Friday, 2 August 2013

Skin in the Game


Skin in the game is a term mainly used in the financial world where it is thought that those persons who are playing the game (e.g. fund managers) should have their own money and reputation involved so that they are as rewarded or as damaged as the people on whose behalf they play the game (i.e. their customers, investors). Philosopher and author Taleb has ignited a debate on the importance of this, he points to a Hammurabic code where if a house were to collapse and kill the owner of the house then the builder will be given the death penalty - now that is some real skin. This blog has already written on how Warren Buffet would not take a fee unless he crossed a certain level of achievement for his investors (; apparently Buffet also has his own money invested along with his investors - he has enough skin in the game.

This got me thinking on what kind of 'skin in the game' we have in the NHS. Of course that is a large one to put out in a short blog. Lets try a limited short version.

In the past when doctors were employed as consultants in the NHS there was a requirement to live within a defined distance of their hospital so that they can respond to urgent and emergency calls when they are on duty and also help their colleagues when necessary even if they were not on duty. In the past consultants had an obligation to let the hospital know if they will be out of the area (even if they were not on call or on annual leave). Doctors were paid some money as relocation expenses to facilitate the same.

This obviously meant that the doctors working in a hospital lived within the catchment area of the hospital. In the event of an urgent need for healthcare for the doctor or for their families, they are highly likely to attend the hospital where they work. The success and failure of the hospital had the potential to directly affect them. In the last decade or so, the obligation to live within the local area seems to have disappeared due to a combination of societal changes of both spouses working and the officialdom seeming to demand that the doctor be available only when rostered to do so. However a large number of permanent senior doctors still live in the catchment area of their local hospitals. By definition there is skin in the game - if your hospital mortality or morbidity or general services were bad you and your family were likely to be affected by it.

The other aspect for consultants in the NHS is many consultants expected to work for many decades in one hospital, they do not expect to move. This has seen a slight change recently but it is substantially true that you would generally not find NHS substantive consultant post holders move very often. They develop, grow skin into the game. There is of course the issue of excess skin in the game where people with too much stake take too much risk, perhaps in the case of NHS consultants it may be a case where due to their superior knowledge of local and national situation they learn to avoid personal risk while all the risks remain for their patients. The doctors have a reputation risk - this is really serious - so serious that a doctor can be struck of for damaging the risk of their profession; at a personal level the reputation is equally serious;  due to peer pressure and long service reputational damage can be devastating.

I am unable to find a historic or current requirement that states that executive directors of NHS hospitals were/are obliged to live in the catchment area of their hospitals. I know of many hospital directors who do not live in the geography covered by their local hospital. This means in reality they have not much skin the game. In contrast to NHS consultants, board directors stay in post only for a fraction of the time that a consultant stays in post - compared to consultant appointments, executive director appointments are practically musical chairs or passing the parcel. Again there is not much skin the game. Of course there is a reputational issue but with performance measurement in the NHS for managers not being so accurate as say for a financial fund manager a large gooey fudge substitutes for reputation.

I don't know how practically applicable the above thoughts are. I have already written about the fact that NHS board director contracts have no reward or punishment for anything other than financial performance (Whose job is it to reduce mortality? Modern life and employment conditions may mean that we may not be able to demand that people live where they work. However we do need to find a way to ensure the skin in the game for NHS managers and directors; increase skin in the game for doctors.

Perhaps a starting point might be to publicly declare if they live within the area of the hospital where they work and how long have they lived within the area (not asking for private addresses, just for HR to declare if they live within the area). Perhaps remuneration and penalties should be linked to quality of performance (when we get around to understanding how we can measure quality meaningfully). We must think of other ways that suit the modern world to increase skin in the game. Healthcare is person to person business, very important for healthcare professionals to remember - no skin means poor game.

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