The difficulties of managing a large global business, most of the internal components and services of which have no direct exposure to any marketplace, are not all that different in kind to managing a large state organisation, but the response has been altogether more dynamic in the private sector.
For example?
In my experience - even at the top end of the public service - there is huge resistance to any precise targets being set, never mind objective monitoring as to whether they have been achieved. The notion of accountability has more to do with not rocking the boat rather than with the quality and quantity of services delivered to the general public. The objective is often to achieve growth in budget allocation rather than improved quality and quantity of service.
Things are changing, but very very unevenly and slowly, and there is little structural incentive for that change to take place - not least because very few Government Ministers have a clue about running a large organisation, and can be easily sidelines or hoodwinked if they ask awkward questions. Many civil servants have nothing but contempt for their ministers and have made thwarting them into an art form. It is very easy to sabotage a politicians career if he is expected to take personal responsibility for all Departmental decisions - even those he was never properly informed about. "It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
precisely articulated and measurable targets
The problem, of course, with measurable targets is that very often the things that are important to performance, especially when profit isn't the bottom line, are difficult to measure. So you set targets by what can be measured, even if they're at best tangential to fulfilling the actual aims of the organisation.
A couple of examples come to mind. One is the charge that people have been alleged to be kept waiting in ambulances before being admitted to Accidents and Emergencies in order not to violate a government-imposed target that all patients should progress to a certain stage within 4 hours of admission. The other example is that, after focusing on the number of pupuls excluded from schools for 6 school days or longer, policies have been adopted that discourage schools from excluding pupils for that length of time (by making it a monetary cost for the school), as well as having Local Authority officials do their best to avoid long-term exclusions whether or not the underlying issues are addressed. The same thing happens with permanent exclusions: it is possible for the Local Authority to negotiate a voluntary transfer of a student from one school to another as a way to avert a permanent exclusion. The end effect, the pupil moving school, is the same as it would have otherwise been, but it doesn't show up on permanent exclusion statistics. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
that's cynical ;-) Any idiot can face a crisis - it's day to day living that wears you out.
Read any analysis of private sector charging by health economists (some of Enthoven's early work will do) and you'll see that private health care does not do half of the measurement that you are ascribing to them.
Funny how it is impossible to measure health care quality and efficiencies in the public sector - but no difficulty in charging for it in the private!
It's easy to set price. Cost-plus works fine for the purpose of the health care provider. Determining value, on the other hand, is a much stickier issue.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
From a value perspective, cost-plus is nonsense. A simple antibiotic treatment for a lung infection saves your life. It costs - at worst - € 100 and a couple of doctor's visits.
I don't know the price tag for a major cosmetic operation, but I would be very surprised if it is less than two orders of magnitude greater.
Without going too far into the value of purely cosmetic operations, I hope that we can at least agree that curing a patient of TB is more valuable than a facelift?
Further, the comparison of costs across suppliers assume a roughly comparable product and that customers are able to shop between suppliers. In many cases this is simply an invalid frame of reference. Not only is major surgery (nevermind emergency care!) a sufficiently rare event for most people that the marketplace won't work [1], there is also the issue that many aspects of pre- and post-treatment care are not (easily) comparable across facilities.
Applying the kind of metrics that you suggest to medical care is like trying to figure out the mass of the Earth by counting the number of pebbles on a beach. It's not the right way to do it. In fact, it's not even a wrong way to do it.
And don't get me started on the moral hazard of reducing citizens to "consumers" and medical professionals to "suppliers."
Don't get me wrong; I'm all for transparency and accountability. But making up insane measurements just to measure something isn't accountability. It's accountabilityness, to Colbertize a bit.
- Jake
[1] Recall that the marketplace is only self-correcting if the burnt hand can teach - if each person breaks his leg at most once or twice during a lifetime, there is no way he can amass the level of experience with the different providers of health care to make an informed choice on his own. If you only spend 20 minutes of the rest of your life on economics, go spend them here.
