The use of Performance Measurement as an Accountability Mechanism: a case study in the UK National Health Service

Northcott, D.
Chang, L.-C.
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Working Paper
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AUT Faculty of Business

The UK Labour government has recently developed the NHS Plan, which specifies long-term objectives and strategies for the development of the National Health Service. Along with the NHS Plan has come the development of Service and Financial Frameworks (SaFFs). The aim of SaFFs is to overcome the potential agency problem that exists between government and NHS organizations (Heymann, 1988) by enhancing the accountability of local NHS organizations for delivering the outcomes required by the NHS Plan. This study uses a case study to explore how the SaFF has been applied as a new NHS performance measurement tool and identifies issues affecting the usefulness of the SaFF as an accountability mechanism. The findings illustrate how the introduction of SaFFs has allowed the government to introduce additional non-financial/process performance indicators and tougher performance monitoring processes. This study also identifies issues related to the choice, relevance and informational quality of performance indicators. The findings suggest that, given the shortcomings in the SaFF’s performance measurement contributions, a key early aim of this new accountability mechanism may be to serve central government’s need to deliver a political message to the public. If the SaFF is to develop into an effective accountability mechanism and support the key aims of the NHS Plan, careful selection of performance indicators and adequate information systems will be crucial.

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2003 © - Copyright of the Author(s)