Examining New Public Management through National Health Services in UK

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This paper analyses the policy reforms introduced globally particularly in National Health Services in UK. Economical and managerial theories are basic principle of the NPM. The applications of the economic and managerial theories cover the competition in public service delivery system and managing the function of the government respectively. Consequences of Performance Management are also included in this paper. Our focus is upon the National Health Services in UK. Secondly the strengths and weaknesses of this New Public Management are analyzed to know that how it is subjected to bring the public sector reforms in UK.

The New Public Management became an active area to make policies in many countries in 1980s. The term New Public Management covers number of reforms that is aimed to dismantle the government bureaucracies and changes in ways to deliver the services to end users. The public sector change has become due to paying the attention in public sector performance. Literature focused on the use of technologies as a dominant part of NPM (Lapsley, 1999; Olson et al., 1998). The present situation of the public administration reforms in UK and other countries are traced back to those reforms which began in early 1980. The bureaucracies have been criticized for over half century (Dahl, 1947). The US, UK and Australia have been active in introducing the professional techniques and performance measures into the public service. This paper mainly analyzes the new public management reforms, its strengths and weaknesses as globally and particularly in UK. It also focuses on literature about the NPM and ways of delivering, role of stake holders and performance management.

Literature Review of NPM

Christopher Hood (1991: p.4-5) has presented the NPM doctrine with seven components like professional management in public sector, emphasis on output controls, standards and performance measures, units of the public sector, competition in public sector, style of the public sector's management, stress on the discipline and thriftiness in resource use. These models of doctrine also point out its rationalization and meanings. The OECD model focuses upon the several managerial features like solidifying the management with authority, flexibility and ensuring good performance, optimistic use of information technology, accountability and control, improvement in human resources, good responsive service and strengthening the functions at the centre (Kickert, 1997: p.18). The main theme of the NPM is the providence of the good decision-making and economic flexibilities in the public sector. The basic principal of NPM is based on the economic and managerial theories. Economic theory defines the market competition in delivering the services in public sector; good governance for the process of privatizing the state owned institutions. The use of the managerial theory explains the flexibility in managers when they perform in public sectors with complete sovereignty. The basic foundation of NPM is the amalgamation of the cost-effective and executive approaches. It can be summarized that economic and managerial features of NPM with following components like decentralization of the authorities and powers, transformation of government agencies into independent agencies, accountability on performance based, state function's privatization, reforms in bureaucracy, client orientation, good management, public service delivery based on performance, managerial autonomy and struggle in public service delivery (Christensen and Lagried, 2002, p.18). Since 1980 this NPM has become very influential model of reforms leading to changes and transformation in public sector in developing countries. But NPM oriented reforms are not same every where (Ibid, p.1). In 1979 during the regime of Thatcher UK has introduced many dramatic reforms. The reform agenda was based on management derived from the business, market type mechanism and client orientation (Kickert, 1997, P.21). Administrative reforms are also observed in developing countries since 1990 and onwards. The transition and evolution of authorities from central government to semi-autonomous bodies is the important component of the NPM in countries like Kenya, Malawi, South Africa and Zambia through means of the reforms in corporate sector i.e. health (Polidano,1999: p.5-6). This process of reforms was completed by converting the hospitals into their own boards of directors and ministry of health hived off the services delivery from ministry of health into a separate health entity in UK (McCourt, 2002:p.229-230).

New Public Management in Health care in UK

Since 1980s it is much focused on healthcare systems across the world to reform the administration and management (Dent, 2003). Management reforms have become a new world fashion (McKee and Healy, 2002). It has been reported that record data from US and UK shows that doctors believe that hospital management are likely more driven by the financial rather than clinical priorities (Rundell et al, 2004). Strengthening the Resource management within the NHS and main features of an organization were to re-organize it in 1974 (Klein, 2001: 72-73). Turn in the new liberal policy was taken in the Thatcher government. The Griffiths report released in1993 turned the NHS into a well managed organization in the same way as other large corporations. Managers were responsible to manage the hospitals with a devolved budget. Steady increase has been noted as number of senior managers employed increased from 1000 in 1986 to 20842 in 1995 (Pollock 2005: 39). It was a real challenge for the medical dominance and aimed to pursue the reform role which Harrison (1988) called the Managers representing the third party. These managers were responsible to implement the government policies. The important role of this policy was very tight measurement and controlling the clinicians by the business managers (Pollock, 2005: 107). On the same time it was envisaged that clinicians must also apply for these roles through resource management; would control the budget. Doctors also responded these measures in mix consequences. There was a growing willingness on the part of Royal College of Physicians and BMA to accept the regulations of the clinical directorates (Kitchener, 2000: 138). Due to these changes doctors also joined the hospitals with clinical director's roles and emerged as a new hybrid generation of professional managers.

Performance Management

In UK the performance measurement flowered in 1980s, the 1990s were the years of the management consolidation and performance expansions. It was necessary that performance would be embedded in management. In UK complete move in performance management occurred in 1990s. It was noticed that evolver of the public management were in favor to develop the performance based culture. The rise in the performance was seen in UK in 1990s, which was an issue in public sector theory and practice. Many countries have attempted the integration of performance management system with control and financial allocation systems (Flynn 2002). However there are technical and organizational difficulties which are not suited for this performance management. United Kingdom has attempted such system with national budget process that defines the performance, outcome and outputs. The purpose of this system is to produce the effectiveness and efficiency for the public satisfactions. Labor Party attempted to bring the reforms as its agenda before elections that would attract the voters. Market based research methods were set to find out the policies which would create the chances of Labor Party winning. Consecutive governments tried their best to solve the designated problems. These problems list a number of issues like Shirking, Standards, Efficiency, Political priorities and several issues in education and health sectors. We are mainly focusing the health sector of the UK where governments enhanced the New Public Management having the performance management system. The NHS set many targets grouped mainly in three categories.

Service Standards: Service standards count the numbers of the patients admitted into a hospitals and the level of services provided them. Both of these count the service levels and its continuity that signifies the improvements. Outcomes of health and social care and money value are other two categories which were set in 2002 and relevant departments have shown positive results towards these two factors. Statistics from the people's Panel data show the improvements in hospitals and performance of the NHS satisfied the public as it went from 37% in 1997 to 42% in the year 1998.

Stakeholders in NPM

Jones and Wicket consider the important premises of stakeholder theory (Jones and Wicks, 1999). It helps in turn to examine that corporations keep the relationships with many constituent groups like stakeholders who affect and are affected by decisions. Freeman has counted the relationship between organization and its external environmental impacts. He focused upon the commercial organizations and examined the possibility that non-stakeholders might impact the managerial decision making. In every company a set of distinct stakeholder groups exist. Out of these groups some affect primarily because their interests are directly linked with these organizations while other secondary groups are less indirect or directly affected by the activities of company (Svendsen, 1999). Second premises of Jones and Wicks state as that relationship found in stakeholder theory are concerned in terms of the processes and outcomes for stakeholders and company. However Frooman has explained the concept of the stakeholder influence strategies through the use of power and resource dependence to create a good model of relationships (Frooman, 1999). The main objective of the Frooman model was to change the behavior of the suppliers and others by the influence of an environmental pressure group. We are discussing the NHS in UK and New Public Management; Berman Brown with his colleagues identified three main groups of the stakeholders such as professional clinicians, patients and managers (Berman Brown et. al, 1994). They found that patients are most dependent and not well informed; the clinician are the powerful and closely linked to patients and managers are more focused on the effectiveness considerations and resource efficiency. They have also observed that

"An orientation towards health rather than illness would be a profound change for the NHS, but one that may be brought nearer by the rise of the professional manager. To the latter, a particular clinical treatment is only a means to an end, and if allocating resources away from treatment to, say, health education is more efficient at improving overall health; it will seem a rational use of finite resources (Berman Brown et al., 1994: 69)".

Democratic legitimacy puts the stakeholders at the centre to make the decisions. Therefore a decision is always legitimate when adequate chances are provided to the stakeholders to make a final decision. This improves the abilities of the service providers towards the end users and wider stakeholder community (Stoker, 2006). In new millennium UK governments have manifested their belief that a decentralized system is more feasible in a wide range of public service. So it is supported the participation and involvement of the citizens is more important in the delivery of the public services and augmenting the voice of the local communities within local community decision making processes (Pollit, 2003). In addition these policies are based on the idea that patients must exercise the welfare decisions with complete involvement (Greener and Powell, 2008).

As we know that a new managerial approach emerged during 1980s and 1990s and also changes in traditional model of administration. Hughes argued that public management the alternative of traditional administration may offer a very realistic approach to solve the problems of earlier model (Owen E. Hughes 2003). The problems of the public sector and management reforms are undertaken. The main idea is to transform the business and private sectors into public services (Haynes, P. 2003). On the whole, NPM is aimed to enhance the decentralization, efficient strategies, competition and markets, the size reduction in units, exercise of good management services, flexibility in organizations and consumer orientation results. Globally phenomenon is increasingly seen through the techniques and practices mainly derived from the public sector. NPM has many points which are necessary to describe here in this part of the paper. In the political environment of the public sector the use of economic methods is limited. The strength of the NPM is the developed system that helps to allocate the resources and decision making. Private management has difficulty to measure the objectives and results in the public sector. Strengths of the NPM overlap the weaknesses in public sectors and allow a better partnership between private and public sectors to achieve the results. Decentralized system is best to deliver the best services and making the decisions based on the resource allocations. The accountability process is increased through the New Public Management; when stakeholders also do not produce resistance for this accountability process (Haynes, P. 2003). After 1980 most governments restructured to move their governments towards the market-oriented democracies. The main objective is to make the bureaucracies more efficient to deliver the best services to public. The NPM attempted to diminish the role of the bureaucracies and more responsive to the political leaders. NPM was applied to bring the changes by the use of best management techniques. Citizens were focused to play the role of customer and recipients (Aucoin, 1990, p. 16). Corporatization, competitive tendering, benchmarking, privatizations, out based budgeting and strategic management became the new activities in public sector.

Mechanism of NPM

People (civil servants and political leaders) are the main role player in the mechanism of managing the public resources by issuing and implementing the policies, programs and strategies. People benefit from the results. Therefore NPM needs the committed team of managers who are responsible to implement the policies and provide the services to public in ways like

Economical ----- low cost;

Better work practices to yield the maximum outputs within budgets--- proficient;

Satisfying the customers with the best quality of services ----- effective;

Ethical ---- with fair and honest means;

Keeping the people well informed --- accountable;

Responsive to people ---- client's priorities;

Generating the positive results and giving up hat is harmful for the economy and its environment ---- eclectic (Polidano, 1999, p. 32).

Strengths and Weaknesses

Modernization in UK

Due to NPM strong relationships were developed between people and UK government during 1980s and 1990s. Focusing upon the economic reforms and values in public services and restructuring of the public sector have given rise to reform in public management. Other elements of public sector included the privatization, lightening the civil services, competition and especially auditing and performance measurement in the internal markets (Minogue, 1998:18). Public service organizations were recast as the best image of the business world while citizens being the assets were recast as consumers (Newman, 2005:45). The labor government in 1997 developed a new model of governance based upon the discourse of modernization (Newman, 2005). In this way modernization continued the New Public Management and transforming and promoting the public sector through market mechanisms, attacking the monopoly and providing the accountability to service users and stakeholders. The rational process of the modernization was presented into a new form to improve the public management; meeting the requirements of the business world and updating the services to make equivalent it to the expectation of the modern consumers (Newman, 2005).

Critique of NPM

National Health Services was criticized by the British newspapers in 1999. Emergency and accident departments were much under attack because patients had faced long waits. Journalists were unsure whether blame NHS management for these crisis or other budgetary issuing authorities. These reports of NHS towards the patients were perceived by the government. Commentators on the public management and NHS say that these problems have very deep-root reasons which shape the structure and manage the NHS and public funded services. It is argued that this kind of system allows the managers and professionals to follow their own interests and do not take care of their user's reasonable demands. The New Public Management and other reforms have been repositioned to demarcate between the doctors and managers. However the publicly funded systems are not so sensitive to users. We are talking about the rational demands of the users who demand of admission to an accident and emergency departments. This paper also examines the NPM on the account of the problems in developing countries such as low administrative capacity and corruption. We have seen the successful stories of the NPM and its failure in the developing countries. Viewing the NPM globally it is noted that World Bank has encountered the problem of poor control of expenditures and also inappropriate accounting system in its client countries. Larbi (1998) has pointed out that in many developing countries the public managers are not so experienced to deliver the best services to public.

When we talk about the challenges of NPM for the NHS in UK, the managers of the autonomous bodies like hospitals and polyclinics tend to maintain the flexibility in resource allocation and planning. Managers also attempt to pursue the technical efficiencies but a shackle prevails in the form having inability to hire and fire the civil servant. It is not improbable that central and traditional control will permit the hospitals and polyclinics to put their own interest of local politicians above of the consumers.


In this paper we have discussed the origin of the NPM globally and particularly in UK. Views of the different writers are presented in this paper to highlight the importance of the NPM in UK. Theoretical evidence has shown that market competition and powers decentralization can bring the good management and better service delivery in public sector. One sector of NHS in UK is highly focused to see the impacts of the NPM and also its drawbacks in the National Health Service. It is also shown that how the performance management flowered in UK, which was developed for the customer's satisfaction. Role of stakeholders and end users is mandatory and decentralized system is more plausible for the delivery of public service. Mechanism of the National Public Management is the way to manage the resource allocation and implementing the policies and strategies. Image of the business community is shaped in the way to look the development of relationship between government and people in UK. Strengths of the NPM are dominant on the weaknesses however many flaws are noticed in the National Health Services in UK. Low administrative capacity and corruption are dangerous to this NPM as the hiring and firing of employees is concerning for the stakeholders (managers and doctors) in National Health Services.