NHS Agency Spend – How to Address the Agency Staff “Cap”

We are pleased to have a guest post from Jon Miton, Business Development Director of Comensura.

In his recent spending review George Osborne has asked government to ‘take a step back and think about the shape of the state’ and produce proposals outlining how 25% or 40% budget cuts could be achieved.

His approach to the NHS looks to be somewhat more prescriptive if last week’s announcement on agency staff are anything to go by; annual spend limits for some, monthly reporting on agency expenditure and further measures in the Monitor and NHS Trust Development Agency (TDA) pipeline to follow.

A couple of questions though; are the various framework agreements that provide the tools through which NHS Trusts buy agency staff fit for purpose, and how can NHS Trusts control their expenditure better?

To address the first question, just last month, my business Comensura was awarded a place on a framework that enables NHS Trusts to engage with a single provider to manage all agency staff requirements - doctors, other health professionals, nurses, back office administration and so on. This is the first framework I have seen for the NHS that has adopted this approach and is undoubtedly a step in the right direction, albeit that with 60+ suppliers on the list, the onus is still too heavily placed on the Trust to decide on the right sourcing model to adopt. These concerns aside, we welcome the change in direction, and expect other buying organisations to follow suit to accommodate the changing needs of Trusts.

On the second point, we believe that NHS Trusts can control their agency staff expenditure by doing the following:

1.  Get visibility and control: in agency staff areas of shortage and across different job families it is inevitable that NHS Trusts will need a deep list of recruitment suppliers to meet needs, but multi-supplier lists are difficult to manage without a centralised management mechanism. To get visibility and control, Trusts either need to create an internal function to manage suppliers, or appoint a managed service provider (MSP) to perform this this essential function on behalf of an NHS Trust. We also believe that there should be a clear distinction in roles to avoid conflicts of interest; the MSP is there to manage recruitment suppliers, not provide temporary staff themselves. This approach is widely embraced across local government and the private sector.

2.  Get big data, use big data: Whichever approach to getting visibility and control is used, it must be able to provide management information at the touch of a button. This not only provides the monthly reporting figures but also the real-time opportunity for the NHS Trust to interrogate buying behaviour and usage patterns. Whilst all NHS Trusts will know what they spend at a high macro level, having micro level spend data down to hiring manager, length of assignment, reason for hire and trend data can stimulate real change in buying activity.

3.  Stop fixating on margin: Margin reduction can deliver 20% savings but is less likely where demand for agency staff outstrips supply. In our experience, a focus on removing expenditure altogether through demand management and workforce planning can deliver upwards of 60% savings. This is where NHS Trusts should focus in order to meet Osborne’s challenge. To achieve this, it has to be a partnership with shared responsibility. Margin efficiency should be addressed at the outset and open and honest discussions must take place in order to find innovative ways of delivering further savings through demand. This approach can been very successful in reducing overall usage, in some cases by up to 60% without compromising service delivery.

Now a 60% reduction in demand for agency nurses would be a big ask, but there is evidence to suggest that practical inroads can be made through management mechanisms like those described here. They will at least go a long way towards helping Trusts spend within their annual caps.

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Voices (2)

  1. Pete Whitehouse:

    I agree with the article that it will deliver some initial benefit having worked with a private healthcare organisation. However, I would also challenge that putting a vendor neutral model in place is just a sticky plaster solution and not addressing the underlying problem. Why is the NHS using temps in the first place? From my review there is a fundamental problem with permanent recruitment in the sector. Time to hire, from
    my experience, was well over 50 days (with best practice being nearer to 20) due to the shortage in staff and the types of roles required. Unless this is fixed then you are not going to challenge the demand problem and you are just scratching the surface. Also, a vendor neutral is not interested in demand challenge so contracts need to be incentivised in such a way to do so.

    Finally, there has been no reference to bank staff or ward scheduling here which also has an impact. Most hospitals are poor at scheduling and planning their shifts, therefore a reactive action is to jump to an agency when resource is not present. A scheduling tool alignied to the most appropriate resource perm first, then bank staff then as a last resort temps should be in place.

    I would propose a scheduling tool that is built into a RPO (perm recruitment outsource) / MSP (temp labour managed service) solution as the optimal solution as the 3 go hand in hand and incentives can be aligned.

    1. Jon Milton:

      I’ve suggested an MSP model and not been prescriptive on which model as vendor neutral models vary a lot in terms of how they deliver, as do master vendors, as do RPO’s.

      The point is that you need to get visibility and control through a management mechanism to get you from a to b, and once you’ve got to b and put your house in order you can start to think about how to get to c which is where demand challenge and workforce planning comes into place.

      Your point re a vendor neutral MSP not being interested in demand challenge is incorrect as far as my business is concerned and maybe a reflection of the vendor neutral model that you worked with in private care – as I mentioned vendor neutral MSPs vary substantially, not least in terms of contract management approach.

      We provide a range of transactional demand management controls as well as more contract management led demand/workforce initiatives where we work closely with the customer, and this approach has yielded (in government and private sector) reduced usage of agency staff of 60% of total expenditure, albeit that the customer has worked closely with us in partnership and has been prepared to mandate and resource appropriately (ie its a joint effort that can yield big results). Some of this has been from strategically transferring spend to permanent positions, but the bulk has come through challenging behaviour.

      You are right, perm recruitment, shift allocations, and usage of bank staff all require further scrutiny, although I’d suggest each area needs to go from a to b first rather than trying to go big bang and cover all. I don’t think there are any simple answers though and each Trust will be different and need to understand their own circumstances before making a decision on which course of action to take.

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