Work in progress Naomi Fulop London School Of Hygiene & Tropical Medicine

1. Organizational Turnaround:emerging lessons from a study of ‘failing’ health care providers in England Work in progress Naomi Fulop London School Of Hygiene & Tropical Medicine

2. Acknowledgements Project team: Fiona Scheibl Nigel Edwards Gerasimos Protopsaltis Funded by: NHS Confederation

3. Outline of Seminar • Policy context • What do we know from the literature? • Study aims • Methods • Findings • Some lessons/policy implications • Conceptual/methodological issues

4. Policy context • New public management – ideas from management of private sector transplanted to management of public sector • Increasing focus on performance in public sector • Performance assessment developed in education, health, local government in England & elsewhere

5. The English health care context • A National Health Service (NHS) • Funded out of taxation • Mainly publicly provided • Elected politicians provide overall direction • Very centralised and hierarchical - tension with decentralisation tendencies

6. A star rating system (1) • Performance assessment system introduced in NHS in 2001 • Health care organizations graded – ‘star rating’ system

7. Star rating system (2) • Three stars - highest levels of performance • Two stars - performing well overall, but have not quite reached the same consistently high standards • One star - some cause for concern regarding particular areas of performance • Zero stars - poorest levels of performance against the indicators or little progress in implementing clinical governance

8. What are ratings based on? Key targets and indicators – examples • A&E emergency admission waits (12 hours) • cancelled operations not admitted within 28 days • financial management • hospital cleanliness • death within 30 days of selected surgical procedures • emergency readmission to hospital following discharge • Clinical governance (CHI) reviews

9. Barking, Havering and Redbridge Hospitals NHS Trust ** Summary Trust report Barnet and Chase Farm Hospitals NHS Trust * Summary Trust report Barnsley District General Hospital NHS Trust *** Summary Trust report Barts and The London NHS Trust * Summary Trust report Basildon and Thurrock University Hospitals NHS Trust *** Summary Trust report Bedford Hospitals NHS Trust ** Summary Trust report Publicly availablesource: CHI website (2003 ratings)

10. Policy responses • Concept of ‘failing’ health care organization • Franchising policy – ‘heroic leadership’ model • Development of more sophisticated interventions – Modernisation Agency • Three star organisations get ‘earned autonomy’ (Foundation hospitals)

11. Why were we interested? • Mergers study – unstated driver to deal with managerial deficits….. • Franchising policy – concern about ‘heroic leadership’ model • Personal interest in ‘failure’

12. What do we know from the literature? (1) • Quite extensive literature on turnaround in private sector • Very little literature on turnaround in public sector

13. What do we know from the literature? (2) • Approx. 25-30 studies on turnaround in private sector • Explain failure in two main ways: • a) changes in external environment • b) inertia within the organisation • Dominant model of successful turnaround • Retrenchment (withdraw from unprofitable sectors) • Strategic change (new markets or new products in existing markets) • Leadership change (CEO and/or senior management team) Source: Skelcher et al (2003)

14. How helpful is this model of turnaround for public sector organisations? • Retrenchment – can hospitals stop providing certain services? (but can contract out) • Strategic change – can’t easily take over another provider (but can redesign processes) • Leadership change – is possible in NHS and focus has been on this • Turnaround in public sector, e.g. NHS is constrained by context – markers for ‘success’ and ‘failure’ more contested Source: Skelcher, 2003

15. Study objectives • Draw lessons from the experience of changing the management of ‘failing’ organisations • Specifically exploring: • Markers for ‘failure’ • Responses to turnaround • Strategies for turnaround • Process/Impact of these strategies

16. Methods • Phase 1 (2002): case studies of 5 hospitals • Perceived to be ‘failing’ • New management brought in • At different stages of turnaround • Phase 2 (2003): followed up 4/5 from phase 1 plus four added: • Zero star (or ‘at risk’) • Management replaced • Support from Modernisation Agency

17. Data collection and analysis • Semi-structured interviews with 106 internal and external stakeholders across 9 hospitals • Analysis of national and local media coverage • Changes in star ratings over time • Analysis within and between case studies

18. Markers For Failure • Poor performance on key targets e.g. waiting lists • Financial deficits • Major developments – ‘eyes off the ball’ e.g. merger, redevelopment (PFI) • Stagnating management team • Lack of clear management structures/processes • Lack of engagement of clinicians in management of services • Poor public image e.g. relations with media and external stakeholders • Low staff morale

23. Markers Secondary causes - “eyes off the ball” - poor relationships with external stakeholders - financial deficits INTERNAL EXTERNAL - poor financial control - increase in competition - changes in Govt policy - lack of HRM strategies - lack of leadership Organisational - introspection - arrogance - trauma Primary Causes Markers and causes of failure

24. Responses to failure Health authorities (HAs) and Regional Offices (ROs) played key roles in turnaround situations. E.g. RO ‘encouraged’ chairman to resign and provided additional financial support to in-coming team (Trust E) But When RO or HA intervened – should they have intervened earlier? (‘The dangers of delay’ McKiernan, 2002)

25. The dangers of delay • I can’t quite see why they weren’t making change almost a year earlier. Because all the signs were there in 1999 that things were going badly wrong, yet they waited another year until there was almost complete collapse, before action was taken. I do think regions, as then, and in those still evolving days of the performance management system, was still perhaps not being helped totally by their indicators, or their intelligence” (Senior manager, Trust C).

26. Turnaround strategies (1) 3 types of management change: • Merger of ‘failing’ trust with ‘successful’ one (1) • Chief Executive franchise (2) • Replacement of entire executive teams (6)

27. Turnaround strategies (2) • Internal reorganisation • Formally and informally involving clinicians • Introduction of systems/processes/protocols • Improving operational performance • Focus on human resources • Financial analysis and control • Attempts to change ‘organisational culture’ • External relations

28. Strategies For Turnaround • Involving staff • “There was this big drive to improve communications, involve all the staff in what was going on, and make sure they had an opportunity to influence what was going on” (Middle manager, Trust C). • Engaging Clinicians • “[The new Chief Executive] managed to get an understanding over to the clinicians that you have to meet the national targets. They were not negotiable. And if you didn’t meet them, you were stuffed, basically. You’d get nothing. You’d get no money, you’d have major problems here. And there’d be no new development. And eventually that gradually came home” (Senior manager, Trust C).

29. Strategies For Turnaround • Focus on operational performance • “Our focus, because of the situation we were in, was very much on waiting lists, waiting times, turning the culture of the organisation and the focus of the organisation. So we took an approach that was very much about process redesign, and involving people who were involved in the front line care, and also the administrative processes in how we could improve things, make things better”(Senior manager, Trust B).

30. Impact of turnaround strategies • Patient care • Staff • Organisational culture • Public image/external relations • Star ratings

31. Impact of turnaround strategies On patient care • How much ‘failure’ was about quality of clinical care? • Focus on operational (esp. access) targets led to improvements

32. Impact of turnaround strategies On Staff • ‘Honeymoon period’ – opportunity for change • Initial dip in morale because loyalty to outgoing management – destabilising • Only affects staff close to top of the hierarchy?

33. Process/Impact Of Turnaround Strategies On staff • “[The staff] knew what the problems were. We started on a winner really, although it was an awful mess, the thing was, it couldn’t get worse. And so you’ve got credibility and goodwill. You’ve then got to demonstrate your credibility. You’ve got to win people round, haven’t you. Because good will does run out. So you’ve actually got to start to deliver some things fairly quickly” (Senior manager, Trust C). • “Initially, I think there was a dip in morale, because certain staff had been in the cluster a very long time, and I think they perceived that the early retirement of the previous chief executivemeant that there was some concern”(Senior manager, Trust A).

34. Process/Impact Of Turnaround Strategies Conflicts / Tensions • “A lot of conflict between [the new Chief Executive], and a lot of the consultants, who were very loyal to [the previous Chief Executive], who had been there for a very long time, and useless though he was, he had a very loyal following of consultants, who felt that the way he’d been got rid of was unfair, and immoral and so on” (Senior manager, Trust E). • “But there was [conflict] with acceptability of individuals, you know, with clinicians, they didn’t like the look of me, or [the other execs], sometimes based on their experience of you, and that’s fair enough, if they don’t like you because they don’t like what you represent, and what you said, and all the rest of it, but if they don’t like you on principle, it’s a bit silly for grown-ups. There was lots of that stuff. It’s died off now, largely” (Senior manager, Trust D).

35. Process/Impact Of Turnaround Strategies On organisational culture • Attempts to Move: • From ‘can’t do’ to ‘can do’ • From ‘closed’ to ‘open’ • Some successes reported

36. Impact of turnaround strategies On organisational culture • “it’s a can-do culture now, it’s not tired, it’s involved, it’s got pride. Stuff like, we’re in the middle of nurses’ week, I mean two years ago, you’d never have had a whole week of events which are really well attended, and quite innovative, and all sorts of things” (Senior manager, Trust B). • “There were huge clashes of organisational culture. I mean the fact that we came in, wanting them to work, to pay attention to government guidance, this is not something [the trust] had ever done. The fact that we have provided a much more open culture, some have thoroughly enjoyed it, others are appalled because it also means that some of their data, some of their poor practices are being reported and commented upon” (Senior manager, Trust E).

37. Impact of turnaround strategies On public image/external relations • Great improvements reported • With local MPs • With local media • With other external stakeholders

38. Impact of turnaround strategies • In short term, some showed improvements in operational performance • Takes longer to address organisational culture issues • Two groups of hospitals: • Group 1 (5): transformed from ‘failing’ to ‘self-regulating’ • Group 2 (4): stagnating or ‘permanently failing’

39. Impact Of Turnaround Strategies? A BCDE New Management Dec 99Feb 01Dec 99April 99April 01 Star Rating 01 00*** **0 Star Rating 02 ***** ** Star Rating 03 * *** ** 0

40. Impact Of Turnaround Strategies? FGHI New ManagementMar 01Jun 02Jan 0201 Star Rating 01 **0**** Star Rating 02 *000 Star Rating 03 *0 ** **

41. Resources required for turnaround • Temporal (time, stability) • Leadership skills • Ability to develop change agenda • Ability to grasp detail required to deliver core targets • External support • Financial (access to funding to achieve ‘quick wins’)

42. Lessons for management/policy • Skills for identifying ‘at risk’ organisations • Resources required for turnaround (esp. time and leadership) • Diagnose the problem • Establish clear leadership • Secure engagement of clinical staff • Work with external stakeholders • Right people in right posts • Use internal reward systems • Use external support systems

43. Conceptual/methodological issues • Definitions of ‘failure’ and ‘success’ • Interaction between processes and ‘outcomes’ i.e. impact of being labelled zero star • Comparisons of turnaround in NHS with other public sector organizations • Comparison of ‘failing’ hospitals with more successful ones – what’s the best comparator?