Data Envelopment and Free Disposable - Sample Essay

The concept of performance measurement has become increasingly popular and a ‘central feature of public management reform in many countries’ (Boukaert and Pollitt, 2004, pp.90). As the public have become more affluent in their tastes with time, and begin demanding a higher level of standards from public services, the use of PM (performance measurement) is now more crucial to ensure citizens are satisfied and able to depend upon efficient and effective services offered by the state. This is reflected by Pidd (2005) in his definition of New Public Management as a management culture that emphasises the centrality and accountability of the citizen.

The significance of PM has been bought to light, and to explore PM, the UK’s public management of the healthcare and education services will be described, with mention to the public management in these services of other OECD countries for an international context. The UK is being focused upon because out of all the OECD countries, it has the most performance measured public sector. The healthcare and education services are focused upon because they have been measured for their performance the earliest out of all public services; since the late 19th century.

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They have continued to be prioritised when the Labour party were elected to Government, who focused upon these two domestic needs through increased expenditures in their new PM activities (Boukaert and Pollitt, 2004, pp.293). This demonstrates that they are the two major welfare state services needed by the citizens where PM would be required the most. Therefore, the assignment is interested in whether, throughout this period; an effective and efficient way to manage performance in the UK’s public sector has been identified.

The assignment is structured under several headings, beginning by explaining why performance is measured in the public sector. The healthcare and education services will be described, respectively; in how and by whom their performance is measured, allowing the assignment to conclude with the measures that appear to work best in managing performance. The assignment now moves on to detail the purpose of performance management.

Performance Measurement PM is extremely useful, because if an organisation does not measure its performance, it will only understand its impact in society to a small degree (Bovaird and Loeffler, 2003). Since PM has become more central to public management, Boukaert (1996, pp.234) has acknowledged three ways that PM has transformed; it has become more extensive with new fields and levels being measured; more intensive by the monitoring and controlling over further management functions; and more external through the multiplicity of users. These will be discussed further in the next two sections of the assignment.

Bird (2003) has three reasons why performance is measured in public services. Firstly, it establishes which policies work well and which do not in the delivery of the service. This allows management to monitor and evaluate policies against standards and furthermore, allows the government to enhance policy making and public sector management in the future (Pidd, 2005, pp.133).

Secondly, it identifies functional competencies and establishes who the best performers are, which the worst performers would then benchmark against. This is an important aspect because the bad performers can then work towards reaching the level of performance of those who are better at managing public services to reach an overall efficient and effective public sector. Finally, it supports public accountability by demonstrating that the public services provided reflect value for the taxes that are paid by citizens. Politicians have to demonstrate that the services are provided for correctly as well; otherwise the consequences would be that citizens would lack trust of the public sector, an issue which already exists. This basis is especially important because, as it was made known before, the citizen is central to New Public Management (Pidd, 2005).

The PM data has a number of users; the general public, media, central government, national and local politicians, and all managers in the public sector (Audit Commission, 2000). Users want to see who the good and bad performers are when this data is published. For example, the public can choose which services to they wish to use, which is especially important in an era where people like having options to select from. The government will be able to monitor the national levels of performance to set standards, which local politicians can use towards making strategic objectives to help maintain local public service standards.

The purpose of PM has been established, and it is evident that there are good intentions behind the process, which is why performance auditing has already been fully established in Finland, Netherlands, Sweden, Canada, the UK and the US (Boukaert and Pollitt, 2004). However, it has not been completely applied in France, Germany and Italy, maybe because it is hard to find the best ways to measure performance (Audit Commission, 2000). The assignment now moves onto describing the methods the UK government has chosen to measure performance in the healthcare and education services.

Healthcare A high level of performance is especially important in healthcare services as it is a vital commodity for the public, but because it is so complex, performance criteria is more subjective making it very difficult to construct measures of performance (Moullin, 2004, pp.110; Propper and Wilson, 2003, pp.264). Awareness of the need for healthcare has also enlarged in the US, where it has been increasingly measured for performance over the past decade to improve the quality of service (Handler et al, 2001, pp.1235).

The Labour government, from 1997, put PM at the forefront of the British National Health Service (NHS), and in 2000, it set 300 detailed targets to be met for the next ten years (Smith, 2002). The key targets can be found in appendix A. Tony Blair issued a healthcare spending budget to match the average level spent in the European Union, which meant there was a huge increase in the NHS budget. This demonstrates how healthcare is also prioritised in other European countries. The increase in PM in healthcare was also triggered by the Harold Shipman case that uncovered malpractice by one doctor that had been ongoing for many years, seeing the death of many service users treated by him.

So what performance measures are now being used? The two main ways PM is conducted are by the UK Star Rating System and the Performance Assessment Framework. The UK Star Rating System is carried out by the National Performance Assessment System who categorise the management of hospitals into four groups where an award of 0, 1, 2 or 3 stars are given. The assessment is against the key targets found in appendix A and those who are awarded the most stars, indicating the best performance, gain their incentives. Rewards in healthcare include earned autonomy, new doctors’ contracts and more funding, which improve performance from wanting and even needing the incentives offered (Carvel, 2002).

However, the downside of this is that those performing poorly will not receive any funding but financial penalties, demoralising the workers at that hospital. It has been known that executives of hospitals have corrupted the data of their performance to avoid such penalties so the UK Star Rating System is not the most reliable form of PM (Moullin, 2004). How can this data be reliable if it has been known to be distorted? It is also argued that current PM methods do not relate to the overall purpose of the service:

In the ambulance service, units have an eight minute response time target for serious incidents…the target gives ambulance crews no choice but to dump patients in accident and emergency departments (Caulkin, 2004). This clearly demonstrates that to meet PM targets, patients are not always going to be satisfied and subsequently, performance is not truly being measured. On the other hand, there would be pressure to improve and meet targets if data is going to be published, which should improve overall performance anyway. Publications are ones such as the NHS P1 booklets which are used for informing legislatures, taxpayers and service users – representing how PM has become more external.

The other PM is by the PAF (Performance Assessment Framework) included in the NHS plan. The PAF assesses performance against sixty high level performance indicators grouped into six categories, which can be found in appendix B. These measures are more balanced and show how NHS performs with more depth as they have a closer match with policy priorities (Smith, 2002). For example, measures of patients treated and discharged from hospital is taken a step further, to measure how many are treated and discharged who are capable of living independently; this also shows that PM has become more intensive. However, Smith (2002) also argues that the indicators may have been chosen on the basis of administrative convenience. PAF does though focus on improvement, because the PM against all the indicators emphasises the need to find out why performance falls below the average to continuously develop.

Although only two forms of PM have been described, there are many more PM methods such as Data Envelopment and Free Disposable Hull (Bovaird and Loeffler, 2003). Even now, Moullin (2004) reveals that the number of performance measures is increasing. This is what is happening in the US, where several different national assessments have been published and more extensive assessments of public health are currently under development (Handler et al, 2001). Overall, the PM in the UK healthcare sector may be complex and difficult, but it is clear that it is trying to achieve the aim of improving the value of service for users.

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