COMMUNITY HEALTH STUDIES VOLUME V, NUMBER 3, 1981

COMMENTARY THE ART OF THE POSSIBLE John Cooper South Austrolian Health Commission, Pirie Street, Adelaide, 5000.

The theme of this ‘commentary’ will be l i m i t a t i o n s on pol icy a n d p l ann ing . Recognition of limitations has now been the angst of the times for ten or fifteen years, as the titles of popularly influential writing, say ‘Limits to Growth’ or ‘Small is Beautiful’ and even ‘Limits t o Medicine’, i l lust ra te . However, the books I shall draw upon for this review article emphasise, by and large, limitations of a different character from the apocalyptic ‘Limits to Growth’ school or the utopian obverse of the same coin. The limitations described by the writers I have chosen arise not from inexorable outside forces, but from our own choices, or inability to choose, and from the complexity of our own social artifacts.

“The fault dear Brutus lies not in our stars but in ourselves”.

Economic Limitations: Health Care Priorities and Management‘

describes and comments upon organisation and management of the British National H e a l t h S e r v i c e s ince t h e 1974 re- organisation. Three of the authors undertook research for the Royal Commission and they are able to present FL very useful description and analysis of the current British scene. Economic limitations on health services, and the consequent need for rationing are their principal concern, as is the case in much recent English work. While making obeisance to the alleged infinity of demand for medical services and consequent inevitability of rationing, the authors go on to describe the macro-economic trade-offs and government mechanisms which lead to the actual allocation of monies for the NHS.

Since the British spend about 2 per cent less of G.D.P. on health services than most comparable countries (about $4,000 million annually), a pervasive concern with rationing is not surprising. The question of rationing in Britain arises immediately, not out of t h e o r e t i c a l l y i n s a t i a b l e d e m a n d s approaching ultimate economic constraints but out of the fact that funding entirely from

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general revenue makes unambiguous and direct t he t rade-offs between hea l th expenditure and other forms of public or private expenditure. In these circumstances, which mixed public/private systems do not allow so easily, the British are able to make a choice about how much to spend on health services and they choose to spend less than those who lack the opportunity for such direct choice.

The authors see the NHS planning cycle as the vehicle for rationing provision of medical services, given that rationing by price or geographic barriers to access are in Britain considered unacceptable. The NHS planning cycle is a vast machinery orchestrated around three levels of planning. At the national level is the Department of Health and Social Security (DHSS) ‘Priorities Document’ which sets out standards and guidelines. Within national guidelines broad strategic plans are prepared a t the regional level on a 10-15 year time horizon. At the district level operational plans for specific changes in services are prepared on a three-year time horizon in the context of the regional strategic plan. This planning structure is seen a s having the potential to make choice between different kinds of health service expenditure a s direct and explicit as the NHS makes choice between health expenditure and other forms of expenditure. In the ultimate it might even allow the marginal cost-benefit analysis of which economists are enamoured.

Political Limitations: The potential of the planning cycle is one

thing. The practice, a s reported by Bevans et al, is different. They observe that in practice plans have been confined to the use of ‘growth money’, while existing activities are routinely funded on the basis of “s tandst i l l” . Significant re-deployment of exis t ing resources had, at the time this book was written, proved “too hard”, in Australian vernacular.

The difficulty in re-deployment of existing resources is illustrated by an apocryphal

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quotation from a senior British Civil Servant, no doubt a 'Greats' man, on Programme Analysis and Review (PAR), which was introduced by the Heath government in 1970 to systematically and critically appraise existing government expenditure.

"Socrates was the first person to do a PAR. He went around Athens asking fundamental questions. Socrates was put to death. I do not want to do another PAR".

The quotation nicely illustrates the main theme of The Zero-Sum Society by Lester Thurow, the title of which has become a catch-phrasez. Interestingly it is not uncommonly taken to refer to the nature of the political process within a low growth or recession economy and to illustrate the view that economic constraints will force hard decisions. In fact Thurow's argument is opposite, that a low growth economy is the consequence of a political process which is incapable of making ha rd decisions. Pluralistic democracy, particularly the American version in Thurow's view, gives all potential losers a power of veto. Since there are always losers, the shifts in resources necessary to economic growth are prevented.

Power of veto is suggested by Bevans et a1 to be one of the main causes why the British planning s t ruc tu re had not achieved significant re-deployment of resources within the NHS. Within Federal and pluralistic systems, with many independent or quasi independent bodies, the power of veto is overt. Within the apparently monolithic, centrally directed, NHS it is less obvious to an outside observer. However, by the system of consensus management and an elaborate consultative structure, the British seem to have succeeded in internalising all of the constraints which characterise pluralistic systems, without the flexibility to "see a gap and dart through it" which pluralistic systems offer.

Economic limitations, then, turn out to be l a r g e l y p o l i t i c a l l i m i t a t i o n s , t h e consequences of social choice.

Aaron Wildavsky's The Art and Croft of Policy Analysis comprises an extended reflection on American experience in social policy over the past twenty years, embracing the Great Society phase with the subsequent managerialist phase of PPBS, ZBB and all that. The book is much concerned with

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limitations upon policy and policy analysis. In one chapter limitations imposed by

crowding of 'policy space' are discussed. Since the second world war the scope of public policy interventions, and the size of public expenditures relative to the economy as a whole, have increased to the point where there are, as it were, no virgin fields remaining. Consequently policy analysis is i n c r e a s i n g l y c o n c e r n e d , n o t w i t h fundamental social problems, but with unintended effects of existing policies and unexpected interactions between policies. Since every policy generates i ts own constituency, new policies tend always to be additions to, rather than substitutions for, existing policies. Thus crowding inexorably increases and problems of interaction between policies become ubiquitous. A classic example of this phenomenon can be seen among services for the aged in Australia.

Thurow describes a similar problem. While the beneficiaries of a policy or service may be relatively few, their interest in it is usually substantial and immediate. Although the sum of benefits from abolition or replacement may be far greater than losses, benefits to individual members of the wider community are most often marginal and removed. So "intensity overwhelms numbers".

Thurow sees the forces of inertia a s overcome only by manifest crisis. In response to some clearly intolerable situation, the general public can be mobilised and the political log-jam broken. He uses the example of the need to abandon school recesses in Los Angeles because the air was dangerous. Then the system changes, new interest groups form and a number of related problems can be addressed in the fluid situation created by the original crisis. It is not impossible the most recent changes in hospital funding may precipitate such a crisis in Australia.

Limitations of Rationality: The main theme of Wildavsky's text is

limitations on rationality. He particulnrly attacks rational planning. Wildavsky argues that the planning ideals of co-ordination, consistency and comprehensiveness are inherently unachievable because we can never have sufficient knowledge: if we had knowledge the mind is not capable of encompassing in ra t ional models the complexity of reality: even had we both the

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knowledge and the understanding, society does not permit any one the power.

Wildavsky opposes to “rational planning” interactive approaches to policy making. So, rather than mandating a desirable outcome, he argues for seeking to structure social relations and incentives in a way which will promote such an outcome. Before it became fashionable among conservatives, this used to be called social engineering. After experience of the various versions of health insurance, the interactive approach to policy seems open to much the same objections as rational approaches. It makes unrealistic demands on our ability to foresee how people will, in fact, behave in response to various a r r a n g e m e n t s , a n d to foresee w h a t interactions will emerge between new incentives and old incentives.

Wildavsky applies the same argument with particular force to exaggerated expectations of PPBS, a topic of particular interest to South Australians.

“Program budgeting has not succeeded anywhere in the world it has been tried. The reason for this failure can be deduced backward. What would it be like if it worked? Program budgeting is like the simultaneous equation in the sky. If every major program were connected to every other with full knowledge of their consequences, then all social problems would be solved simultaneously. Program budgeting fails because its cognitive requirements --‘relating causes to consequences in all important areas of policy - are beyond i n d i v i d u a l o r col lect ive h u m a n capacity. . . . PPBS is a fancy way of restating difficulties . . .”

Zero Base Budgetting, still. only being talked about in Australia, is given equally short shift.

“There is no yesterday. Nothing is taken for granted. Everything at every period is subject to scrutiny. As a result calculations become unmanageable. At last report the State of Georgia - in which zero base budgetting became most famous -was trying to budget by somehow surveying some 10,000 e l e m e n t s . C o n f l i c t m i g h t b e catastrophic if state governments did not in fact end up doing business very much as it was done before”.

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Experience in South Australia with PPBS lends some support to Wildavsky’s critique. First, PPB requires considerable over- s impl i f i ca t ion a n d d i s t o r t i o n of t h e complexity of reality. For example, services must be classified according to common objectives. This is logically impossible except at the most general level, since services are not organised and cannot be organised sensibly on the basis of common objectives. Most services have many diverse objectives, but are organised around common resource requirements and skills. What distinguishes surgery from medicine is not the problem being addressed, but the skills deployed. A second problem is the simple one that afflicts annual reports. Having comprehensively described as far as possible everything the government is doing, one has a document no one in their right mind can bring themselves to read. Our own brief but direct experience confirms that State governments do, in fact, end up doing business very much as it was done before.

Hidden Agendas: Wildavsky suggests that the attractiveness

of rational methods and systems derives from latent motives. So he argues the original success of PERT* in the Polaris program was essentially as a bureaucratic tactic to give the project’s management freedom of manoeuvre. PERT was used to demonstrate the ‘gee whiz’ competence of Polaris project management, so winning exceptional licence from the funding agencies.

In a chapter discussing “The strategic retreat on objectives”, as agencies discover goals set in the sixties and early seventies c a n n o t be accompl i shed , W i l d a v s k y describes other tactics which strike a chord close to home. One is to decentralise. If your goal is not achievable, thenmake it somebody else’s responsibiiity. This tactic is sometimes known as the new Federalism.

Another tactic is interestingly cited as an example of goal displacement. Agencies step back from seeking results in relation to ultimate goals which require changes they cannot achieve in the outside world,

Programme Evaluation Review Technique or alternatively Critical Path Method - a computer assisted technique for scheduling tasks with complex interdependencies.

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particularly changes in personal or social behaviour. Instead agencies seek to equalise distribution of their own efforts and of the resources they control. We cannot be confident what we do does any good, but we try to spread it out fairly. This may have some bearing on current interest in funding formulae.

Funding formulae have had a recent vogue in Britain and the discussion of the Resource Allocation Working Party formula is one of the most interesting chapters of the commentary by Bevans et a1 on the NHS. The RAWP formula is designed to estimate a geographically equitable distribution of health service operating funds, in relation to age and sex standardised population and including a surrogate measure of need. A variant of the formula has been adopted by New South Wales, was recommended by the Jamison Report and incorporated in the recommendations of the State Grants Commission.

The authors are critical of the technical crudity of aspects of the formula, in particular the use of Standardised Mortality Ratios to adjust for differing “need’. Putting aside the question of whether SMR’s represent a reasonable surrogate for general health status, the manner in which SMRs are used within the formula is heroic. It is assumed there is a linear relationship between SMR and legitimate use of medical services, SMR’s being used directly to weight Dooulation. So if an area has an SMR of 1.2 it is assumed that funding 20 per cent greater than the mean is required. Such an assump- tion begs a series of questions about the relationship between SMRs and use of services, scope for effective intervention by personal health services and relative use of high cost services. Furthermore, the value of an SMR is influenced by extreme variations from typical age structures, so leading to double counting for age, and is argued by Bevans et a1 to be relatively unstable over time, making for artificial instability in funding. formula have been on the London teaching hospitals. This, the authors argue, derives in large degree from the failure of the formula to take any account of costs due to provision of exotic services, research or “state of the art” treatments. While this partly derives from technical problems, aspects of the formula as

employed in Britain suggest deliberate refusal to make allowance for any ‘special’ role of the teaching hospitals beyond undergraduate medical education.

Yet, despite the shortcomings of the RAWP formula, it has been widely copied and is in some ways successful. Funds have in fact been transferred from one place to another, which the NHS had signally failed to achieve in its first twenty five years although regional inequality of health funding in the UK is gross and well documented. RAWP has also been conspicuously successful in changing the fundamental premise of negotiation away from historical patterns of expenditure.

In terms of latent motives, formula funding is attractive in several ways. First, as Wildavsky suggests, formula funding gets the central agency off the hook. By making simple and explicit the relationship between overall funding for health and funding for particular areas or services, heat is transferred in one direction back to government and in the opposite direction to local management. This is particularly useful in times of reduced funding.

Second, that the particular form of the RAWP formula places exceptional pressure on the London teaching hospi ta ls i s consistent .with obvious pragmatism. If you want to find money, it is logical to use a method which squeezes the places where there is most monev.

This

T h i r d , “common s t r a t e g i e s i n negotiation are to employ an agent to negotiate, to make threats and then make communication difficult o r impossible. The policies of the DHSS in respect t o undergraduate teaching hospitals, since 1974, are open to being seen as the implementation of such a s t ra tegy. Direct negotiation w a s replaced by using RHA’s as agents+, and the threats made by using revenue targets which are significantly below the current expenditure of most teaching areas.” strategy, implicit in RAWP, mav be

compared with the-planning and consulthive process which, by contrast, opens channels of

Before 1874 teaching hospitals enjoyed independent Boards of Governors which dealt directly with the DHSS. After 1974 teaching hospitals were subordinated to Regional Health Authorities.

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communication, making available avenues for the exercise of veto by those adversely effected. Despite its crudity RAWP has had some success in redeployment of resources where the planning cycle has yet had little.

Conclusion: . What then, in the light of all these gloomy

reflections, is the place or purpose of planning and policy analysis?

In general what Wildavsky advocates as “policy analysis” falls squarely in the tradition of Lindblom and Simon.4 The art of policy analysis lies in defining problems which are capable of solution. Progress is measured by contemporary problems being preferable to past problems. Organisations do not, and cannot, purposefully pursue general objectives. Organisations adapt incrementally to specific problems, in order to satisfice on behalf of diverse interests.

This is not necessarily inconsistent with planning, particularly incremental ’ and adaptive planning, although Wildavsky seeks to make it so. For myself, I cannot entirely abandon the notion that co-ordination, consistency and direction are desirable but they are to be achieved by artful response and selective intervention. Successful planning is more like sailing a yacht than driving a car. It is helpful to have a chart and a knowledge of prevailing winds, in order to point and tack towards the general direction in which one would like to go. Nevertheless the main object is to stay afloat, and if a squall blows up it may be best to go somewhere different.

Wildavsky writes also of the craft of policy analysis, which is to say that technical competence is generally helpful. To a significant extent the ambitious British systems fall down on technical shortcomings in implementation. This is exemplified in the discussion by Bevans et a t of the content of plans prepared by regional and district authorities, which they observe typically fail to take account, in the most elementary way, of uncertainty. The problem of uncertainty has been central to the literature of planning

for thirty years, and there are a variety of more or less elaborate methods to take account of it. It is surely a serious mistake to erect ambitious systems, without first having developed basic competence in the techniques among those who use the system.

Systems may or may not in the end prove helpful to planning and policy-making. Systems are not fundamental to the purpose of planning and policy analysis, nor indeed is whether plans are adopted. The fundamental purpose is to promote conscious choice within all the limitations inherent in being merely men, so that decisions may be realistic, deliberate and informed.

The first step is to delineate what, in operations research, is called a “feasible space” within which realistic choices can be made. We need to map the real world, in order to make clear what a colleague of mine calls “The law of the situation”.

The next aim is to make choice and, as far as possible, the consequences of choice explicit. It seems to me that making choice explicit, so what is done is done knowingly, is good for its own sake. It is also possible that clarity of choice may lead to different choices, as in funding for health in the U.K. Referring back to Lester Thurow’s argument, it may also be a little more difficult for special interests to prevail when the trade-offs are unambiguous. S o al though PPB, for example, may ult imately make logically impossible demands, if you can get even part of the way choices may be clarified and a framework provided within which choice is possible.

Whether or not different choices are better choices is nearly always a matter of values. Making choice explicit tends to expose values which is also a good thing. That is one of my values.

Wildavsky expresses a similar view in his frequently repeated maxim, that, “the task of policy analysis, therefore, is the weighty and ancient one Q f speaking truth to power”. The maxim is nowhere ascribed to its traditional source. Traditionally it is the court jester who speaks truth to power.

References 1. Bevan G, Copeman M, Perrin I and Rosser Organisations (Wiley, New York, 1958);

R. Health Care Priorities and Management Hirschmann, A 0 and Lindblom, CE. (Croom Helm, London, 1980). Economic Development, Research and

2. Thurow LC. The Zero-Sum Society (Basic Development, Policy Making: Some Books, New York, 1980). Converging Views. Behavioural Science,

3. Wildavsky A. The Art and Craft of Policy Vo1.7, 1962; Lindblom, CE. The Science of Analysis (Macmillan, London, 1980). Muddling Through. Public Admin.

4. See for example March, JC and Simon HA. Review, Vo1.19, pp. 79-88.

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