Cap on Rates for NHS Locums Causes Shortages – Well, Who Would Have Guessed?!

Isn't it annoying when people say "I told you so"? But I'm afraid - we told you so! Last June when the government announced various moves in response to the growing bill for temporary staff in the National Health Service, we explained here  that the high rates were not because of “rip-off agencies” but because staff were using their market power to extract higher fees. We also predicted that if caps were introduced, then supply would go down as some individuals would simply stop doing the work.

The fundamental problem is one of supply and demand, and this proves yet again that you just can’t buck the market. Not enough qualified staff - doctors and nurses - and too much demand in a system where demand is growing because of immigration, life expectancy, higher expectations ... So as we said, if you put a cap on the prices, what will happen?

Well obviously, supply will reduce. At the margin, some doctors will say, "you know what? I would do that extra night shift for £1000, but I won't do it for £900". That is how supply and demand - and human nature - works. Last week the Times reported (behind their paywall) that our predictions are indeed coming to pass.

Doctors are refusing to work locum shifts for the lower rates imposed by ministers, leaving A&E units dangerously short-staffed, Cliff Mann, president of the Royal College of Emergency Medicine, said”.

So, just as we would have expected, many hospital trusts are having to apply for exemptions to the rules in order to maintain patient safety. In some A&E units, half the shifts are not covered properly. The other route that trusts are taking is not one we forecast however. Here is Cliff Mann again.

“He said that some hospitals had resorted to claiming that doctors had worked longer hours as a backdoor way to pay them more. Patient leaders condemned the arrangements as having a “very bad smell”.

So Trusts are apparently falsifying work records so a doctor might do an 8-hour shift, but he or she is paid for 12 hours. So in reality, the hourly rate is 50% more than it appears, in order to disguise the true rate and apparently stay within the capped rate.  For instance, if the maximum billable rate is £50 an hour, then bill for 12 hours at £50 instead of 8 hours at £75, which is the true "market" rate.

Very creative but my goodness, that opens a whole can of worms. This is, not to beat around the bush, fraud. The Trust and the individual (and maybe the agency assuming one is involved) are conspiring to issue and pay false invoices, in order to steal money from the public purse. In the above case, the doctor has stolen £200 from the Trust - with the connivance of Trust staff!

And it is a true conspiracy, which tends to be viewed more severely by the courts than a single individual transgressing. This is almost certainly a criminal offence, and if any procurement people are involved in this, or someone suggests you should be part of it, I would suggest you think very hard about whether you want to be involved. It just needs one disgruntled whistle-blower and you might find yourself in court. (And thrown out of CIPS, incidentally).

As we said last year, there is no magic solution to this issue, and we do understand why the cap was introduced; if nothing else, the political imperative to be seen to be doing something is always strong. In the long term, increasing supply is the most robust response, but it takes years to train medical staff. In the short-term, planning and resource scheduling needs to be world-class in every Trust. And if the cap is going to continue, the system has to be ready for the consequences which are being seen now, such as more A&E departments having to shut temporarily at busy times.

First Voice

  1. Gordon Murray:

    I wonder what l happen if there’s some enquiry into a catastrophe when someone was being paid to be present and accountable yet wasn’t?

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