As the Chairman said, it is five years since I last addressed your Conference. Looking back over those five years I get the impression that I have lived an awful long time in the course of it. Very many things have happened since then, and if I attempted a retrospective view, then this Conference would last a very long time. In the meantime, the National Health Service that we were then bringing about has come into actual being, but perhaps that is a slight exaggeration, it is coming into being, because there are some people who have a sort of romantic attitude towards public affairs and think that secular institutions have a sort of heroic birth, whereas we know very well that the conception is painful, the period of gestation is unpleasant, and the birth lasts an awful long time. One of the difficulties of course that is an inevitable accompaniment of planning in a democratic community is that our plans are bound to be controversial; no matter how amiable the Minister is who is responsible for them, they are the subject of political controversy, and by that very fact alone their inception is almost certain to be accompanied by a good deal of polemics. In the case of the National Health Service very deeply entrenched emotional attitudes were disturbed. The traditions of the medical profession go back a very long way, and it was too much to hope that so drastic a thing as the National Health Service could be accomplished without very much disturbance. However, I am now reconciled to what happened because as Iread the newspapers about what is happening in other parts of the world where similar attempts are being made to launch a National Health Service of a very much more modest kind than we have here and when I read what is being said about it by members of the medical profession, then I realise the controversy which took place between the British Medical Association and myself were a series of comparatively friendly exchanges compared wfth what is happening elsewhere.

A Service for Patients and the Public

`There is another aspect of this which I think we should keep in mind, especially in a Conference of specialists of this sort. As a great service of this sort is bedded down the most important part of the service tends to be obscured. First of all of course there are a vast number of pressure groups which are concerned; there are the doctors themselves, then there are the nurses, then there are the domestic staffs of hospitals, then there are the dentists who are particularly vocal, then there are the ophthalmic opticians, then there are the various other bodies, and then of course there are the hospital administrators, also an extremely powerful pressure. One after the other takes the stage and makes its presence known until before very long one gets a sort of impression that the National Health Service is being created for them and the poor patient is hardly heard at all. It is necessary for us to remember, because although the thing is obvious that does not make it less important, that the National Health Service has been brought into existence not for any of those pressure groups at all, but for the patients and for the general public, and in our own flash of personal pride and professional jealousy let us all bear in mind that there may be a time when one of us will be a patient and that will restore our sense of values. I am bound to make these reflections because the order paper in the House of Commons tends to be filled with questions about the pressure groups in the National Health Service and the patients are hardly ever heard of at all. Let us keep our sense of proportion. Of course I know very well that no National Health Service is going to be successful if the various people responsible for carrying it out are not reasonably contented. That is obvious. Indeed, it is impossible to take a proper professional pride in one’s work if one is conscious of a sense of injustice, and so I do not cavil at the assertions which are made by this or that branch of the National Health Service in establishing its claims. But we have now called into existence a vast piece of conciliation machinery which is operating quite smoothly. That of course is first of all started at the top because they had to get the Whitley machinery into existence and now we are getting right down to the bottom so as to get the consultative machinery established at hospital level because I believe that we can make the Hospital Administration and the National Health Service as a whole a vast co-operative enterprise.

Reconciliation of conflicting interests

“We do not want, and indeed I think there is no danger of it becoming, at least I hope not, a vast bureaucratic machine, because if it becomes that, then we shall have failed in one of our principal objectives, because the National Health Service is a novel experiment, as I have pointed out before. It is an attempt on the part of British society to reconcile two normally conflicting interests, centralised financial responsibility and decentralised administration at the periphery. Other countries of course are quite unable to understand what we are doing. When I point out to them that the National Health Service is administered by a vast body of voluntary workers they just do not understand it. I know that secretly you also modify it your selves. There is a natural disposition on the part of the official to believe that the committee is nothing but a nuisance. However, in a democratic community it is a necessary nuisance because that committee, if it does its work, will establish the proper reciprocal contact between the internal administration of a hospital and the nature and taste of public opinion outside. Therefore, although you may be irritated by these interferences with what you consider to be the last word in efficiency, you must realise that there are two types of efficiency, mechanical and quantitative efficiency and democratic efficiency. I am reminded of it every week in the House of Commons.

A Novel Experiment

“We are, as I say, trying to carry out a very difficult and novel experiment which has never been done before. We have no precedent for it in the British Constitution. We have all kinds of types of administrative set-ups and we have created many of them in the course of the last four or five years, statutory Boards that are responsible for administering vast industries, but in the National Health Service we came to the conclusion that a medical Board was an entirely unsuitable instrument for this purpose, because you could not possibly allow the welfare of the patients using the National Health Service to be subject only to the ipse dixit of non?elected bodies. Therefore we decided that the only way in which this could be done and also preserve the principle of central financial responsibility was by making the Minister responsible to Parliament, so that the Minister of Health, whoever he may be at any given time, is responsible constitutionally for everything that you do. I am frightened when I think about it! Everything that happens in the National Health Service among the whole 340,000 or 350,000 working in the various branches, the Minister has to answer for to the House of Commons, and no one can say that the House of Commons is not vigilant in the matter, because I think I am now getting every Thursday a record number of questions: as many as 60 or 70 every Thursday afternoon, not only on the health matters of course, which shows the lively interest Members of Parliament are taking in what you are doing. When I get up in the House of Commons I speak with all the assurance of the knowledge of an efficient band of administrators behind me.

Health Service Expenditure

There is one particular feature of the National Health Service which has come under very special public attention recently, and that is the expenditure. A lot of foolish things have been said by people who ought to know better; in fact I know sometimes they do know better. They have talked about the vast administrative expenses of the National Health Service. Well, we know that it is always necessary to maintain the utmost vigilance in regard to administrative expenses, and it is not enough to say that this or that little piece of carelessness does not cost much money. The important thing about an efficient and prudent administration is not only the money which it saves, which is of importance itself, but that if a piece of carelessness or a piece of extravagance or slackness goes unrebuked or uncorrected, a general air of lassitude soon begins to pervade the whole service.

Self Critical Machinery

The very good result that follows from preventing a piece of slackness is that that itself pervades the whole administration and it becomes taut and efficient and self-critical, whereas if a piece of extravagance, whoever it is committed by, goes unrebuked or uncorrected, then everything becomes loosened and slackened and generally unself-critical and inefficient. Therefore, although a lot of nonsense has been talked, we must nevertheless always act on the assumption that when any piece of organisation reaches a certain size, there must always be something wrong with it all the time and that therefore it is our duty to find out where and what that wrong is.

We shall have to proceed, therefore, both centrally and locally on that principle, that a piece of self-critical machinery will have to be established so that not only now and again in a nervous and desultory manner, but persistently and automatically checks are kept up on the administration of the service.

Uniform System of Accounting

“Now one of the difficulties about the hospital service is that because it ‘growed up like Topsy,’ it grew up differently, and not only grew up differently, but people used the same name for different things, and that is particularly so too of the accounting of hospitals. Various items of expenditure were included under different heads and so it was a jigsaw puzzle, and indeed some of the voluntary hospitals appear to have had the most extraordinary system of non-accountancy because we have not been able to discover how they added up or subtracted. Therefore we have found it necessary to have a uniform system of accounts kept everywhere so that all of us are describing the same things by the same names. That is an essential condition for any effective control over financial expenditure. After this has been in operation for some time – and I hope you will be getting it within a few weeks – it will be possible to begin the first stage in self-examination, and that is a system of comparative costing.

Comparative Costing a Guide to Investigation

Now let me be on my guard at once and admit that there is such an extraordinary difference between hospitals and the needs of hospitals and the ages of hospitals that it is not possible to arrive at a refined conclusion and say that hospital has got so much per bed more under a particular heading than that hospital and therefore A must be less efficient than B, because we know that is just not true. If you have a hospital that has just been altered from an old infirmary here you had stone flags, stone staircases and all kinds of ancient methods, then obviously it is going to be very much more difficult to administer that hospital than an up-to-date one.

The First Need, Uniform Accounting

What the system of comparative costing will do is to show a red light, and then it will be our duty to find out why the costs are either higher in gross or higher under a particular heading, and then of course the investigation starts. Then comes the reply and an explanation of why the difference occurs, and if the explanation is satisfactory, all well and good, but if the additional expenditure conceals itself, as indeed it may well do, behind an alibi, as though one might say to oneself: ‘I know I have an old hospital and therefore I am entitled to be expensive’ – if that subjective attitude were to arise, when that subjective attitude expresses itself in quantitative terms, we will be able to examine it and find out as to whether or not the additional expenditure is justified. Therefore, the first condition or the first self-criticism or the first piece of automatic machinery inside the National Health Service will be this method of comparative costing which cannot start until the accounting is on a uniform level. I am extremely grateful to this organisation and to many of the officials who have helped us so much in getting this costing system or accounting system established.

A Staff Ceiling

Then there will be the second matter we propose to have, because hospitals vary so much not only in their ages, but in the specialities for which they are responsible. We propose to have a team, and a competent team, that is not consisting only of administrative officials, but assisted by men with medical knowledge with a knowledge of hospital administration, to visit the hospitals and they will establish, after examining the hospital on the spot, and agree the staff ceiling. We have to do it in this way because of what I have said, that there is such a variation that no uniform principle can be applicable, and when that ceiling has been established by reference to the actual facts and duties of that particular hospital, then it will not be possible to exceed that ceiling without consent.

Unit Costing

Then of course there is a third method which is only in its beginnings. The Nuffield Trust and the King Edward’s Fund are helping us to find out whether it is possible to have a system of unit costing so that we can have a more refined check still. Now these are necessary for any efficient organisation. It is absolutely essential that we should realise their importance now, because I have given a pledge that for the year 1950/1951 there will be no exceeding of the financial ceiling that has been laid down in estimates. Now a lot of foolish things have been said about the supplementary estimates. They have been regarded by some people as pieces of self-evident evidences that the finances of the National Health Service are not under effective control. That is a very silly thing to say because it was not until at least one year’s experience had been obtained that it was possible to find out what the expenses would be. Indeed, as I tried to explain to the House of Commons, and I think it is being understood now even by some newspapers, the estimates which are laid down for the year 1950/1951 are the first estimates based upon a full year’s experience of the National Health Service. All the other estimates necessarily had to have an element of conjecture in them and it is a fact that the pre-requisite for the study of human behaviour is that human beings should first of all be allowed to behave, and it was not possible to know what would be the hospital expenditure under the new conditions, it was not possible to know what would be the dental or optical expenditure or the pharmaceutical expenditure until people had had long enough in the enjoyment of them to show how they proposed to behave. Now our estimates for 1950/1951 are based on much surer foundations, and they are your estimates very largely, and therefore, I am entitled to expect you to live within them. Therefore the next year, 1950/1951 is an extremely important year. We have first had to start the National Health Service, the State has found the money for it, and now we have to show that our administrative machinery is sufficiently gripping to enable us to say with some degree of predictability what the National Health Service is likely to cost. Therefore, we must have economies, and we must have economies in order to have extensions, because if the National Health Service is to live within its estimates, then any improvement in any particular part of the Service must necessarily come out of economy in another part, or we should be a stagnant Service, and we do not want that, do we? There are a lot of things we want to do, and if we cannot exceed the gross estimate, then we shall have to have economies here and there in order that the Service may be bettered in one or two directions.

The Role of the Hospital Administrator

This is where you play the most important part of all, because no matter how vigilant or enthusiastic the hospital management committee may be, they will be completely helpless unless the hospital administrators are up to their job. Therefore, the responsibility that rests upon you is very great indeed. Everybody knows, every amateur knows, that ultimately his efficiency depends not upon the eloquence of his perorations, not upon even the substance of his exordium, but upon the efficiency of his instruments. Therefore, hospital administrations will depend finally and ultimately upon the efficiency and zeal of those responsible for the day to day administration in the hospital, and that is you. I know you have got some difficulties; I know that hospital administrators are subject to intimidation. The matron crackles her starches and it has a very great result. At the same time the medical staffs produce an air of sacerdotalism in the hospital which is very intimidating for the secular mind. You have to stand up against it. Sometimes when you are listening to their importunities it will be just as well to close your eyes because we know that professional people are perfectionists, that they never have got enough; the sky is the limit as far as they are concerned, but the limit is slightly under the sky as far as exchequer is concerned. I know that hospital administration is an arena in which the contending giants fight and you ultimately have to make the final decision. The hospital unit, although it is the place where the professions show their skill, is essentially a secular unit, because it is where the public are being served, and therefore it is a secular decision and not a professional decision in the hospital organisation of this country. We have said, and it is not to be modified in the very slightest, that we put the apparatus of medicine at the disposal of the profession and then the profession uses it as it thinks fit, but in the organisation of the apparatus of the hospital, the secular voice must have its say. Therefore I know and I am very conscious of the fact that you will have very great financial, physical and psychological difficulties too, but I am quite sure you will be equal to them. When you gather here every year, or even more frequently, where the professions are not present, you can fortify your moral courage. I again emphasise that next year is an exceedingly important one, because if at the end of the year we can show, and I am sure we shall, that this vast apparatus that we have called into existence in so short a time is entirely within our management and control, then we shall have won the most important fight in the development of the National Health Service.

The Service Relieving much Suffering

“Before I sit down, may I just say this. We hear so much of what is wrong and we hardly ever hear of what is right. It is inevitable because only misfortune is news, and we hear all the time about this little defect and that little defect and that piece of maladministration, but you know better than I do that the National Health Service as a whole is responsible for the relief of an enormous amount of human suffering and very many young people are getting benefit from it. We are being watched by practically the whole of the world to see whether this National health Service is going to be a success. We know it is going to be a success. This is a non-political organisation and I am the very last person to introduce political colouration into a gathering of this sort, but the last General Election could not pay a higher tribute to the success of the National Health Service because all political parties clamoured for equal responsibility for its inception. We start off with an enormous amount of goodwill behind us and therefore that is an augury for more success in the future.”

Source: The Hospital, June 1950, pp. 429/34.

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