After just six months in the job, the chairman of one of the worst performing NHS trusts in the country has resigned. Nothing odd about that, you might think, until you realise that the man in question is a well-respected corporate executive and troubleshooter. If that doesn’t worry you, it should.
Sir David Varney was a senior executive at Shell, Chief Executive of British Gas, Chairman of O2 and Chairman of Revenue and Customs. He has overseen massive business change projects including mergers, demergers and downsizing. At Revenue and Customs he took 10,000 heads out of the organisation.
But the NHS, it seems, chewed him up and spat him out.
Sir David told the Guardian’s Jane Dudman that making 8.5% annual efficiency savings, while still trying to improve patient and service outcomes, was an “incredibly tough” challenge. Add in the need to manage Andrew Lansley’s proposed structural changes and many trusts, he said, will need to make “eye-wateringly high efficiency gains.”
Apart from the lean manufacturing firms, which have had to get very good at taking out costs, it is unusual even for private sector firms to make this kind of saving and they very rarely do it while improving productivity and service at the same time. Sir David said that 8.5% was higher than he had “ever seen in the private sector, where 3% would be a likely outcome.”
As if the task wasn’t difficult enough, Sir David felt that he did not get the backing of the Strategic Health Authority to make the changes he thought necessary.
In the interview he makes a few interesting observations about leadership teams. This one struck a chord:
One of the things I discovered is that you need three ingredients to be really unsuccessful. You need to be blind; you need to be blind to the fact that you’re blind and then you need to make it undiscussable.
Now, to be fair, he wasn’t referring to the SHA when he made this comment but disingenuousness and undiscussable topics are certainly a feature in many parts of the NHS. What people in the private sector often fail to grasp is that the public sector is Political with a large P as well as political with a small p. All organisations are political but the public sector has local and national politics adding another layer of complexity. Certain things are therefore even less discussable than they would be in the private sector.
Esther Harris gives some good examples of the sort of irrationality which often prevails in the public sector. Sound commercial decisions involving short-term pain for much greater long-term gain are often overturned because the short-term pain is politically unacceptable. That’s one reason why public sector organisations don’t operate like commercial ones.
Financial common-sense can go to hell. If it might look bad in the papers we’re not going to do it. And there is no point relying on politicians for support in such circumstances. Level-headed reason is the first casualty of a media firestorm.
So it’s not hard to see how even a battle-hardened business executive like David Varney could have found himself losing the will to live. Not only was he trying to take 8.5% off the Trust’s running costs, he was doing so while attempting to increase service levels at the same time. Such an approach inevitably carries some short-term risks. Feeling he would get little support from the SHA and facing the additional complication of Andrew Lansley’s NHS reforms, he seems to have filed Barking, Havering and Redbridge NHS trust in his ‘too difficult’ box and quit.
Whatever the reason for David Varney quitting his job so soon, the implications of his sudden departure are worrying. A seasoned corporate executive with a commercial background and proven ability to manage change and take costs out of organisations has thrown in the towel after six months at a debt-ridden NHS trust. He clearly thought that the challenge of turning that trust around, given all the other political crap that was going on, was just too difficult. If it was too difficult for him, what chance does anyone else have?