'Yes, Mr Brown, as you well understand, the NHS is a business operation in that it is an input-output system with desired outcomes'

Mr Brown, you have offered places in the government to people outside Labour ranks. As an experienced public health professional specialising in reforming health care services, I offer my services to advise you on why the NHS is so hard to reform.

I will also suggest ways to improve NHS value for money, without a war with the medical profession (and a lot of others) and, incidentally, to save the NHS for Labour.

Of course, you would be crazy to take me on spec, so I'll start for free by explaining why the NHS, along with every other health service in the world, is so hard to improve, even if showered with gold.

Yes, Mr Brown, as you well understand (but large numbers of NHS patients, managers and doctors seem to have difficulty with) the NHS is a business operation in that it is an input-output system with desired outcomes. It operates on raw materials (patients) using resources (workers and plant). As you.and Tony Blair have often said, it certainly needs reforming. So why has the NHS not responded enough to all the restructuring, targets, incentives and downright edicts that have been poured upon it?

Obstacles to improvement

The most important reason is that a health service is possibly the most difficult business system of any to manage and to increase value for money. This is because:

  • Consumer sovereignty is largely lacking, which is why doctors and other clinicians are so crucial as patients' agents. This makes patient choice, which is very desirable, very difficult to implement well.
  • Whereas in a typical business system, managerial power is pyramidal, with power emanating from senior managers downwards to frontline workers, in health services these workers are doctors, who have the great managerial and political power.
  • What makes the position more difficult is that, while senior business managers are expected to have training in.the economics of business systems, especially efficiency in the face of scarce resources, doctors are, on the contrary, medically trained into an absolutist, not resource-based, culture, where opportunity costs and marginal costs and benefits are unknown territory.
  • In most business systems, the objectives and outcomes are clear and the system is 'hard'. In health services, although the objectives are clear - increased health status and satisfaction with the process of care - the necessary business 'metrics' are lacking. No car manufacturer would tolerate not knowing how many cars it had sold and how much profit gained. Yet the NHS operates in exactly this way: we do not know - because they are not routinely measured - the health gain from each treatment and the cost per health gain. These are the real equivalent of cars sold and company profits. While the NHS does know the number of treatments carried out, these are the equivalent of numbers of cars produced, not cars sold. In the NHS, relevant data on clinical and health-related quality of life outcomes are not routinely collected. In BUPA they are - it measures the health-related quality of life improvement for each operation it carries out and for each surgeon routinely and has done for years.

The way forward

You will want solutions, not just explanations, so here are a few to begin with:

  • You know already that demand management is key, but how to do it? Well, regulating thresholds of severity for treatment is one way. I'll give you details when we meet.
  • Much more training is needed for doctors and managers in how to run a healthcare business system. Sir Gerry Robinson got it in one with his television series on trying to improve efficiency in a hospital.
  • Ethico-legal priority-setting policies and processes are key to commissioning, both within and outside contracts and service level agreements. Recent work has produced frameworks tying need, activity and outcomes within ethico-legal frameworks, so as to decide which treatments to fund and which patients should be treated. Again, details when we meet.
  • There is a body of professional specialised knowledge - public health and population medicine - with the skills and expertise to advise and train doctors and NHS managers on how to improve clinical cost-effectiveness in the NHS. But instead of strengthening the position of such experts, successive restructuring has in recent years weakened their position in the NHS. You need to change that. In the meantime, we have an organisation - the Public Health Action Support Team, hosted by Imperial College London - which provides support and training for NHS commissioning and management.
  • There is a lack of coherent function and structure in local primary care trusts. One key to crisp public service business decision-making is clear: precise and detailed business policies. Because all PCTs have very similar business decisions, these policies can developed by specialised groups and made available as templates, to be tweaked locally. Yet more detail when we meet.

I am happy to come to your office, or I would be glad to show you some of the details I mentioned at our local NHS. What is your diary like for next week?

David Lawrence is an honorary senior lecturer at the health services research unit at the London School of Hygiene and Tropical Medicine.