Editorials

Short termism in the NHS

BMJ 1995; 311 doi: https://doi.org/10.1136/bmj.311.7007.703 (Published 16 September 1995) Cite this as: BMJ 1995;311:703
  1. Rebecca Rosen,
  2. Martin McKee
  1. Honorary lecturer Reader Health Services Research Unit, London School of Hygiene and Tropical Medicine, London WC1E 7HT

    The national malady needs urgent treatment

    In The State We're In Will Hutton catalogues the corrosive effects on British industry and services of putting short term gain before long term development.1 Drawing on evidence from more successful economies, he argues persuasively for cheaper, more stable financing for businesses and strong long term collaboration between companies and their stakeholders (such as subcontractors, financiers, and staff). Although such work is informing the debate on the future of corporate governance in British industry, does it also have lessons for the health service?

    Observers of the NHS will recognise many of the problems that Hutton identified in British industry, which is unsurprising as health care systems usually reflect wider social values. These include short termism and crisis intervention, a failure to develop sustained collaborative relationships between participants in the market, and a lack of involvement in decision making by key stakeholders. Examples of these problems in the NHS include the increasing number of managers on fixed term contracts lasting one or two years2; ministerial intervention to prevent the closure of University College Hospital when local purchasers tried to buy cheaper services elsewhere3; the near closure of a district ophthalmology department when a group of general practitioner fundholders tried to move their contracts4; and the demise of the old health authority structure, which offered some representation to non-managerial stakeholders in local services.

    Although examples exist within the NHS of successful, intersectoral development of strategies for the medium term future, fragmentation is more common. Four years of reorganisation, mergers of purchasing organisations, and general practitioner fundholding are jeopardising the opportunities for collaboration.

    Furthermore, the NHS's complex annual contracting cycle is expensive. Le Grand and Bartlett have noted that “the development of quasi-markets invariably results in an increase in the transaction costs of delivering welfare services, …

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