ACADEMIC INTEREST

Published: 24/04/2003, Volume II3, No. 5825 Page 16

The government seems to be in a quandary about precisely which mechanism it wants to drive improved NHS performance.

There is currently an overwhelming emphasis on topdown performance management, with a proliferation of centrally specified targets. But if plans for greater local freedom and earned autonomy materialise, most notably through the creation of foundation trusts, this will be replaced by far greater reliance on bottom-up incentives and drivers.

In this new environment, patient exit and patient voice will become increasingly important.

1But what are they - and can they work together?

Consumer exit is the classic market mechanism for addressing provider failings. If consumers do not like a service, they can move to an alternative provider. Loss of custom acts as a stimulus for providers losing business, while the quest for new customers acts as an incentive for successful firms.

This structure lies behind the freedoms that will be given to primary care trusts to shift contracts or service agreements in response to unsatisfactory services. It also underpins patient choice initiatives. In the government's words, this will mark 'an irreversible shift from the 1940s 'take it or leave it' top down service.Hospitals will no longer choose patients. Patients will choose hospitals.'

Voice, on the other hand, is a mechanism for changing, rather than escaping from, unsatisfactory conditions. It can take many forms, including public representation on committees, pressure groups and individual complaints.

The proposal to create local membership and boards of governors for foundation trusts suggests that voice is meant to be a major determinant of their behaviour.

Their influence is intended to be strengthened through the Commission for Patient and Public Involvement in Health and the new duty placed on the NHS to involve and consult in the Health and Social Care Act 2001.

Economists have usually seen exit as a stronger mechanism than voice. Famous marketchoice advocate Milton Friedman was contemptuously dismissive of voice, referring to 'cumbrous political channels'.

And if the 1940s take-it-orleave it culture has persisted in the NHS until 2003, this suggests that its traditional dependence on representation through voice has not been particularly effective.However, exit has its problems as well.

To operate effectively, exit requires consumers to be able to shop around. This, in turn, requires a level of excess capacity among providers. It is doubtful whether a tax-funded system - with its public accountability and tight expenditure constraints - will have the freedom to sustain levels of excess capacity that are found in private market systems.

Moreover, one of the major building blocks of the new NHS - PCTs - offer no freedom of choice to patients in terms of the organisations that purchase on their behalf, and it is difficult to see how this lack of choice can be addressed within such large, geographically defined bodies.

Finally, of course not everyone agrees that choice is a good thing per se, especially when it may threaten the equity aims of the NHS. Faced with these dilemmas, the government's decision to rely on both exit and voice might seem canny. But it will not be if they work against each other.

This may occur if exit acts as a safety valve and reduces the pressure of voice.Think of the persistent reports from the rail regulator about the appalling state of Britain's railways. Is it possible that the outcry would have yielded improvements if large numbers of people had not been able to exit to alternative modes of transport, thereby reducing the pressure of complaints?

Similar arguments have been put forward about middle-class flight from state schooling in many urban areas - ie, that the exit of demanding and vociferous parents has reduced the power of voice for improved standards.

Interestingly, research evidence suggests that people who take out private health insurance (and exit the NHS) do not reduce their political support for it.However, this may be because the exit is only partial, with most private subscribers remaining NHS users in non-elective areas.

Getting the right incentive structures for improved NHS performance is a key challenge in delivering the NHS plan. It is an area where the NHS has often failed; incremental policy making has lacked coherence and consistency.

Thinking through how exit and voice are going to work together is crucial, particularly as the picture will be complicated by the Commission of Healthcare Audit and Inspection hovering around in top-down management mode as well.

REFERENCE

1 Albert Hirschman. Exit, voice and loyalty. Harvard University Press, 1970.

Ray Robinson is professor of health policy, London School of Economics and Political Science.