Management and Change: Issues underpinning the design and implementation of performance management against goals and objectives

Performance Management in the NHS
Authored by Piers Simey, Specialist Public Health Trainee, Greenwich PCT

Definition: Performance Management has been defined as: 'a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved' (Armstrong & Baron, 2002).

Background

The Government's drive to improve the quality of NHS performance has been backed by significant year-on-year increases in the organisation's budget. Performance managing the NHS helps involve staff in raising standards and ultimately provides taxpayers with proof of progress in areas that matter most to them. The difficulties of performance managing such a large multi-function organisation were initially compounded by the adoption of too many national targets, leading to criticisms of excessive central control and skewed local service priorities. Recent developments have focused on setting fewer targets, with greater freedom for NHS organisations to respond to local needs. The growth in NHS funding is set to continue until 2008; subsequent funding allocations will partly depend on NHS performance over the next few years.

The Performance Management Policy Trail: the PAST

The 1999 NHS Performance Assessment Framework used the Balanced Scorecard for the first time. This assessed 6 areas of performance for Health Authorities that would help improve quality standards and focus on aspects of performance that mattered most for patients and the public. The NHS Plan (2000) set out the blueprint for the development of the NHS over the next 10 years, and performance management was adapted to include its requirements for different NHS organisations. The NHS Improvement Plan (2004) announced a new commitment to high quality personalised care, examples of which included Payment by Results & PracticeBased Commissioning. This would be achieved through a balance of financial incentives and performance management.

National Standards, Local Action (2004) introduced Standards for Better Health as the main approach to ensure continuous improvement in the quality of NHS performance. Core Standards (compulsory) set out minimum levels of service, while Developmental Standards detail plans for improving local services.

Standards for Better Health cover the following seven areas:

• Safety
• Clinical and cost effectiveness
• Governance
• Patient Focus
• Accessible and responsive care
• Care environment and amenities
• Public Health

Local NHS Organisations still have to contribute to the national Public Service Agreements, but there are fewer national targets to be met and they can set local targets according to the following principles:

• Reflect population needs
• Address local service gaps
• Deliver equity
• Are evidence based
• Are developed in partnership with other NHS bodies and Local Authorities
• Offer value for money

Standards for Better Health are now a key part of the performance assessment by the Healthcare Commission (see below) of all healthcare organisations. National Service Frameworks and NICE guidance are integral to this standard based system and their implementation fits within the Developmental Standards of Standards for Better Health.

10 High Impact Changes for Service Improvement and Delivery (2004) was published to promote dramatic improvement across the NHS, based on the experiences of frontline teams. They are seen as patient-centred, evidence based changes to the overall NHS system (www.wise.nhs.uk/cmsWISE/HIC/HIC+Intro.htm).

The Balanced Scorecard (BSC)

Definition: The BSC is briefly defined as a management framework that:. . . 'translates an organisation's mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system' (Kaplan and Norton, 1996) .

Background

In the early 1990's Dr. Robert Kaplan (Harvard Business School) and Dr. David Norton devised a new approach to business strategy and the measurement of overall 'performance' in organisations. They called their new system the 'balanced scorecard' and it has since become increasingly used in organisations, private and public, across the globe.

The balanced scorecard is not simply a measurement system, it is a management system - a system that helps organisations to clarify their vision and strategy and, importantly, translate these into action. The Scorecard provides feedback around both the internal business processes and external outcomes so as to enable organisations to continuously improve their strategic performance, their business outcomes. It has been said (The Balanced Scorecard Institute) that when fully deployed, the balanced scorecard 'transforms strategic planning from an academic exercise into the nerve center of an enterprise'.

Theoretically the Balanced Scorecard encourages us to view the organisation from four perspectives, and to develop measurements, collect data and analyze it in each of the four undernoted perspectives:

• The Learning & Growth perspective
• The Business Process perspective
• The Customer perspective
• The Financial perspective

For further information on balanced Scorecard use http://www.balancedscorecard.org

How the BSC is used in the NHS

• As a measurement tool against the defined targets
• As a traffic light system for Trusts to identify progress

Disadvantages

• The NHS does not use the BSC in a 'balanced holistic' way to develop its business from the four perspectives identified above.
• It is used in a way that it is difficult to balance progress with success e.g. if at 6 months smoking cessation target are below 50% that does not mean that the target will not be met, but it will highlight areas of concern.
• There is a degree of self assessment which is often subjective.

Many Trusts are now using different tools to assess performance progress.

The Healthcare Commission: Star Ratings & annual inspections

The Healthcare Commission was set up in 2004 to promote and drive improvement in the quality of healthcare and public health, as well as to give the public the best possible information about the provision of healthcare. It has a statutory duty to assess the performance of healthcare organisations, award annual performance ratings for the NHS (Star Ratings) and co-ordinate reviews of healthcare by others. The Healthcare Commission replaced the work carried out by the Commission for Health Improvement (CHI).

Star Ratings reflected performance against a limited number of key targets and a larger number and range of indicators on the Balanced Scorecard. Star Ratings placed NHS organisations in England into one of four categories (three, two, one or no stars) according to performance against threshold levels set for the targets and indicators. Performance was registered as a matter of concern if: (a) there was some degree of underachievement across a large number of targets; (b) there was significant underachievement of a smaller number of targets or (c) there was a combination of (b) and (c). Targets and indicators used to assess Star Ratings differed between Primary Care Trusts, Acute & Specialist Trusts, Mental Health Trusts, and Ambulance Trusts. The overall NHS Star Ratings report for2005 praised improvement, but noted that a third of acute trusts failed to achieve financial balance for the year - a key requirement. Star ratings will not however exist for the 2005/06 financial year (see below).

The Healthcare Commission presents an annual 'State of Healthcare' report to Parliament. Its 2005 report focused on the experience of patients for the first time. The report highlighted improvements in some NHS services (cancer and heart services) - but pointed out that improvement in other services (sexual health, mental health, maternity, and dental services) lagged behind.

The FUTURE: 2005/06: ending star ratings, beginning 'annual health checks'

From April 2005, Annual health checks replaced Star ratings as the framework for assessing NHS performance. The annual health check will look at a broad range of issues, with some indicators developed from Standards for Better Health. Performance will be assessed by tackling two questions:

• Is the organisation getting the basics right? (Core Standards, Existing Targets, Use of Resources)
• Is the organisation making and sustaining progress (New National Targets, Improvement Reviews)

NHS organisations will self assess their progress. Their declarations will be supplemented by comments from representatives of patients and the local community, including the Patient & Public Involvement Forum, the Local Authority Overview & Scrutiny Committee & the Strategic Health Authority. The Healthcare Commission will cross check these declarations using existing information stored in central databases, although unannounced visits and spot checks by the Commission will also feature. The annual health check for 2005/06 will be published in September 2006.

Detailed guidance is available and will be added to from www.healthcarecommission.org.uk.

Improvement Reviews will be a complementary part of the framework of assessment, helping organisations to achieve their Developmental Standards.
Improvement reviews will focus on nationally important aspects of healthcare with an emphasis on a small number of factors critical to achieving successful outcomes and good quality services.

The first three improvement reviews cover:

• Substance misuse
• Tobacco control
• Services for children in hospital

The next scheduled reviews (February 2006)

• Heart failure
• Adult mental health services
• Safety & control of healthcare associated infection

Improvement reviews will take approximately 18 months to complete and will contribute to the annual health check rating. Organisations with the weakest assessments (c10%) will need to develop an action plan and may be visited by a team of inspectors.

The Accountability Cascade

The Public Service Agreements (PSA) agreed between the Treasury and the Department of Health are the overriding targets for the NHS, but there are a range of other cross Government Department PSAs relevant to improving the wider determinants of health. Each NHS organisation is currently accountable for the performance of other NHS organisations in their area as described below. Performance Management has been a constant process between the organisations, using interim reports (often monthly) and prospective analysis (weekly) to assess performance and determine the need for remedial action. Lack of awareness of fraudulent activity does not protect against poor star ratings: several London PCTs have lost stars following independent waiting list manipulation by staff in Acute Trusts.

Once Acute Trusts become Foundation Trusts they are accountable to Monitor (an independent organisation) and to local people, although they are still inspected by the Healthcare Commission. Primary Care Trusts are also becoming more accountable to their local communities.

Tackling poor performance: exceptional measures

If a Trust fails to satisfy the Healthcare Commission that it meets its Core Standards, the Trust would normally work with their Strategic Health Authority to develop and implement improvement proposals. In exceptional circumstances, the Healthcare Commission can recommend to the Secretary of State (or Monitor, for Foundation Trusts) special measures to improve significant failings in performance. Monitor can intervene where Foundation Trusts are failing their responsibilities in other areas.

Partnerships: shared goals & mutual performance management

The Health Act (1999) and the Health & Social Care Act (2003) established a statutory requirement for NHS bodies and Local Authorities to work together on improving healthcare. The developmental Standards of Standards for Better Health emphasise the need for a whole systems approach to providing health services. Both the Healthcare Commission and the Commission for Social Care Improvement (CSCI) undertake thematic reviews of progress, jointly where appropriate. CSCI independently assesses the performance of Local Authorities, providing a star rating for Social Services designed to be compatible with performance information for the NHS.

Local Area Agreements are a collaborative arrangement for Local Authorities to work with local organisations (including the NHS) to secure additional funding for themed work focusing on: (a) children & young people; (b) safer & stronger communities; and (c) healthier communities & older people. The initiative was set up through the Office of the Deputy Prime Minister (now under the auspices of the Department for Communities and Local Government) and regional Government Offices have a leading role in performance management. Local partnerships are a core feature. A key component is to strengthen Local Public Service Agreements (LPSAs). LPSAs aredeveloped by Local Authorities and may have links to health improvement.

References

• Armstrong M, Baron A.  Performance Management: the new realities.  Institute of Personnel and Development: London, 1998.
• Department of Health. The NHS Plan. Department of Health: London, 2000
• Department of Health. The NHS Improvement Plan: Putting people at the heart of public services. The Stationary Office: London, 2004
• Department of Health. National Standards, Local Action. Health and Social Care Standards and Planning Framework. Department of Health: London, 2004
• NHS Modernisation Agency. 10 High Impact Changes for Service Improvement and Delivery. A guide for NHS leaders. NHS Modernisation Agency: London, 2004
• Kaplan RS, Norton DP. The Balanced Scorecard. Harvard Business School Press: Boston, Massachusetts, 1996
• Great Britain, The Health Act, The Stationary Office: London, 1999
• Great Britain, The Health & Social Care (Community Health & Standards) Act, The Stationary Office: London, 2003

© K Enock 2006