We could learn a lot from the private sector. But we could learn even more from large not for profit organisations that adopt the business know-how of the private sector with the social ethos of the public sector.
By examining how these organisations operate in practise we could see how hospital trusts might develop in the future. After all, isn’t that where foundation status is leading? Hospital trusts will be competitive, efficient and patent focused just like the best commercial businesses in the private sector. And those that aren’t will be taken over, merged or cease to exist just like in the private sector. But unlike the private sector they will not be profit driven, this should sit more comfortable with the medical professions ethics.
My experience of working in the not for profit sector led me to a different conclusion. The first surprise was that unlike the voluntary sector the not for profit sector did not adopt local authority pay and conditions, it paid senior managers more and frontline staff less.
In another practice taken from the private sector, no one knew what anyone else earned as senior managers negotiated their own salaries each year linked to their annual appraisal. Only after I hlft did I discover a colleague was paid several thousands more for the same job simply because they had negotiated a higher starting salary.
Profit over performance
The turnover of senior managers was dramatic; reorganisations were used to purge those not in tune with the new direction. All this was made possible by the fact that trade unions were not recognised and the board did not concern itself with HR issues. In fact, the board only concerned itself with the bottom line.
‘Success was measured in terms of growth driven by the chief executive’s ego rather than a sound business case’
As a head of service I regularly attended board meetings but not to discuss quality of care or the implications of budget decisions but plans for growth and the PR opportunities this offered. Marketing was considered important to attract new business and a considerable amount of senior management time was spent trying to win public sector contracts. Glossy brochures and expensive videos were produced in support of this.
While individual services were not required to make a profit, they needed to in order to cross-subsidise loss making services. However, if a service in a particular area was loss making with little prospect of breaking even then it was closed. This was a financial decision; it didn’t involve consulting with existing service users, staff or the local community, which gave a lie to the rhetoric on customer engagement or community involvement.
When I took up a senior management post at a large housing association I thought that the not for profit sector would offer the business know-how of the private sector and the social ethos of the public sector. I was wrong. The not for profit sector lacked the openness and accountability of local government and in the absence of the pursuit of profit it measured success in terms of growth driven by the chief executive’s ego rather than a sound business case. Not a good model for NHS trusts.