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"We need some people who know how to spend NHS money wisely... Good management can pay for itself. " 

STEPHEN BLACK, HEALTHCARE SPECIALIST, PA CONSULTING GROUP

We need some managers

Stephen Black
British Medical Journal
7 August 2010
Coalition plans for English NHS

We need some managers

The centralised drive to meet the politically attractive target of cutting management (there is no public lobby for more bureaucracy) runs a serious risk of undermining the capacity of the new NHS to improve and spend its money well.1 We need some people who know how to spend NHS money wisely.

Primary care trusts spent 1-2% of their budgets on management, and the new target will roughly halve this total. Only the most outstandingly frugal charities spend as little as 1% of their turnover on management. In the United States, where charities have to categorise such expenditure, typical large charities such as the American Diabetes Association, American Cancer Research Fund, and American Red Cross spend 3-5%. But some big health charities spend much more: the Mayo Clinic 12.5%, the Salk Institute 19% (www.charitynavigator.org).

This crude comparison suggests that we will be lucky if consortiums of general practitioners can do a good job of commissioning with the expected costs of management at < 1% of their NHS spend. A more prudent approach would be to allow them to decide for themselves how much to spend since they can then make intelligent choices about how much they need to improve outcomes or productivity.

Good management can pay for itself. The estimated error rate in clinical coding by hospitals is more than 10%. Primary care trust that have checked how much they pay for their activity have found that they overspend by 5%. Most trusts have probably never either noticed or recovered that money. If they spent, say, 0.5% more of their budget on management, they would have 4.5% extra to spend on other services - a good return on investment in management cost.

Stephen Black, management consultant, London SW1W 9SR
Steve.black@paconsulting.com

1 Ham C. The coalition goverment's plans for the NHS in England. BMJ 2010;341:c3790. (14 July.)
Cite this as: BMJ 2010;341:c4183

To contact Stephen Black, you can email him here.

To see PA's goverment healthcare pages, please click here

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