Feature / A sense of proportion

Treasurers in 1973 were urged to show a ‘sense of proportion’, challenge clinicians and inject realism. Steve Brown reports on a prescient HFMA conference report.

in November 1973, the service stood on the verge of its biggest reorganisation since its inception. It was just months away from the abolition of regional hospital boards and the creation of a new system of regional and area health authorities.

Oh, and, little did they know it at the time, but they also had the added interest of 1974’s hung parliament and coalition government to look forward to.

Fast forward to the present day and it seems that not a lot has changed. Okay, the coalition may be stronger this time around – and today’s challenge may be about releasing unprecedented efficiency savings rather than implementing a reorganisational challenge, but you get the picture.

As health service accountants gathered in London – at the Connaught Rooms, as tradition had it – for their annual conference, the then secretary of state for social services Sir Keith Joseph had some advice that might be considered appropriate today.

He opened his ‘talk’ by reading a letter from a daughter to her parents. It read:

‘Dear Mum and Dad,

As you will see from my address, I have left school and I am in fact sharing this flat with a man called Peter.

He is writing by the same post to tell his wife.

I hope to bring him home to meet you as soon

as he is cured by the specialist who is now treating him.

Ever your loving daughter.

PTO…

…PS Not a word on the other side of this page is true but I think I have failed my A level and I wanted you to have a sense of proportion.’

Sir Keith appealed to his audience to adopt a similar outlook. He said that considering the handicaps with which the health services and its treasurers had been coping during the past 25 years, it was a miracle the NHS had done as well as it had.

Sir Keith suggested that the introduction of functional budgeting implied a more detailed involvement in cost control, which he thought would come in gradually as the new management structure emerged.

However, he acknowledged particular difficulties around controlling ‘on call’ budgets, such as those run by pathology and pharmacy. ‘The treasurer could discuss costs with the pathologist, for example, where departmental costs were high for the output of work.’ he said. ‘Excessive demand’ could also be brought to the attention of the medical advisory committee.

While the management team would be the channel for this kind of financial investigation, the treasurer had a special responsibility.

‘ He might even be accused of encroaching into clinical matters, but he must nevertheless bring facts forward so that the clinicians were aware of the financial situation,’ Sir Keith was reported as saying.

‘Treasurers must carry out reviews of high-cost drugs. And when these costs do not conform to the Department’s policy, they must pass the information to their medical colleagues.’

Sir Keith asserted that ‘doctors would recognise all too clearly that a close control of costs made it easier to finance the developments they wanted to introduce’.

Treasurers were also seen as the right people to ‘inject an element of realism’ into the management team.

‘Proposals often came from professional enthusiasts who tended to put them forward in an ideal form which we could not necessarily afford. Treasurers could perhaps suggest a gradual process of improvement, a phasing of proposals.’

We are told that this was ‘often better than outright rejection’.

The original article (from which extracts are quoted directly) appeared in Hospital Service Finance in February 1974