'There is no such thing as a financial problem'

Sir Ian Carruthers is no mean multitasker. Not only has he been heading the transition team between the Modernisation Agency and the new NHS Institute for Innovation and Improvement on top of his day job as chief executive of Dorset and Somerset strategic health authority;

he has also just become one of three SHA chief executives (alongside Alan Burns and Mike Farrar) who have taken charge in their neighbouring strategic health authorities. Sir Ian has added Hampshire and Isle of Wight SHA to his fiefdom.

So this is a fine opportunity to see what the most successful NHS manager of his generation believes are the secrets to running a topperforming organisation.

'When I came to West Dorset [in 1987] it was very unsuccessful, with major financial difficulties.

Changing that was about having a clear direction of travel - letting people know what was expected, giving them space to do it, and focusing on key priorities. The key is working with very good people who want to achieve things.' How did he start turning things around? 'You need an open mindset and willingness to listen. There is no such thing as a financial problem - just the history of management decisions that created it.

Recognising this is a fundamental shift in mindset, acknowledging that past decisions didn't relate to clear progression of a health economy's duties.' He continues: 'It is much easier to say yes and to over-commit resources than to make sound business decisions. A financial problem is a symptom; not the problem itself. We set ourselves targets like achieving financial balance, reducing waiting lists and waiting times - it gave us focus.

Sir Ian is keen to stress the importance of listening to the rest of the team. 'You have to create a coalition of leaders to take things forwards, motivated by wanting to do the best for users and to be the best in clinical practice, ' he says. 'I've been lucky to lead some highperforming organisations, but they only succeed because of the very good people working in them.' Why, then, is the quality of system-wide learning from best practice so variable in other parts of the NHS? 'Clinicians and managers are capable of coming up with great innovation. But It is unlikely they can do much with it without good management procedure. The real challenge is how to get best practice adopted and happening in the right places. Knowledge is one obstacle:

not everywhere is outward-looking.

There is also a culture of wanting to invent things locally.

Strategic and operational delivery cannot be separated, insists Sir Ian.

'We have to consider strategic imperatives, but also focus on today... We must think about the consequences in five years' time of what we decide today, ' he says.

'Values matter too: doing what's best for the patient. I believe all clinicians and healthcare workers really want to do well. If I put myself in their shoes, I want to be free to practise to the best of my abilities.' By 'free to practise', does he mean good management is partly about getting out of the way? 'It is not that, but recognising people's drivers and creating a framework in which they can get on with it. That happens in better-performing organisations, where meeting targets is a byproduct of how they work; not the main focus. In less-successful organisations, It is vice-versa.' How will the Institute for Innovation and Improvement help achieve all this? 'The institute will be seen as part of the NHS; not a standalone body. It'll bring together best practice in learning and leadership, making programmes available to help the NHS improve quality and value - as well as helping it to embrace the technological revolution, ' says Sir Ian.

Speculation about SHA mergers has grown since Sir Ian and colleagues took over their neighbours. What is Sir Ian's view on the best future for the three yearold organisations?

'An intermediate tier is essential.

The question is, what value can it add? For me, SHAs' main role is to interpret national policy. Success is about how well they do that, but also how they hold local organisations to account. This is not just performance management, but how they secure performance improvement - on occasions, with a tough edge.' He adds: 'You have got to consider factors like geography, coherence and the scale of challenge faced. I think Creating A Patient-Led NHS statements about a balance of organic and intermediate change moving to fewer SHAs are probably right - but these changes will need to consider the scale of challenges localities face.' Sir Ian says SHAs have to ensure the national plan is delivered and exceeded locally, in customised cooperation with localities: 'It is about balancing top-down and bottom-up to get a well-run system.' What will the service look like once we reach an NHS with a majority of foundation trusts?

'The NHS has to move from being reasonably good at hitting targets, to become a series of organisations that can run a business.

The more freedoms for these organisations the better, [but] they must prove their competence to use these freedoms.

'The foundation trust programme is very positive. Over time, we'll need similar programmes to develop primary care trusts and SHAs. There are lots of good PCTs that need to be talked up, and we should recognise their contributions as much as highperforming foundation trusts.

'SHAs are about building capability in terms of people, IT infrastructure and workforce. They also have a role ensuring strategic coherence, and shaping the market by ensuring coherence to provider patterns and seeing this reflected in future capital developments.' Does Sir Ian see SHAs managing markets? 'We are coming to the end of a period of creating over-capacity with the new independent treatment centres, and that over-capacity is a good thing in reducing waits. The future impact of over-capacity will have to be looked at and rebalanced, now that we have greater plurality of provision. This major, strategic job needs to be done at an appropriate level - but how high you define that level is unclear.

'Creating A Patient-Led NHS talks about organisations in the most mature way I've yet seen. It says, work out your functions and fit the organisations to them. This time, what's really positive about NHS organisational development is that There is not simply been a decision about a number [of SHAs or PCTs]. The number should be the last thing we define, and it should 'fall out' of other work.' But he warns that organisational configuration should not be an end in itself: 'There may be a danger that someone will invent a number, which would be inappropriate to the issues. We need to develop the business strategy, deliver it, and then arrive at a number of organisations.

In the past, It is been the other way round. The real question is not about structures, It is about how all these elements need to change to improve delivery of health and social care.' He acknowledges research evidence that suggests mergers are destabilising. 'Any organisation will constantly retune organisational and management frameworks to meet paramount business needs. But It is well known that organisational change creates loss of momentum.

We need to keep 'tipping' towards transformation - not remove the momentum. Any well-developed organisation will do this anyway. It is a question of balance.

'I would sooner talk about organisational change than mergers and organisational change is a secondary matter, which should be part of everyday life and adjust in accordance to what we need to deliver to our local community.' He continues: 'Successful places tend to deal with change regardless of organisational structure. If you trace NHS organisations over time, There is no correlation of success and organisational change. Where you find less-successful systems, those organisations change more often. In less well-performing areas, organisational change is not the reason or solution that will necessarily move them to be highperforming.' What then will work for poorer performers?

'It is more about leadership and continuity of leadership, ' answers Sir Ian. 'Good leadership is always getting rejuvenated and wanting to learn - about people, capability and engagement with others. In many circumstances, continuity and consistency are as valuable as changing leadership. There is a real temptation for a new leader to come in and change everything.' How does Sir Ian see commissioning developing, if topperforming NHS organisations and the commercial sector are allowed to bid for others' commissioning franchises?

'The private sector could be allocated that task, but it may be some way off because what I think it has got to offer is more in the way of provision, particularly in long-term conditions and the management of individual patients, ' he says.

'The NHS has to move away from being a set of organisations and towards being a brand which funds comprehensive healthcare free at point of need.' How does he rate progress towards the DoH's goal of having 20 per cent of targets set nationally and 80 per cent locally by 2008?

'There is been a reduction in targets, but I am sure more could be done. The more we can decentralise target-setting, the better. It is clouded by some people saying that all targets are bad, but I know of no organisation that doesn't define remits of good practice, which is what targets are. Nationally set targets are actually minimum standards. I wonder whether we will be ambitious enough locally to go beyond them, ' he adds.

'The commitment to fewer national targets will be achieved, but we must be more locally ambitious.

Targets have driven change. Local targets are good because they're locally owned - but they must be ambitious. The [national] target culture's main problem is that it does encourage people to be 'safety first', rather than be locally ambitious and improve things, but maybe just miss targets - which would be far better. The debate on targets has largely been ill-informed.

'Most places now hit targets incredibly well, but we now have to move on to managing a business.

We need a business strategy.

'We have to build capability and ensure fitness for purpose; redesign the workforce; and realise the benefits from pay redesign. There is also IT. We have never tended to look at these areas as coherently as we should.

'I [also] think payment by results needs some adjustment, and the review is to be welcomed, but the principle of rewarding people for what they do is right. We need to reward organisations for doing the right things, those which accord with strategic developments.

'We need to put more time, energy and resource into quality of care as well. There is the patient safety agenda, which will be a determinant in a commissioningbased, choice-based future, as well as vital to managing the local and national NHS brand reputation.

'Finally, we need an incentive framework to drive quality, and to spend more managerial time on all these issues. My role as a leader is to ask colleagues, 'are we spending our time on the most appropriate things? .