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It is a key part of the government's health reforms, but the process of setting up NICE has been described as 'shambolic', the chair's role in a pill scare is back in the headlines, and the ghostly body has no office staff. Kaye McIntosh reports

Sir Michael Rawlins, chair of the National Institute for Clinical Excellence may have been smiling at its launch last week, but within days he was given a taste of his own medicine as the contraceptive pill scare was re-opened.

Sir Michael was chair of the Committee on Safety of Medicines when it sparked panic by warning that the newest brands of the pill should not be used as first-line treatments because of an increased risk of thrombosis.

So the Department of Health's decision to reverse the advice given three years ago would have been embarrassing at any time.

But coming just days after the launch of the national body that will tell ministers which drugs are clinically and cost-effective, it was an ill omen.

Sir Michael must be hoping that the 30 to 50 appraisals of 'new and existing treatments' which NICE plans to carry out each year will cause fewer headlines.

Commentators had warned that NICE chief executive Andrew Dillon, appointed last week, could face a 'power struggle' with his high-profile chair. But the events of last week showed that Mr Dillon's ability to stay out of the headlines could be an even more valuable skill.

Few chief executives of large acute trusts in London have managed to keep quite such a low profile. 'Who?' was many people's first response to news of his appointment.

But those who know Mr Dillon, chief executive of St George's Healthcare trust in south-west London, know that few things faze him. From being rapped over the knuckles by the Health and Safety Executive for allowing the demolition of a store containing radioactive waste, to dealing with obstetricians struck off by the General Medical Council for faking research papers in The Lancet, Mr Dillon just gets on with

the job.

In fact he will be doing both jobs until July in what he describes as a 'gradual transition'.

At St George's he will be handling negotiations over how the trust handles£6.7m 'cost pressures', including staff pay rises, as well as signing contracts for a£50m private finance initiative project to replace Atkinson Morleys Hospital, a regional neurology and neurosurgery unit.

Gail Adams, Unison representative at St George's, says Mr Dillon is 'not afraid' of taking tough decisions or talking to staff, and adds that he maintains 'good industrial relations'.

One of his innovations was a direct telephone line where staff could 'leave a message after the beep' for the chief executive.

Health policy analyst Professor Ray Rowden of York University welcomes Mr Dillon's appointment. He says: 'Andrew is not one of the high-profile ones.'

But he would bring a 'practical, health service manager's orientation to the job and a lot of people in the NHS will be happy to see that'.

Mr Dillon was chosen from among 36 applicants for the post.

Professor Rowden adds that the appointment of a career NHS manager who knows the day to day realities of running health services will help NICE to communicate with the people on the ground who will have to implement its recommendations.

His people skills will certainly come in useful as Mr Dillon attempts to recruit staff for NICE. Insiders say the process of setting up the organisation - a special health authority - has been 'shambolic'. The advertisement for the chief executive's job didn't appear until the end of January, two months before NICE was due to start work.

At the moment, the organisation's offices in central London's Covent Garden are home only to Mr Dillon, Sir Michael and acting finance director Richard Jefferies, who has been seconded from South East regional office - living up to Sir Michael's description of NICE as 'a virtual organisation'.

Indeed, civil servants have resorted to begging and borrowing computer equipment for the new body from other NHS institutions.

Mr Dillon admits he started work at NICE with 'no office staff' and no fax machine, 'but I do have a desk and a phone'. And a budget of£9.8m, most of which is already committed by the organisations that NICE is absorbing, including the National Prescribing Centre, the National Centre for Clinical Audit and the Professional Audit Programme.

The attraction of NICE is 'the ability to make an enormous difference to the NHS and the way it delivers the service,' Mr Dillon says.

Sir Michael 'has a very good sense of the relationship between chair and chief executive'.

'He has very good roots, as I do in the NHS, but I have different skills in organisation and in developing the people who work for an organisation.'

Mr Dillon says his priorities are 'to deliver on the government's agenda' and 'to put the basic organisation in place'.

That includes appointing a clinical director and a board-level director of communications.

The first set of appraisals is due 'this autumn', according to Sir Michael, although the appraisal process 'has not yet been decided'.

But last week was 'a good start', according to NHS Confederation chief executive Stephen Thornton. He attended the first meeting of the 45-strong NICE 'partners' council', a body of 45 stakeholders from the voluntary sector, patient groups, the royal colleges and health service unions.

The council is officially supposed to meet once a year to agree NICE's annual report.

But Sir Michael has already suggested that it could meet more often and act as a 'sounding board' for NICE, suggesting ideas and providing feedback.

Mr Thornton was 'impressed' with Mr Dillon's 'openness and ability to say that it is a new organisation and it needs help'.

The partners' council has already agreed to meet again 'within a couple of months' to consider issues such as how NICE's pronouncements are to be introduced.

But despite his praise, Mr Thornton is not going to let NICE avoid the difficult questions, about how hard-pressed managers, doctors and nurses on the ground deal with its recommendations and who pays for them.

'It is primary care groups and health authorities on the ground who have to take decisions about what they can afford locally' he points out.

'We will happily take instructions nationally from Frank Dobson, but we will not take instructions from a technocrat body like NICE.'