Managing Primary Risk and the Value Deficit

by Philip Boxer

The UK Government is proposing to remove the superstructure of Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs) and delegate authority to the General Practitioners (GPs) at the edges of the health care system.  How will GPs manage?  How will they be held accountable? And how will they balance what is collectively affordable by the nation with the good of the individual patient?  It will be some time before there will be answers to these questions, but I propose that the issues can be usefully framed in terms of how GPs manage primary risk.

Primary risk and the value deficit
The traditional use of ‘primary task‘ is in terms of the primary task of the organization. For example, the primary task of the PCT is to provide healthcare for its patients.  The funding for the PCT is determined by a formula related to the characteristics of the people within its defined territory.  The healthcare needs of its patients are determined by the GPs caring for those patients.  The primary task is realized through the way the PCT organizes and holds accountable the services it provides to its patients.

In practice, there is always a gap between the services available to treat the patient and the patient’s particular needs – what we shall call a value deficit, the value being the value to the patient of the services provided.  ‘Value’ here is the way the patient values the services provided, which may or may not be expressible in monetary terms. Demand-side value in these terms is therefore to be distinguished from the supply-side value to the service provider of the services provided, which is defined by the difference between their costs and their sales value.

A recent study by McKinsey’s of the costs of chronic healthcare in Germany showed over 80% of costs arose from patients with conditions that were chronic: GPs were having to manage services through the life of the patient’s condition, with the ways in which this through-life management was provided having a significant impact on the through-life costs of the patient’s condition.

The organization’s perspective on primary task therefore becomes insufficient to address the variation at its edges arising from GPs varying through-life management of their patients’ conditions.  The organization also has to find ways of managing primary risk: the risk that for any given patient’s condition, the value deficit will be unacceptably large.

The need for organizations that can support East-West dominance
Those of you familiar with the principles of asymmetric design will recognize the need for East-West dominance in the design of an organization capable of managing primary risk, since the average proscriptions of North-South dominance only hold the doctor accountable for aggregate measures of performance.  East-West dominance becomes necessary if the through-life costs of treating patients’ conditions are to be managed across such variation, as evidenced by the performance of Kaiser Permanante.

So getting rid of the SHAs and PCTs may make sense if they have been judged to be unavoidably North-South dominant.  But we still need to consider how the commissioning processes of GPs are to support East-West dominance. This was something that we began to consider in the Orthotic Pathfinder Projects, and in the platforms needed to support them.

In managing primary risk, doctors are familiar with the need to avoid errors of execution (treatment applied wrongly) and errors of planning (wrong combination of treatments) with respect to their patients’ conditions. But holding doctors accountable within East-West dominant forms of organization also means enabling them to avoid errors of intent (treating wrong condition).[1]

The systematic under-use of treatments found in the Orthotics Pathfinders was not because the doctors didn’t understand what the patients needed.  It was because the North-South dominant systems of accountability under which they worked had perverse incentives built into them that made it impossible to provide through-life treatment of their patients’ conditions, other than at personal cost to themselves.

I guess what is unacceptable at the level of the individual cannot be assumed to be addressed by adopting the same approach at the level of the government of averages. I guess the present UK government assumed this when they abolished the SHAs and PCTs, but they nevertheless appear to have replicated the same difficulty for practice-based commissioning: East-West dominant forms of governance really are different to North-South dominance forms of governance!


[1] For more on the different nature of errors of intent, see ‘Unintentional’ errors and unconscious valencies.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.