News

Towards marketisation

The choice agenda is pushing NHS organisations toward a new world in which they will openly compete for the provision of health care services in England. To balance commercial savvy with common sense, NHS leaders will need to look both at the commercial sector and at themselves, says Darren Leech

This concept of marketisation represents a truly seismic shift in ethos and culture for the NHS and its leaders. Hospitals and provider organisations will increasingly require more commercially orientated management and leadership and as the ways of the commercial world remain a mystery for many, this will - like any suggestion of culture change - present a degree of real uncertainty and fear.

NHS leaders, increasingly mindful of the implications of market failure, will need to grapple with the obvious conflict presented by marketisation – the clash between competition and collaboration. In almost any market, there is an inherent business pressure to grow and further secure market share. In instances where organisations have previously worked together as ‘networks’ to provide services to the same or similar markets (based upon clinical condition or, most likely, geography), pressures to dominate rather than divide the market could bring new tensions to inter-organisational relationships. From a patient perspective, the consequence could be that services at one provider site become commercially unviable and are therefore rationalised or stopped in the interests of efficiency, whilst at another the scale of service is stepped up.

As commercial markets have evolved so have innovative models such as ‘co-opetition’ 1 which to a certain extent puts pay to some organisational conflict. The concept involves rival organisations agreeing to collaborate in mutually beneficial areas, whilst still competing in others. Co-opetition as a business strategy is well illustrated by two of the world’s largest IT companies who contribute to a shared R&D programme focussed on developing better hardware technology. Using this mutually developed hardware, the two organisations then compete quite ferociously in making innovative software to take to the market. Both organisations benefit from the combined R&D function as a consequence of both financial economies of scale and practically, through the intellectual pool created. NHS leaders may wish to further explore such concepts from the commercial sector as they could hold some clues to the ‘compete or collaborate’ conundrum currently faced by many NHS organisations.

Traditional NHS leadership tends to sit at the softer nurturing and collaborative end of the organisational culture spectrum. Often, organisations operating in truly market-driven environments have leaders who exhibit very different characteristics to those in the public sector. A greater emphasis is often placed upon the importance of harder, competitive leadership qualities and this is often reflected in the language, the reward structure and the hierarchy – all of which are indicators for analysing organisational culture. As the health market matures and job descriptions evolve, NHS leaders might begin to feel that their skill-set needs updating and as a consequence they may worry about where and how they might develop the commercial knowledge, competencies and characteristics needed to operate and survive in the ‘new world’. Many leaders in the health service socialise, network and mix with people from similar professional circles - often from within the NHS. There is nothing wrong with this as often it can provide a useful and informal support mechanism. For those likely to struggle in adapting to working life in a more competitively orientated culture, such networks will become even more useful. However, a clue to individual and, therefore, organisational success in the market could again lie outside the NHS bubble.

Making contact and developing relationships with peers outside of the health service could provide leaders with both insight and knowledge from the commercial world. In return, commercial organisations might benefit from better understanding some of the ‘softer’ NHS leadership characteristics and competencies employed by those who often run one of the largest 24/7 organisations in each local area. Indeed, there is already evidence that some FTSE listed companies actively encourage executive development through building relationships with other organisations in the private, public and voluntary sectors 2 and, of course, many NHS non-executives already have a commercial background.

Spending time in commercial organisations for personal development is far from practical or realistic for many NHS leaders or their organisations. Nevertheless, personal development plans that ensure traditional NHS leadership qualities are complemented by those required in the developing market could include ideas such as:

actively creating personal networks that include leaders and managers from commercial organisations outside of the NHS, in order to stimulate interaction and new ideas

when considering formal management training or education why not consider a generic business programme, rather than those that are specifically tailored for the health service and can therefore, be rather inward looking

carefully planned recruitment of managers and leaders from outside the NHS can complement existing teams, bringing a commercial perspective and new ideas which naturally rub off onto the existing workforce.

Whichever business model or personal development activities are employed by those leading NHS hospitals and service provider organisations in a marketised future, they will certainly need to find the right balance between commercial savvy and common sense. To deal with the culture shift, some will need to look outwards into the commercial world whilst many will need to look inwards, quite literally.

References

1. Brandenburger A M & Nalebuff B J (1997), Co-opetition – A revolution mindset that combines competition and cooperation. Doubleday, New York.

Elgin R, ‘The new breed of non-exec takes off’, The Sunday Times (Business Section), January 29 th 2006.

Darren Leech is a PhD student at Ashcroft International Business School, Anglia Ruskin University, Cambridge and is currently working as director of Sustainable Health Services for Cambridgeshire PCT and Hinchingbrooke Health Care NHS Trust in Huntingdon, Cambridgeshire

Tell us what you think – have your say below, or email us directly at [email protected]