NHS sustainability: there aren’t always more fish in the sea

With the Spending Review fast approaching, most things currently written about the NHS begin by saying that the system is running out of money (which it is). They go on to say that social care and other public services are in an even worse state (which they are), and call for a combination of more money and greater efficiency.

But more money and using existing resources better – while both needed – won’t be enough to meet the challenges facing the NHS: we also need to think differently about who governs NHS resources, and how.

The basic problem is easy to diagnose but much harder to manage. Put simply, the NHS only has a limited pot of resources to meet increasing demand for care. To use economic jargon, NHS services are ‘common pool’ resources – things that are more or less available to everyone, but where what we use in effect ends up taking away from others. Easy examples include things like fisheries or forests: if a fisherman catches a fish, another fisherman can’t catch it again; if too many fisherman catch too many fish, the common pool of resources is used unsustainably (think cod in the Atlantic).

While health services aren’t as simple as fish, the same principles broadly apply. Providers of NHS services in any given area have a limited set of resources – their staff, machines, buildings, and so on – and these services are paid for from a limited pot of money allocated to health care from the national budget. The public draw on these resources every time they come into contact with the health system. If too many resources are used by one set of providers, or one set of patients, there will ultimately be less money available to fund other services (think money for acute services versus money for mental health care, for instance).

The problem with common pool resources is that they can run out if they aren’t effectively managed – what Garrett Hardin described as the ‘tragedy of the commons’ in 1968. If individuals (or organisations) act independently of others, there’s a risk that the resources will be used unsustainably. In the end, of course, this is worse for everyone.

But the tragedy doesn’t have to happen. While traditional policy responses to the problem involve turning to the state of the market, research by Elinor Ostrom and others shows how the tragedy can be avoided by local communities developing their own arrangements for managing common pool resources. In many examples across the world, resources such as irrigation systems, forests and fisheries have been successfully governed by communities who define their own rules and approaches to how resources will be used.

Based on her analysis of cases that worked well, as well as ones that failed, Ostrom’s work identifies a set of principles that characterise successful approaches to governing common resources. Might there be something in this for the NHS?

Chris Ham and I recently published a report calling for providers of services to work together in ‘place-based’ systems of care. This means organisations working together – in partnership with local people – to improve health and health care for the population they serve, collectively managing the common resources. Drawing in part on Ostrom’s work, we set out 10 principles for how these systems could be developed – such as setting up an inclusive governance structure, putting in place new forms of system leadership, involving local people in decision-making, and creating a new way of paying for services.

The alternative to place-based systems of care is for each NHS organisation to adopt a ‘fortress mentality’, fighting for its own survival regardless of the impact on others. The fortress mentality is a logical response in the existing NHS environment, where provider autonomy, competition and regulation feature prominently. Organisations serving the same population end up competing in a zero-sum game, where winners co-exist with losers and local priorities become distorted in the battle for resources.

But we know that the major challenges facing our health and care systems – such as improving care for older people, or managing demand for urgent care – require collaboration across services and communities. Collective action is also needed to address the wider social, economic and environmental determinants of health.

The NHS is relying on the government to provide enough funding in the Spending Review to keep the show on the road. If this doesn’t happen, there’s no doubt that patients will suffer. But as well as calling for more money, NHS leaders also need to think differently about how these limited resources are governed. If the existing fortress mentality prevails, the major challenges facing NHS services and the populations they serve are likely to go unmet.

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Comments

#545152 George
Associate Dorector
NERA

Hugh - Interesting blog. I’m assuming that the application of this is to NHS organisations rather than patients (fortress mentality, etc.). So the suggestion is that NHS organisations develop a way of agreeing how scare resources (workforce, *subsidies*, etc) are best allocated.

There is a logic to this argument – given the potentially limited scope of the £8bn. Ostrom’s research highlights the importance of building and maintaining trust. This is not easy to build and maintain across a large number of organisations – that could all do a bit better if they had a bit more of the common pool resource. There needs to be a way to stop ‘cheating’ for the model to work. Transparency and frequent interactions are important to identify any deviation from the agreement, but so too is the presence of a punishment mechanism (and credibility to use the mechanism) for any deviation.

Lots of research done on this… from the world of cartels. See for example the various write-ups of the Airtours case. Interested to know what Ben thinks.

NB to the extent this is a form of collusion, its worth knowing that there have been permissible ‘crisis cartels’ in the past - http://www.antitrustinstitute.org/sites/default/files/Financial%20Crisis....

#545158 Elaine Thomson
Retired
None

The NHS is just that, a health service. What it isn't is a hotel service. A small charge to cover the cost of food, laundry, cleaning etc would be acceptable I'm sure to most reasonable people if it was put to them that the health care element would still be free. It would of course need to be a flat rate for all otherwise some would be tempted to cut back on food to avoid running up a bill. A system would need to be put in place allowing time to pay of course. While I'm typing this I would also like to suggest that prescription drugs only should be available on prescription. Non prescription items could be bought over the counter. It would be interesting to see just how many people find that they could manage without such things as Paracetamol, Ibuprofen etc if they had to pay them.

#545163 Mary
Public health consultant

Co-operation between organisations in the NHS has been seriously impeded by competition law, the mandatory testing of which incurs massive fees to regulators / lawyers /economists etc. This doesn't seem to come up in discussions about sustainability; the general public would be appalled at the sums of money spent on transactional costs. Can this ever be known if these data are commercially sensitive? Can't imagine how much money the lawyers will make when establishing permissible crisis cartels!

#545261 s gray
gp

From a primary care perspective, fortress mentality will prevail until GP partners as self employed public servants are spared being 'jointly and severally liable' within partnership law. If a practice fails, which many have, and more will in the current climate, partners are personally liable for any debts. So when the heat is on, partners will look to protect their businesses given practice failure can result in individual bankcruptcy. In essence as a gp partner, your livelihood and house are at the mercy of central government funding. A unique position to be in in the public sector.

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