Creating pseudo markets and incentive structures for public sector innovation: Diabetes education policy in the UK Paul Windrum (Manchester Metropolitan University) e-mail: p.windrum@mmu.ac.uk Presented at ‘Policy workshop on innovation in the public sector’, Brussels, 2nd December 2005

Background: Stylised facts No data to show public sector doesn’t innovate Elements of public sector always were highly innovative – Linear model of university science & technology - Medical breakthroughs 1980s: change in rhetoric in favour of private sector

Stylised facts cont. Upshot for public sector Outsourcing / competitive tendering of basic services Adoption of management practices (New Public Management) Public-private initiatives

Beyond Rhetoric Increasing Executive dominance (Mitchell, 2001) Tools for this: Directives & targets based on national standards set by Executive Shift of power to the centre while transferring responsibility to local practitioners

Problem: No room for radical innovation! Innovative systems are not in equilibrium Lean & means orgs have no incentive or resources for innovation Asymmetric information between Principle (Executive) and Agent (practitioner) Danger of lock-in to suboptimal solutions when there is no innovation and experimentation at local level A new way forward? (Borne out of necessity)

Focus: Factors that stimulate & shape service innovations (lead to new variety) Selection criteria that determine what service innovations will be taken up and diffuse

Driving Factors: Crisis situation Increasing prevalence of chronic illnesses 1.5 million diabetes patients plus 1 million ‘missing’ patients Costs to NHS Fundamental trade-off: cost vs quality of service

Patient-orientated education Underpinning concepts: Consumerisation Patient empowerment But far from clear what patient-orientated education actually is in practice

Solution: Policy innovation New alternative to de jure public and de facto market standards processes. Encourage local experiments at local level Then define standards (enacted as national ‘Directives’ for diabetes education)

Figure 1. Policy Innovation: creating a pseudo market for innovation

Figure 2. Critical incidents in UK diabetes education 1. Growth of chronic diseases and associated costs Environmental factor 2. Rethink of the management of chronic diseases Policy reform Organisational factor 3. Creation of a NSF standard for diabetes 4. Shift of care for diabetes sufferers from primary (hospitals) to secondary (GPs) care 5. Current ‘window of opportunity’ Conceptual and organisational reform Policy outcome 6. Creation of the Community Diabetes Team at Salford PCT 7. MMU funding leading to a joint project with the Community Diabetes Team Figure 2. Critical incidents in UK diabetes education

Service Level Innovation Key = extensive scoping exercise Patients + medical practitioners Review of other diabetes education projects Variety of approaches according to: How concepts of patient empowerment and consumerisation are understood and implemented Deal with the fundamental trade-off between cost and patient quality

Service Level Innovation Objectives: Improve Efficiency Increase Speed Improve Take-up Improve the Learning Experience

Reduce total face-to-face contact time &/or Improve efficiency Increase amount of knowledge imparted to patients in a given time period or Reduce total face-to-face contact time &/or reduce hours/trips of individual staff to impart the same amount of knowledge Increase Speed Shorten the period of time between diagnosis and the learning process &/or Accelerate the learning process Note: shortening the period of time between diagnosis and the learning process does Not necessarily require holding the 1st session earlier.

Improve take-up Increase the total number of referrals that attend the education sessions Increase the percentage of particular types of patients that attend (e.g. males) Improve the learning experience Patients take ownership Opportunities and scope for individualism

Content of programme What is Diabetes (Type 2)? Diet Medication Special issues: e.g. feet, eyes

Findings Innovation definitely exists in the public sector It relates to innovation activity in the private sector but has its own dynamics and its own innovations – which are generated in public sector institutions ‘Objects’ produced in public and private sectors differ, and public sector environment typically contains more stakeholders BUT the basic cognitive and practical inputs are the same – i.e. human learning and creativity

Findings cont. Conceptual innovations cut across policy and service levels: development of new ‘world views’. Structural/organisational innovations (contracting out and beyond) Due to policy learning Due to conceptual perspectives changing (what public sector should do, how and where)

Findings cont. Policy innovation: new ways of setting standards to traditional de jure public and de facto market standards formation Creation of pseudo market for radical innovation BUT ‘closure’ likely to lead to longer-term problem: sub-optimal solution & lock-in Need to maintain variety in the long-term - flexibility: how to meet diversity of local needs amongst highly heterogeneous population

Findings cont. Selection environment for innovations: importance of social responsibility and accountability typically higher than in private sector key stakeholders shape the innovation process: Govt depts., NGOs, NHS practitioners, and patients As important as the character/interests of the individual stakeholders is how they interact with one another, and their power to shape the innovation This determines how the fundamental trade-off between service quality and costs are treated

And finally… Will the standards ultimately work? Need to encourage local innovators (champions) & keep standards process ‘open’! Patient-orientated education underpinned by 2 key concepts Patient empowerment Consumerisation These pull in opposite directions!

And finally… Will the standards ultimately work? Cont. Patient response Patient-orientated education only dealing with part of the picture, i.e. first knowledge then behaviour change Difficulties lie in altering habits and habitus Skills/ competences to enact the new standards / directives on the ground – changes in basic training of nurses & doctors