1. Creating pseudo markets and incentive structures for public sector innovation: Diabetes education policy in the UK
Paul Windrum
(Manchester Metropolitan University)
Presented at ‘Policy workshop on innovation in the public sector’, Brussels, 2nd December 2005

2. 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

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

4. 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

5. 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)

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

7. 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

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

9. 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)

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

11. 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

12. 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

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

14. 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.

15. 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

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

18. 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

19. 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)

20. 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

21. 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

22. 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!

23. 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