ‘cost improvements’. This placed further pressures on local budgets, and led to numerous cash-saving measures including the closure of hospital beds.

Above-average inflation in NHS-specific costs (particularly drugs and equipment) and staff salaries was not fully covered by central government funds to local Health Authorities. In addition, there were more demands for patient services, and...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Dedication
• 1 Restructuring health services
• 2 Medical autonomy and managerial encroachment
• 3 Administration or management?
• 4 Budgeting and the costs of medical autonomy
• 5 Assuring performance, quality and standards
• 6 Cutback management
• 7 Marketisation and management in the National Health Service
• 8 Structures of control in health management
• Bibliography
• Name index
• Subject index