Right diagnosis, wrong prescription

A long-delayed report into the organization of the British National Health Service (NHS) has belatedly been published this week, with remarkably little media coverage. It was prepared by Stuart Rose, the former boss of retailer Marks & Spencer, and we might wonder to what extent his expertise is relevant to the NHS. Nevertheless, he makes a good fist of explaining how constant and contradictory changes have led to ‘change fatigue’; how targets have had a dysfunctional effect; and that the recent marketization of the NHS in particular has led to a virtually unmanageable situation.

So far, so good, and very much in line with what I have written recently on this blog about unhealthy management and healthy bureaucracy in the NHS. Unfortunately, Rose goes on to wheel out the tired and predictable nostrum that the solution is better leadership and leadership training. We’ve been round this loop endlessly in, especially, the public sector: first it’s better management that’s needed, then better structures, then culture change, then better leadership. Leadership, especially, currently takes on an almost magical character as the universal panacea for what ails organizations. There's an extraordinary impoverishment in the managerial imagination that keeps its proponents going round a hermetically sealed loop of systems (management, organizational structures) and values (leadership, organizational culture).

I don’t actually disagree that leadership (and management, and structure, and culture) matter both in organizations in general and in the NHS. But it is woefully inadequate to think that these things can make very much difference in the face of overwhelming resource deficiencies. As I’ve pointed out before on this blog, health costs are spiralling because of ageing populations, scientific advances and healthcare cost inflation that exceeds general price inflation. UK health expenditure per head is US$3405 or 15 in the world (OECD, 2011 figures), and this does not include the allied issue of care spending for, in particular the elderly.

Now, for sure, expenditure isn’t the whole story because the UK system of socialized health is more efficient than any other. Moreover, I’m very well aware that the situation in the UK is enormously privileged compared with most of the rest of the world. Still, there is a basic arithmetic here. How much difference can leadership make when compared with resources? Suppose, modestly, that it was equivalent to a 1% increase of per head expenditure. Then, the UK would remain at 15 in the league table. Suppose, more extravagantly, it was the equivalent of 10% of per head expenditure. Then the UK would rise to 14 in the list. Suppose, ludicrously surely, it was equivalent to a 20% increase in per head expenditure. Then, by a whisker, it would be 11 in the list. In fact, even if leadership had the capacity to be equivalent to a 100% increase, a doubling, in per head expenditure then the UK would still only be second in the global list. But consider this: no study has definitively shown that leadership makes any difference to organizational performance at all.