Public Service Failure

Combining the strengths of UMIST andThe Victoria University of Manchester

Centre for Public Policyand Management

Public service failuresWhat happens when things go wrong?

Kieran WalsheProfessor of Health Policy and [email protected]



Overview

• Defining the problem: public service failure

• Performance cycles and the process of decline

• Defining and declaring failure

• Ideas and approaches to “turnaround”

• Models for studying public service failures



Public service failures – some examples

• Child Support Agency

• Home Office Immigration and Nationality Department

• Rural Payments Agency

• NHS “Connecting for Health” programme

• North Bristol NHS Trust

• Hull City Council



Public service failures – some examples• Untreated cervical cancer – Auckland, NZ• Contaminated blood products – Canada• Poor paediatric cardiac surgery – Winnipeg, Canada• Deliberate harming of patients – Indiana, USA• Poor paediatric cardiac surgery – Bristol, UK• Cytology screening errors – Kent, UK• Cytology screening errors – Gisbourne, NZ• Deliberate harming of patients – Manchester, UK• Poor gynacological surgery – Kent, UK• Poor obstetric and gynaecology service – Perth, Australia• Poor general surgery – Virginia, USA• Unnecessary cardiac surgery – California, USA



Failure and turnaround

Performancedecline

Failurecrisis

Turnaroundprocess

Return togrowth



Performance cycle

High

Low

Time

Performance

Normal variation or failure?



Performance cycle

High

Low

Time

Performance

Reported

Actual



Recognising performance decline

• Performance is naturally cyclical

• Need for a range of “hard” and “soft” indicators of performance

• Overall level may be less important than rate of change and trajectory

• Performance decline is relative, not absolute

• Differentiating “normal variation” and “incipient failure”

• True performance may be masked in reported performance



Hard indicators of performance• Is the organisation achieving key performance targets and

maintaining financial balance?• What is the level of complaints? How many of these are serious,

enduring complaints, and how well are they resolved?• What is the level and severity of patient safety incidents?• What do the findings from audit projects at a clinical and

organisational level show? • What are the results from external reviews such as Healthcare

Commission, Staff surveys, Patient surveys, National audit programmes, external audit, etc?

• Are there reviews into specific incidents underway e.g. special investigations?

• What is the level of staff turnover? Are there problems in relation to recruitment and retention of staff?



Soft indicators of performance• How well does the organisation make use of available data?• How does the organisation respond to signs of decline - what is

the level of internal challenge and debate?• Is the organisation ‘in touch’ with what is happening, both

internally and externally?• How likely is the organisation to be distracted by other major

initiatives, changes or problems?• How is potential for innovation, creativity and learning used?• How good are clinical-managerial relationships in the

organisation?• How is staff morale?• What is the quality of external relationships?• What are relationships and reputation with the local media like?



Health community views of five SHAs

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Health community views: SHA D• “It does not deal effectively with difficult strategic issues”

• “As you can tell I am unimpressed. … the SHA has been of little help. We suffer from a failure of joint commissioning by our PCTs and the SHA has shirked its responsibility to make them collaborate. As a result clinical services are suffering. The SHA will teach Pontius Pilate a thing or two about not getting too involved. General style is remote and high handed”

• “SHA veers from a very hands off approach to a very interventionist approach with nothing in between and no agreed strategy. Sometime the SHA deals with individual organisations and sometimes with health economy - there is no logic to this”

• “The SHA is reluctant to work with other than (a) a complete "hands off" or (b) directive intervention too late mode. It needs to develop more effective participating modes to really work with local Trusts/systems”



Crisis and declaration of failure

• External assessment/review – by key stakeholders– Report from Audit Commission or Healthcare

Commission, publication of performance data,

• An egregious event – disasters and major failures– High profile patient safety incident, major complaint

investigation, whistleblower, scandal

• Change of perspective– New chief executive or senior management team, new

governance, new partners/views in public service



The causes of decline and failure

• Markers, symptoms or warning signs– Poor relationships, financial deficits, targets missed,

• Secondary causes– Lack of controls, weak strategy, poor leadership– Increased competition, innovations, policy changes

• Primary causes– Organisational culture and attitudes– Introspection, arrogance, myopia, trauma– Failure to learn, adapt, change appropriately



The causes of decline and failure

• Multifactorial, multidimensional symptoms/causes which are interrelated and interact

• The self-regulating response to decline– Recognition, willingness to change, open about

problems/data, internal capacity to tackle problems

• The failing response to decline– Fallacy of success, fortress mentality, retrospective view,

hide the data, no internal capacity to act



Performance cycle

High

Low

Time

Performance

Self regulating response to decline

Failing response to decline



Case study: acute healthcare provider

• The trust was involved in a major hospital rebuild resulting in management’s ‘eyes off the ball’ in terms of key performance targets. It was unable to achieve core operational targets and underachieved on financial targets. The management was perceived as out of touch with changes in the context of the NHS, heavily centralised, with a ‘bunker mentality’, and decisions were perceived to be made ‘behind closed doors’. There was a perceived lack of leadership and strategic direction. There was little pride in the organisation and a poor image in local media.

Fulop et al (2004)



Case study: ambulance service provider

• A number of factors relating to the performance decline were identified. These included a top-down management culture, characterised by central control, unclear decision-making processes and an adversity to risk. This was coupled with a lackof senior management capacity and a significant number of managers in ‘acting up’ positions and/or ‘wearing several hats’. Managers were seen to have their eyes of the ball in terms of the modernisation agenda and were generally resistant to change. Day to day business was conducted ‘on the hoof’ and frequently appeared to take on a firefighting approach. Staff felt generally disempowered and poor relationships existed, both between the management and staff side and within the wider health economy.

Harvey et al, 2004



Approaches to turnaround

• Range of actors– Government departments

– Regulators, inspectors and oversight agencies

– Other, neighbouring public organisations

– New boards/management teams

– Management consultancies

• Range of methods– Replacement, retrenchment and renewal



Replacement

• Serves both a functional and a symbolic/political purpose with stakeholders

• Deals with responsibility for failure and allows the organisation to draw a line and move on

• Brings in necessary new skills and expertise – but risk of losing key experience, knowledge and understanding – flight of talent

• Who gets replaced – the organisation’s leadership?• May be necessary, but not a sufficient response – and

what happens if the new team fails too?



Retrenchment

• Addressing most important performance issues and bringing them under control as soon as possible

• Mechanistic, process-focused, operational changes to structures and systems

• Financial control, achievement of key activity targets, tightened monitoring and management

• Short term, stemming losses and halting decline –focus on symptoms and secondary causes of failure



Renewal

• Establishing new vision and purpose for the organisation – redefining its mission

• Developing clear future long term strategy for return to growth and future success

• Changing organisational culture, attitudes and behaviour

• Long-term, fundamental, focused on primary causes of failure



Case study: metropolitan council

• A new chief executive was appointed who removed and replaced the top team of senior officials over the first year. He also pursued cultural change ‘relentlessly’ by emphasising that the organisation existed to serve the public, making bureaucratic processes and silos unacceptable and insisting on opening up the organisation to its communities. The senior team attended all new staff inductions, held open meetings, lunched with staff, cut back paperwork, had only three staff in his office, introduced project teams to bring about changes and provided opportunities to junior staff. He also paid deliberate attention to the symbolic dimensions of his own behaviour as being consistent with his goals.

Paton and Mordaunt (2004)



Does turnaround work?

• Not all turnarounds work - reasons for failed turnarounds and permanently failing organisations

• Timescale for turnaround and likelihood of successful turnaround variable but can be long

• Added value and impact of external intervention: what would have happened without it?

• Embedding renewal – avoiding a return to failure when intervention/support is removed



Models for studying public service failures

• Dynamic capability – how firms create/build competencies to address changing environment

• Absorptive capacity – ability to ‘acquire, assimilate, transform and exploit knowledge to produce a dynamic organizational capability

• Organisations as learning or knowledge-processing entities - what shapes that capacity to learn?

• Performance decline, failure and turnaround seen as a dysfunction in learning or knowledge-processing?



INTERNAL/ EXTERNAL KNOWLEDGE

Drive the depth and breadth of understanding

ENVIRONMENTAL CONDITIONS

Drive incentives for developing absorptive capacity

LEARNING RELATIONSHIPS

Drive the ease of understanding

MENTAL MODELS

Drive the creativity of recognition, assimilation and application of knowledge

STRUCTURES AND PROCESSES

Drive the efficiency and effectiveness of assimilation and application of knowledge

STRATEGIES

Drive the focus of recognition, understanding, assimilation and application of knowledge

OUTPUTS AND PERFORMANCE

Improvements in services, governance and management

RECOGNISE & UNDERSTAND NEW KNOWLEDGE

Awareness and openness to new knowledge

ASSIMILATE NEW KNOWLEDGE

Synthesis and interpretation of new knowledge

APPLY NEW KNOWLEDGE

Translate into organisational change

ABSORPTIVE CAPACITY



INTERNAL/ EXTERNAL KNOWLEDGEFought against external reviewFindings not a surprise –rejected by senior managers, confirmed what others knew

New Head of Information postSharing information and learning through external networks

ENVIRONMENTAL CONDITIONSSmall organisation, financially challenged health economyExternal performance reviewDisengagedExternal intervention teamImproved relationships with key stakeholders

MENTAL MODELSOrganisation that transported peopleFunded to achieve financial balance and meet key targetsUnhappy organisation, antagonistic relationshipsPatient focused organisation with clinical remitGood working relationships, listening management, increased trust

LEARNING RELATIONSHIPSPoor internal/ external relationshipsBad press

STRUCTURES AND PROCESSESControlled, top-down structureAbsence of many board level posts, freeze on recruitmentClinical governance mechanisms absentNew CE, senior managers, ChairImproved structures and business processesMore devolved management, improved communication

STRATEGIESPriority given to financial and response time targetsNot engaged with clinical agenda or clinical governanceStopped mandatory training; no push for developmentIncreased focus on clinical priorities, looking at the organisation’s role in the wider health economyFocus on investment – both capital and staff development/ training

OUTPUTS AND PERFORMANCE0 star rated, failed CHI reviewCE sacked, Chair not re-appointedSecond 0 star ratingAchieved 3 external accreditation standardsIncreased clinical focus, but with overspendVery different feel to organisationDisseminating learning

RECOGNISE & UNDERSTAND Challenged external evidenceRejected external helpRecognition that change neededEager for knowledge

ASSIMILATE Wanted more/ different evidenceDidn’t think it mattered

Use of external teamThinking laterally, analysing data

APPLY No initial response

Introduced change projectsResponsive to issuesTaking on radical change

ABSORPTIVE CAPACITY

Benefits of working with external intervention teamWorking with health economy



Conclusions

• Public service failures are important – functionally and symbolically, as part of a wider political narrative

• We can do more to understand, predict and engage with (?prevent) performance decline and failure

• There is growing expertise and experience with approaches to turnaround which seem to “work”

• It may be helpful to see failure and turnaround in terms of organisational capacities to learn, or to use information

Business

Public Service Failure