Wednesday, July 16, 2008

To Centralise or to Decentralise .. That is the question ...

Once upon a time when I worked as a manager in the National Health Service (NHS)we were doing some community development work in a rural area of Devon called Dartmoor.

We wanted to ask local people their experiences of local health services and also get their views about how services might be improved.

We decided to hold meetings with residents in the three biggest towns on Dartmoor and a couple of small villages to get what we thought were representative opinions from people living on Dartmoor.

We duly wrote the report of our findings and held a series of meetings to discuss those findings with local people. I remember very clearly going to a village hall in deepest, darkest Dartmoor in a very tiny village called Lustleigh to talk to the locals about our findings.

They asked me whether our research had included opinions from people living in Lustleigh – population about 150 people (plus a few sheep) I replied that we had drawn conclusions from meetings with a cross section of people who lived on Dartmoor, including some who lived in a larger village less than 3 miles away where we had held one of our metings with local residents. The ‘Lustleigh folks’ immediately became indignant and objected that the views of people living in a village 3 miles away should in any way be seen to represent of the views of people living in Lustleigh. They were right of course and we were wrong.

The point of this true story is to get your opinions about the merits of centralisation versus decentralisation - local or national - and what do we actually mean by all these terms.

We can also include in the discussion the relative merits of centralisation and decentralisation within management and organisations.

In the UK National Health Service there are genuine attempts to get decision making down to a more local level and there are still many critics who believe too much power is vested in central government.

This posting has been promoted by my friend David Wike and I would be fascinated to hear comments from readers with different experiences and opinions about preferred options of centralise or decentralise the power.

For instance; what, if anything, needs to remain central? Or alternatively – what just cannot be decentralised?

Thanks David – I hope we get some responses

10 comments:

Richard Lipscombe said...

To Centralise or to Decentralise? - that is the question...

Organisation Theory 101 - this was the big question for me as a student. When I taught the course, part time, to under-graduates they simply took notes.. Post graduates had more 'life experiences' so they debated it with vigor.

The classic rule is to centralise function (telecommunications and their wires and poles will be national because they have to serve everyone simultaneously) and to decentralise is based on considerations of area/region (post office can run effectively on areal basis because they can be batched into systems that essentially service regions)... As I say that is the classic scenario as I learned it and taught it.

Today it is more and less clear. Some say parallel processing (that is the center and peripherals running together at same time as per mainframe and personal computer) has rendered this distinction null and void. Often it depends where you sit what side of equation you are more interested in... If you sit at the center running the mainframe - you tend to see centralisation as the answer because you seek more control and more conformity.. If you sit on a PC or a peripheral you want less conformity and rule making and more independence so you favour decentralisation....

For the NHS it must be an interesting dilemma right now. The cost of delivering health care is rising sharply and so it is becoming enormously expensive to maintain a 'cutting edge' standard of healthcare in a 'universal system'. As cost pressures rise within a centralised NHS decisions have to made about who gets what? To ensure that such decisions are 'universal', not necessarily 'equitable', a centralised bureaucracy spends more and more time on housekeeping than on effecient and effective management. Not an easy issue to write about let alone untangle and solve.

Those who favour decentralisation of a 'universal' coverage healthcare system struggle to make the case for who gets what too. They might like to simply carve up the NHS budget and dispense it to Regional Administrations where they are supposedly closer to the patients and therefore are expected to make better decisions about allocations between competing priorities...

I do not know? I admire the 'universal' coverage of NHS but how best to maintain a quality healthcare system with it being 'free' for all comers is beyond my intellectual capabilities.

In conclusion... One ray of hope is that the new information technologies will help patients and administrators do better for all involved in the healthcare maze.

My hope is the focus will shift from delivering institutional healthcare to all and more towards delivering the information needed for each and every patient to become his/her own best advocate.

Electronic patient records are a good start. They will streamline the cost of keeping paper records in hospitals and doctor's surgeries, etc. More importantly they have the potential to shift the role of the patient in their own healthcare from illness to wellness. The NHS is still, try as it might, essentially an illness system. The patient presents to the NHS in the 'sick role' at present and so becomes 'institutionalised'... In future they will present as 'decentralised units of healthcare' with issues that need a 'centralised unit of healthcare' to address..

If that could become the new NHS model ( I am sure most in the NHS are working hard to achieve something like that including 'friends of the NHS' like Trevor Gay) then dare I say it.... The NHS will finally become Simplicity in motion...

Great topic - full of compelexity looking desperately for simplicity....

Dave Wheeler said...

Wow...de-centralization to me has always been defined as transferring authority, decision making, and control of resources to the lowest possible level. Leaders struggle with this because they are ultimately accountable for the results and feel they are giving up control. As a result, they want to keep certain functions...resource allocation for example centralized. On the other hand, not all folks at the lowest level are prepared for the additional responsibility and accountability that must go with the freedom and flexibility decentralization provides. In the Air Force, we addressed this by through the organizations planning process. Leadership defined the organizations key goals and strategic priorities. Each work center then developed individual plans that aligned them to the executive level plan complete with performance objectives, and metrics. Resources were allocated at the executive level but controlled below. Quarterly performance reviews made the work centers accountable. Leadership retained control...they defined the performance goals. Work centers "controlled" what they needed to do and how they were going to get their to meet their objectives. These types of performance management systems can work in any organization...

Richard Lipscombe said...

David .... Devolution is the process of shifting decision-making to the lowest level... You are right it is hard... I worked 3 years in Australian Department of Foreign Affairs and Trade (as their change consultant) to do just that.. It involved everything you mention... The Executive devolved financial decision-making and other functions to the lowest levels possible... It took job redesign, heaps of training (we began University Courses 'in house' and then spread them around the world on our newly acquired intranet so we had our own Open University teaching what our front line staff wanted and needed to learn so they could be fully accountable for their new decision making roles)..

Meanwhile this did nothing to solve the bigger issues of Centralised versus Decentralised control of 92 Embassies around the world. The endless debate for the 3 years I was there was to go Regional (Asia, Europe, Americas, etc) or to stay Centralised with control in Canberra. Because the Parliament is only in Canberra there are functions that have to stay Centralised so it all got messy... Several Green Papers and then White Papers put the pro and cons of all the options...

In the end I told my client (that is the Executive in Canberra) to treat the whole thing as a network of 92 clusters... Imagine a straight line with all 92 on it rather than worry about their location.. The 'big daddy cluster' was Canberra because it was where the whole network was held accountable to taxpayers and voters through the Cabinet, House of Representatives, and Senate....

In the devolution process we gave mission heads more control over their budgets, staffing, mission agendas, etc.

Devolution is a great process if your staff and systems are up to the challenges raised by it....

Trevor Gay said...

Richard and Dave - What brilliant feedback - thanks.

I am on the road early today but I will respond properly this evening. This whole centralise/decentralise topic has always been fascinating to me and I hope others join our discussion.

David Wike said...

An item on the news earlier this week caused my comments to Trevor that prompted his post. Once again we saw a demonstration of what in the UK is termed a ‘postcode lottery’. This case was as a result of the availability of NHS services being determined at a local level. The reported case related to IVF treatment, but on a number of past occasions there has been publicity in relation to the availability of cancer drugs. If you live in Health Authority ‘A’ and you might receive a particular treatment, but the next town five miles down the road could be in Health Authority ‘B’ which does not provide the same treatment.

It seems to me entirely unsatisfactory that where you live in the UK should determine whether you can have a particular treatment, especially when it could be a matter of life or death. After all, we have a NATIONAL Health Service. But of course, this then raises the issue of whether all policies should be controlled centrally to avoid local variations, whether it be in health, education, social services or whatever.

We have varying degrees of devolved government for Scotland, Wales and Northern Ireland. But do they really represent the views of the people living in those countries. Many services are the responsibility of county or city councils – are they any closer to the people than central or even devolved governments? Perhaps more power should be given to parish (local) councils … but do I know my parish councillors, and more to the point, are they going to ask me what I want to spend my taxes on?

A good few of Simplicity bloggers live in countries that have state governments as well as a federal government, so presumably you must see even more differences than we do here.

Trevor Gay said...

Richard, Dave and David – Wow! - This is a terrific discussion of the highest quality and I genuinely thank you for your comments.

Ironically enough I have been at a major healthcare conference/workshop in Leicester today with a progressive group of managers and clinicians in the NHS talking about how to create world class healthcare in the UK.

A lot of the discussion today centred on the need for ‘local autonomy’ whilst at the same time having limited ‘central’ safeguarding of essential services for those people most vulnerable in our society. We have a universal healthcare system in the UK that is unique and part of today was a presentation from two healthcare policy experts from the US. They talked during the day about our healthcare ‘system’ and what they referred to as the US ‘non system’ and tried to compare the two. They were not critical of the US system and they were not critical of the UK system. They were both very fair in their summary of both approaches. The one thing they did say was that we in the UK are best placed to provide the best health care to our population given the fact we still have – for better or worse – a UNIVERSAL system. Many people overlook that important issue when debating health.

Richard – you will be delighted to hear that the emphasis today in our discussions was on how we need to prioritise and invest more in ‘health’ rather than how we ‘treat’ people after they become ill.

Like all three of you I’ve worked in centralised and decentralised work settings. Both have their plusses and minuses but on balance I would rather work in a decentralised setting where power is given to people at the front line bit ‘the boss’ is there if you need him/her.

Richard Lipscombe said...

Thanks for the feedback Trevor.... I am delighted to hear about any move towards 'trusting the patient'... As you and I know all too well in order for this to occur the patient needs information - electronic patient records are a good start...

I see the slow and steady devolution of power to the front liners - that is to the patients - as the key to solving the problems of health, wellness, and illness delivery systems. Let's remove the front liners (again I mean patients not staff) of the healthcare system from the 'sick role' and make them independent actors who are best placed to 'advocate' for their best health and wellness regimes.

I believe in 'universal' coverage for healthcare delivery systems... The world needs to learn from the best possible NHS that Britain can produce... I see 'universal' coverage as the core asset of the NHS - the core issue is to produce 'equitable outcomes'... Can this be done best through decentralised control of budgets, resources, and priorities? I simply do not know! My preference is to go this way... The counter weight to this must be an efficient centralised control mechanism that sets longer-term stretch goals and regulates the processes of health delivery systems, regimes, institutions, etc in ways that ensure abuses of devolved power are not corrupting the total effort... A hard balance to strike... Yet it is one that can be struck in a universal healthcare approach...

For 3 years I worked with Executive Management to devolve power to the front liners within the Australian Department of Foreign Affairs and Trade.. We overcame many obstacles - not least the 'elitism' and 'power base' of the diplomats.. These people acted like the great War Lords I have read about in history books... They fought us all the way.. We took them on with what they called 'deforestation' (don't you love the way people put a tag on activities - my key client and driving force on the Executive was Mr Forrester)..

Our program was to 'de-stream' the workforce.. We enabled front liners to go to universtity as part-time students (lectures held in the building so no travel needed) and so they graduated into the previously 'elite' grades... By the time I had had enough and departed you were battling to tell a 'front liner' from an Executive...

We devolved everything we could to the 'front liners' and then we devolved even more as they were educated and trained to take on their new accountabilities... We had a nice mix of decentralisation and centralisation going by the time I left... The one thing that had changed is that the 'front liners' were in charge of the castle not the old War Lords...

Simplicity in action - not really and yet it was so much more efficient and effective when I left... Total adminstration costs were down by 35% and reducing... Why? Because the front liners stopped the old boy network practices that simply wasted money on travel, accommodation,uplifting families, recruitment practices, mission running costs, etc... One simple example says it all - frequent flyer points were formerly used by management families for holidays now they were used to extend the travel budget for everyone.. Short term missions flew business not first class... Travel was scheduled in advance to take full toll of discounts, etc.. All Simplicity measures that work and work well....

Seeya....

Trevor Gay said...

Thanks for that great story Richard – and well done for leading that change!

Giving the ‘power’ to the people at the front line works once the people who have the ‘power’ feel comfortable about letting go. We all struggle with that 'letting go' bit I guess but in my experience it is always the right thing to do.

You and I think very much alike on the health debate I’m pleased to say.

dave wheeler said...

When the Air Force started integrating quality/performance management systems into the day to day operations it was done through closed loop performance management systems like the Malcom Baldrige Criteria for Performance Excellence.

These types of systems actually "institutionalized" the labels decentralization/devolution/autonomy by providing multiple opportunities for input to occur in planning and decision making from all levels of the organization as well as external customers and suppliers. For example, in the area of product and service design the expectation is that external customers, external suppliers, internal producers and suppliers input is incorporated into the design and delivery process. Do the local communities have to have complete "control" and responsibility for the design and delivery of their services or can it be "controlled" by the NHS if their local needs and requirements are met? In my experience folks don't want necessarily want control and accountability for everything as this often comes without the tools and resources to meet the new expectations. This is the devolution issue. They simply want input. When this opportunity os provided, leadership sees the value in their ideas and suggestions, who is in a better position to see the challenges and issues and what the customer has to say. This is how leadership overcomes their "fear" of giving up "control"...Devolution is simply enabling front liners, giving them the tools they need time. training, etc needed to meet performance expectations.

Closed loop systems engage all key stakeholders, internal and external. Leadership, planning, data driven decision making, inclusive product and service design, balanced scorecards of performance metrics are all key management functions. These systems link it all together and move the words out of the books and into the day to day.

Trevor Gay said...

Thanks Dave – I’m sure you are right that the correct answer if finding the right balance about what needs to be ‘held on to’ at the top and what can be ‘let go’

You and I are going to have to find some time for you to teach me more about the Baldridge approach – I like the sound of it!