NHS Consultancy Spend – Is It Really A Waste Of Money?

The NHS seems to have been cropping up on our radar for a number of different reasons in the recent days, and one very interesting news story last week brought into question the significant amount of money spent by hospital trusts on management consulting.

Research by academics at Bristol, Seville and Warwick Universities suggests that consulting spend by NHS Trusts is not correlated with better financial performance – indeed, it seems to work in the opposite direction!  As Public Finance reported:

Andrew Sturdy, professor in management at the University of Bristol, said: “Our research has clearly shown that management consultants are not only failing to improve efficiency in the NHS but, in most cases, making the situation worse.”

He added it was possible that “consulting projects are highly disruptive, especially if the demand for them has been generated artificially by sophisticated selling, back stage deal-making and revolving doors between politicians, regulators, healthcare managers and civil servants.”

I’m not sure about the “revolving doors” issue, it seems to me that if this is a genuine issue, it is far more  likely caused by poor management of the whole end-to-end consulting engagement process than it is by “revolving doors” or political machinations. That means failure somewhere between defining and specifying the project, through choosing the supplier and agreeing the right construal mechanisms, to managing the consultants’ delivery, or indeed setting the consultants a task to solve that is basically  intractable.

But this sort of analysis always raises some doubts (correlation versus causation, for instance). And, as Alan Leaman, chief executive of the Management Consultancies Association (MCA) said: “[The report] forgets that many consulting projects stimulate essential programmes of investment and modernisation, increasing some spending in the short-term in order to deliver better outcomes and effectiveness in the medium and longer-term”.

I’ve been a judge for the MCA awards in recent years, so have personally seen consulting projects in the NHS that I have no doubt delivered real value, with hard numbers to back that up. And this report uses data that comes from 2009-13, so it is not up-to-date. But having said all of that, a couple of experts we spoke to were not totally surprised by the findings.

One friend from the consulting side of the table suggests that there are many poor projects delivered in the NHS, and there are Trusts with fundamental issues who have paid for repeated (and expensive) consulting projects that don’t deliver because those underlying problems are not tackled.

Meanwhile, a friend who is a hospital trust Head of Procurement was scathing about some big firms who put in teams of “smart kids”, then produce cost saving recommendations that are the “biggest work of fiction since Harry Potter!”

So, what can the NHS and indeed the consulting industry do to get better value from consultants in the sector? (assuming that stopping using external support completely is not very likely or indeed advisable). We’ll have a think about that and come back to the question next week.

Voices (2)

  1. Sam Unkim:

    Of course NHS H.o.P’s challenge these “works of fiction”.
    Still to hear of any Trust ever getting their money back though

    Consultant Flowchart

    Hold a few meetings, spout some garbage, explore “land-n-expand” opportunities..

    Open report Microsoft Word, Find & Replace name of last Trust with current Trust.

    Kerrching £300,000 invoice & on to next Trust.

  2. PW:

    If you want value out of consultants then they need to be managed and a good brief is required. Projects that often fail are due to the inertia of the contracting business to support with the dependencies of a poor brief in the first place.

    I often see problems thrown over the fence to try and fix without the fundamental ability to drive through the consultancy recommendations.

    Your NHS Head of Procurement should be challenging the works of fiction, however, based on my knowledge of the public sector procurement, then its more than likely down to a poor brief in the first place.

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