One of the first things to get right in the NHS is the language. Perhaps the use of wrong language is the expression of some fundamental misunderstanding of the way the NHS works.
First thing to understand is that the NHS is not a business. It is a publicly funded and mostly publicly delivered service. So the NHS has to stop using the terms and language of business.
Let us look at the terms profit and loss. Why would the NHS use those terms? The terms to use are surplus and deficit. NHS uses things like trading account, when it actually does not trade in anything. NHS staff including clinical staff in their ‘management’ courses are taught how to write a business plan. Why? Why should people in an organisation that is actually not doing business know or write a business plan? They should be writing a service development or service improvement plan which is totally different from a business plan. The aim of a business plan is to generate a profit. The aim of a service development or service improvement plan is self-explanatory. A primary aim of business is to be profitable – get a return on investment. A secondary aim of a public service healthcare organisation is to stay within budget.
A private company’s money is from its sales, the NHS does not sell anything, NHS money is derived from a budget. Technically when sales generate more money than how much the product or service costs then the private company makes a profit and in theory the profits are unlimited. The NHS money is from an allocated budget, if less money than the allocated budget is spent then a surplus is generated – by definition the surplus is limited, very limited.
When a private company sells less or at a price less than what it takes them to make the product or deliver the service then the company makes a loss. By definition this loss is limited to the capital of the company (for limited companies). When the NHS spends more money than its allocated budget then a deficit (not a loss) happens, this money is spent for keeping the health of the population and hence in theory it is unlimited (as a public funded service the government can print money) though in practice a line will be drawn somewhere when the service is delivered differently, perhaps inadequately.
For a private company the theoretical profits are unlimited and for a public service like the NHS the theoretical surplus is limited. For a private company the losses are limited and for a public service like the NHS the deficit in theory can be unlimited. Some NHS managers many not know or understand this, many do – yet the language of profit and loss are used. Wrong language leads to wrong attitudes and wrong expressions.
Sales for a private company can be very variable from day to day, week to week, month to month, yet to year. Budgets vary too but not that much. In fact budgets are assured though the amount can vary. Every NHS clinical organisation can be assured that they will get some budgeted amount next year, simply because their catchment population’s need remain, irrespective of what the organisation is called, how it is structured or who runs it.
The fundamentals are different between a business and government organisation. The reasons, attitudes are different, the methods are different, the language should be different. Yet the business language is used in the NHS. When a business language is used, business attitudes kick in. When a public service is run like a business yet the funding/accounting principles are different people do not know where to stop. People think by making a surplus they are getting bigger and better, they often do not. People by not calling it a deficit and not call it a loss when they make a loss and yet they do not really go out of ‘business’ or ‘existence’ they do not realise when to stop. The ability to recognise a good or a bad idea gets distorted at the best or lost. That is exactly what has happened to NHS managers – wrong language leading to wrong thinking leading to an inability to recognise good, bad, right, wrong. It is like a hypoxic pilot in free fall.
Let us get the language right. The language influences understanding which impacts on attitudes. Get the language wrong and the path towards disaster is established with the inability to recognise it till it is too late.
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