Corporate governance: Heal thyself – introducing good governance into the NHS

Arguments over healthcare, both here and in the US, are good
for us all. The more you look at how the National Health Service is run, for
example, the more you can see lessons that could be carried through to any
business concerned about its governance. But there is a difference.

Usually, when you make that sort of point, what you are getting at is the
idea that best practice, once identified, can be transferred across into other
organisations. But, sadly, when you look at the NHS and governance, what you are
usually pointing out is areas where governance is a disaster. What people can
learn is that the short, sharp shock of recognising what is going on can help
you remind yourself why it is so important to get it right in whatever type of
organisation you are working in. The alternative? Eventual chaos.

I was recently at a conference on better governance in the NHS run by
consultant Trust Analytics. Virginia Bottomley, one-time health minister and
these days Baroness Bottomley, was in attendance to remind us of her father’s
experience, late in life, running St Thomas’s Hospital in London. She quoted him
as telling her that he had “never known so much emotion, or viciousness”. This
is what happens when governance is not working. A culture of everyone for
themselves grows up in the vacuum without an existing code to ensure a culture
of shared endeavour and a structure in which to excel.

The great divide in the NHS has traditionally been that between clinicians
and managers. And that tended to be reduced to a simplistic battle between
people portraying themselves as the guardians of a culture where no one ever
counted the cost and people trying desperately to bring some semblance of order
to proceedings. In short, it closely resembled any corporate organisation where
controls have broken down and efficiency and effectiveness have gone out the
window. In the corporate world, such a situation generally ends in disaster
followed by reconstruction: in the NHS it was seen, until relatively recently,
as the natural order of things.

Building efficient structures and operating efficiently is seen as irrelevant
if your main objective is output without counting the cost. It is the equivalent
of all those situations where a newly successful high-street chain starts
expanding rapidly and then falls over as costs continue to outstrip revenue. But
everyone in the NHS knows that it would never be allowed to fall over ­ perhaps
an organisation that is ‘too big to fail’ ­ so inefficiencies continue to mount
up.

Baroness Bottomley knew where to start: “Good governance means performing
effectively in clearly defined roles,” she said. But it is hard to create that
sort of environment if the culture has never existed.

The answer is to bring everyone together to try to make them understand that
sharing experience and understanding will bring about a better way of working.
It is far from easy. Clinicians can refuse to take any notice of accountants and
accountants become exasperated at erratic clinical costs.

The answer, as with corporate governance the world over, is the better use of
leadership, backed up with effective audit committees. Director of the Institute
of Business Ethics, Philippa Foster Back is also chair of the Audit Committee at
the Norfolk and Norwich University Hospital Trust. For her, the whole process
has to start with leadership, with people willing to take responsibility and
then share it out.

As she says: “If you have the right sort of person leading ­ a person who
goes out of their way to understand the clinical side and therefore can speak
their language, and can then bring that language into the financial sphere and
feed it back to them ­ then usually you can switch people onto your message and
change is easier to bring about.”

Easy peasy. It is a question of having the left-hand side of the brain
talking to and understanding the right-hand side. Within the NHS, that objective
is not at all easy to grasp for. There tends to be no instinctive understanding
or enthusiasm for understanding, one side with the other, hence Foster Back’s
point about leadership. To an extent, we are going back a decade or more to the
grand era when change management programmes were en vogue.

The people who have been successful in bridging the gap in NHS organisations,
as in management everywhere, have tended to be people who can communicate
enthusiasm and then, over a period of time, carry people with them.

But even the boards and audit committees in the NHS are harder work than they
need to be. Often they contain people who are there as stakeholder
representatives rather than ‘critical friends’, people who are simply qualified
as good non-executive directors. Often they bring a self-perpetuating narrowness
of focus. The optimistic point, however, is that NHS boards are going through
the same sort of evolution corporate boards went through two decades ago when
effective corporate governance started to become the norm, rather than an
aberration.