NHS vs HMV: face the music on failure

21 Jan 13
Paul Corrigan

Calling in the administrators is always a sure sign of business failure, whether it's the NHS or HMV. So why not make that plain?

Over the last few months I have been bemused at how NHS politics has tried to grapple with the report of an administrator sent in to deal with the failure of South London Healthcare NHS Trust. It seems to me that the government has positioned the role of the administrator entirely incorrectly.

This was brought into sharp relief by last Tuesday’s announcement that an administrator had been sent in to deal with the failure of the HMV music chain. Look at the press and media comment on the role of this administrator.

BBC4's Today programme seemed genuinely sad for the thousands of people who were going to lose their jobs. There was much historical comment about the bad decisions made by HMV in relation to the internet - both as a method of recording and selling music. People felt sad that a once great organisation had, through making a number of strategic errors, failed.

The business pages went further. They said that there were important lessons here for other big firms. Don’t be complacent. Recognise that if you don’t keep up you have no God-given right to be the supplier from whom people will buy music. Make sure that you scan the horizon every day for new ideas that can provide more and more value to your customers.

It all adds up to sadness at the loss of a brand. Sadness at the loss of all those livelihoods. Sadness that a big institution could somehow not keep up. Even sadness for the children who were given HMV vouchers at Xmas that are now worthless. That’s what failure is.

And what might the administrators do? Well they might find some buyers for some stores. They might find some buyers for some parts of the sales business. They might be able, by breaking up the whole enterprise, to keep some jobs. It will take inventiveness and imagination. But the administrator’s job is, given the fact that HMV has failed, to retrieve value from the break up.

That’s what administrators do. No-one believes that in a few weeks time HMV will be back again - doing what it did before.   Compare this to our understanding of what the administrator has achieved in South London Health Care.

Here, throughout the national and local media, it is the administrator that is in some way seen as the cause of the problem for the Trust. It’s as if things were fine before he came in with his report. Now he wants to bring about all these changes because – well because he is that sort of person. And what everyone has to do now is find some way to stop him from doing what he wants to do.

No one seems to notice that he was sent in because the Trust was failing. It could only pay the wages of the staff by taking £1.3 million a week from other patients in the London NHS. The failure of the trust was already based upon several years of twisting and turning to try and stop that real experience of failure being visible.

Therefore when someone is sent in post-failure to sort it out - as administrators everywhere else do - he is not seen as performing the role of an administrator but as yet another chance to keep a failed trust going.

So what is actually a post-failure intervention has once more been transformed by inadequate explanation and portrayed to the public as being a pre-failure intervention.

What the HMV administrator has to do is search around for other organisations that can ensure that value is obtained from the remnants of a failed organisation.

The same is true of an NHS trust administrator. It is because the administrator is an inventive man that parts of the trust can be taken over and can deliver safer sustainable services. Therefore despite failure, and providing other organisations will come in and help by taking over, some important services can be saved.

But the trust, like HMV, has failed.

Paul Corrigan was formerly senior health policy adviser to Tony Blair when he was prime minister. This post first appeared on Health Matters

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