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Trusts to slash spending on management consultants

Pulse - 19th January 2010 5:04 pm

NHS managers have been told to slash their spending on external consultants by up to half, leaving a raft of contracts with private firms set to be axed or scaled back.

A briefing document sent out to trusts by the NHS Confederation reveals the scale of the cuts could save the average PCT £600,000 a year.

The document, which advises trusts how to achieve the requirements of the government’s operating framework for the NHS for 2010/11, says that all NHS organisations will be expected to ‘rigorously consider how to reduce their back office costs’, and states the DH is directing trusts to ‘aim to cut spending on consultancy by 50%, communications by 25% and IT project costs by 10%’.

Both Labour and the Conservatives have set out plans for huge cutbacks in PCT back office costs.

In October, the Conservatives promised to cut total spending on administration by PCTs, strategic health authorities and dozens of NHS quangos by one third and the government has promised to cut NHS management spend by 30%.

But the document shows the cutbacks will punch huge holes in the profits of the raft of private firms that have reaped massive rewards from lucractive NHS contracts.

Doctors fear private sector’s role in the NHS

By Mike Broad - 23rd December 2009 10:20 am

Eight out of ten doctors are concerned about private companies profiting from the NHS, a poll shows.

Doctors were asked whether they agreed with the BMA’s concerns that large multinational companies are making profits out of running local clinical services on behalf of the NHS.

Eighty percent of the 697 respondents said they either strongly agreed (51%) or agreed (29%) with the statement. Just 7% either disagreed (4%) or strongly disagreed (3%).

One respondent, a consultant urologist, said: “The NHS no longer exists. There are a number of health services in England, Wales, Northern Ireland and Scotland, all different, no longer national in a UK sense. We are at a time when foundation trusts have become businesses, motivated by profit and loss.”

A BMA report, listing the amounts of public money being wasted as a result of market-driven reforms, estimates that £1.54bn might have been overpaid to Independent Sector Treatment Centres in England. It suggests the NHS in England spent around £350m on management consultants in the last financial year.

Dr Hamish Meldrum, chairman of BMA council, said: “This is more evidence of the medical profession’s concerns about commercial values being imposed on the NHS. There are countless examples of taxpayers’ money being wasted because of the drive for services to be provided by profit-making companies rather than traditional NHS providers.

“When politicians talk about cutting waste they should consider the fact that the bureaucratic costs of a market are hitting the taxpayer hard. We’d like to see the NHS in England restored to a publicly provided, publicly funded service, driven by the needs of patients, not shareholders.”

Management consultant spend to be monitored

By Mike Broad - 31st October 2009 9:48 pm

The government is to start centrally monitoring the NHS’s expenditure on management consultants from next year.

Earlier this year, the health select committee strongly criticised the government for having little idea of how much the NHS spends on management consultants.

It’s estimated that that management consultants are charging up to £1,000 a day for advice and cost the NHS as much as £600 million in 2005/06.

The government last week conceded that it should collate overall expenditure on management consultancy but warned: “at present, the level of reporting is neither consistent nor complete across organisations. It is therefore the Department of Health’s intention to issue guidance to NHS organisations as part of the financial reporting manual for 2009/10 to bring consistency to this reporting.”

The government will not, however, monitor the day rates that management consultants charge as requested. “It is preferred practice to negotiate costs for a whole piece of work rather than agreeing individual day rates. This process provides protection from the financial risks being exposed if day rate based contracting is used. This makes provision of day rates impossible to provide,” it explained.

The health select committee also recommended that a sample of contracts with management consultants be subject to external peer review. This should include an assessment of the value of consultants’ output.

The government said responsibility for assessing value should rest with trusts and they should draw on the expertise of their non-executive board members.

“Nevertheless, as part the government’s ongoing drive to improve the transparency of NHS expenditure, it will examine steps organisation should be taking to understand the value that is being achieved through the expenditure on management consultancy,” it said.

A BMA spokesperson commented: “It’s good that we’re going to get a clearer idea of the sums being spent on management consultants. Recent estimates indicate that it’s £350 million a year by trusts in England, and around £150million by the DoH. That’s a huge amount of money to be spending on outside opinions at a time when front-line services are being targeted for funding cuts.

“This may be money well spent if it is delivering genuine improvements to the way hospitals operate, but as most doctors will tell you, some of the best ideas are coming from within the NHS, not from the private sector.”

Alan Leaman, chief executive of the Management Consultancies Association, commented: “Management consultants are providing a wide variety of benefits to the NHS, helping to improve patient care and reduce costs for the taxpayer.

“Besides some strategic and practical advice, this is most often about helping to find good solutions to problems and then getting them implemented. We support moves to greater transparency.”

Read a blog on management consultants.

Tags: Health Select Committee, Management consultants
Posted in Hospital Dr News | 3 Comments »

Do good management consultants exist?

By Katherine Teale - 10th September 2009 11:31 pm

I have to admit I’m finding work quite stressful at the moment - not the anaesthetics - I know what I’m doing (most of the time) and people are occasionally grateful, but my management role, where neither of the above applies.

As my husband says, I can leave the anaesthetics at work, but the management tends to come home with me. Luckily for my mental health, all our problems are about to be solved: the management consultants have been called in.

Our management consultants are called Andy and Dave. I spent most of Thursday sticking coloured post-it notes to the wall as part of a ‘mapping exercise’. Everyone gets together to talk through the ‘patient journey’ and identify where the problems lie and whose fault they are (the spinal surgeons’, since, as usual, they haven’t turned up to defend themselves).

So far Andy and Dave seem down-to-earth kind of guys, and to know what they’re talking about.

Not all management consultancies are like Andy and Dave - this week the top-notch consultancy McKinsey caused consternation by advising the NHS to solve its financial woes by cutting 10% of its staff.

Although it’s hard to believe that anyone who understands hospitals could propose this, it’s not really that surprising that a private consultancy which makes it’s money through market forces should propose a market-driven solution.

Downsizing the workforce is a traditional response from businesses facing a loss of profits and which have to make a surplus for shareholders. None of the other possible, non-market, solutions were mentioned such as canceling the £5bn ISTC programme (of which £1bn, give or take a few quid, has been wasted on paying for procedures that were never carried out), or stopping any more PFI deals (the total money raised so far by PFI is about £12bn, but the NHS will end up paying as much as £40bn in high interest rates and returns to shareholders).

It says a lot about the mindset at the DoH that this report was ever commissioned. Meanwhile, back in the real world, our guys are putting in plenty of groundwork. I have to admit it’s taken me a while to come to terms with Andy and Dave, because I’d previously believed that management consultants were a bunch of over-paid parasites who were only called in by incompetent managers.

That was before I became part of the theatre management team. Now I realise that they are in fact a valuable resource who are called in by desperate managers who are at their wits end because they have been ordered to achieve miracles with a bunch of unmanageable people, inadequate resources and a set of impossibly conflicting targets.

Dave and Andy’s remit is to help us treat more patients without any extra money or compromising safety, while making all the staff happy. So far we’ve had lots of post-it notes but no mention of market-forces or redundancies.

Let’s see if they can achieve in a few weeks what I have been trying to do for two years as clinical director - presumably not all management consultants are the same and I’m keeping an open mind.

Tags: Job losses, Management consultants
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Cut management consultants not doctors

By Stephen Campion, HCSA chief executive - 4th September 2009 7:10 pm

Still no news from the Co-operation and Competition Panel about what it considers hospital consultants may be allowed to do in their free time; but with the news this week that a top firm of management consultants had recommended a 10% cut in NHS staff in the next five years it would probably have taken second place anyway.

Did you know that the NHS spends as much on management consultants every year as it does on hospital consultants? I have no doubt that some management consultants do more than borrow your watch to tell you the time but this is ridiculous! This ‘gold Rolex’ was not only paid for by government (sorry, you and I as taxpayers) but the time it gave was so inaccurate that Ministers rightly preferred to send it back.

The serious point about all this is that any assessment of healthcare costs must get away from the old fashioned principles of putting hard pressed and dedicated staff on the chopping board for the first cut. The management consultants said that by cutting 137,000 jobs a saving of £20bn would be achieved by the year 2014.

On the evidence of this performance, I am sure I am not alone in being able to offer (at no charge to the taxpayer or government) an alternative for the chop.

Tags: Funding, Management consultants, Workforce
Posted in HCSA | No Comments »

Management consultants say slash 137k NHS jobs

HSJ - 3rd September 2009 1:28 pm

The Department of Health has been told the NHS in England will need to slash its workforce by 137,000 if it is to achieve its planned £20bn savings by 2014.

This would mean the NHS losing 10% of its workforce. The estimate was given to the DoH in a confidential report commissioned from the consultancy firm McKinsey and Company and seen by HSJ.

Although the DoH has said the report was “purely advice and does not constitute government policy”, it bears the department’s logo and has been disseminated among senior NHS managers.

The McKinsey report makes clear the cuts will need to be felt as much among clinical staff as administrators.

Based on its analysis of different staff group efficiencies, it says the cut required to full time equivalents for an NHS hospital with a clinical staff of 300 would be: two consultants, one registrar, 10 nurses, 10 healthcare assistants, three allied health professionals and eight non-clinical staff.

Labour’s links to management consultants revealed

The Telegraph - 24th August 2009 10:42 am

The disclosure of more than 100 contracts worth a total of £470 million last night engulfed the Government in accusations of “cronyism”.

Among those recruited by the favoured firms are a former health minister, an ex-adviser to the health secretary and a senior Whitehall official responsible for encouraging private sector involvement in the NHS.

Critics said the revelations indicated that the “revolving door” between the Government and its favourite consultant firms was spinning ever more quickly, with former senior politicians, officials and advisers linked to companies profiting directly from the policies they had introduced.

Lord Warner, a Labour peer, who was a health minister until December 2006, now acts as an adviser to PA Consulting group, which received £4.9 million from the Department of Health (DoH) in 2007/8.

Until last December he also advised Deloitte, which received almost £3 million in the same year. Since resigning as a minister in 2006, the peer has also registered interests working for six other health care, technology and IT firms.

Doctors must take leading role in quality debate

By Mike Broad - 30th June 2009 2:37 pm

The medial profession and the NHS face their most serious challenges ever, claimed the chairman of BMA council at the annual representatives meeting.

Dr Hamish Meldrum told delegates in Liverpool that both the financial and political crises affecting the country would have repercussions for doctors.

But Dr Meldrum reassured members that the BMA would protect the profession. He said: “There is no doubt that there are going to be those who want to put pressure on our incomes, the medical workforce and our pensions.

“Whilst we should be realistic and not expect inflation-busting pay rises and an infinite expansion in medical manpower, I can assure you that we are not going to allow doctors to be scapegoats for the failures of politicians or bankers.”

He re-iterated the BMA’s opposition to marketisation, the continued use of management consultants and additional PFI projects in the NHS. And he called on the profession to support the BMA’s new campaign Look After Our NHS, launched earlier this month.

Dr Meldrum did call on doctors to do their bit to improve quality and thus efficiency in the NHS. He said doctors could “vastly” improve the outcomes data for their services and “look seriously” at the issue of service redesign.

“I know some of you will think we are dancing to the government’s tune. No way! I’m talking about difficult decisions but ones that are made for evidence-based, clinical reasons not purely for political or financial expediency.”

He also called for more emphasis on lifestyle services and a healthy ageing strategy to reduce dependency in older age.

He finished his speech by urging doctors to show leadership, and get involved, with medico-political issues. He said: “We have a choice. We can be cynical, pessimistic, worry about being tainted by association and criticise from the sidelines….alternatively, we can keep talking, keep involved, keep engaged and take a leading role, not with some sort of blind acceptance but with our eyes wide open.”

Tags: Management consultants, PFI, Privatisation
Posted in Hospital Dr News | No Comments »

Cuts should also affect our private sector friends

By Mike Broad - 23rd June 2009 11:09 am

Everyone is aware that the NHS is screwed for funding for the foreseeable future.

Debate has raged over just how much the NHS is going to have to cut sorry, save through ‘efficiencies’ - but it’s going to be many billions.

We know this because we keep being told it. David Nicholson (you know the one, your boss, head honcho of the NHS) has been particularly active in the media warning that we’re all going to have to tighten our belts.

Fair enough. Though it does make his recent appearances in front of the health select committee (HSC) over the use of management consultants appear paradoxical.

It’s estimated that the NHS spends at least £600m a year on management consultants - and that’s a conservative guess. The truth is we don’t know hence the HSC’s interest.

In his first appearance in front of the HSC, in December 2008, Nicholson said all the right things. The HSC suggested that NHS should know centrally how much it is spending, and Nicholson agreed.

Nicholson also said that expenditure was set to fall in the first half of this year as they’d set up an internal consultancy that would perform the same role but using existing employees. Considering that some management consultants charge the NHS more than a £1,000 a day for their services, it makes a lot of sense.

However, Nicholson then changed his tune when he appeared in front of the HSC again a few months later. This time he was adamant that the Department of Health shouldn’t be monitoring the spend centrally - it amounted to micro-management. “We do not think it is the right thing to do,” he said.

Why did he change his mind? Presumably he decided there are enough checks and balances locally to ensure transparency and accountability around the use of management consultants. I don’t think there are.

Fortunately, the HSC urged the government to centrally record overall spend, and day rates, and coordinate the assessment of value.

The big management consultancy firms are very powerful, with their leading figures often advising - and sometimes sitting within - government. One could imagine that they wouldn’t want too much scrutiny around all their public sector contracts.

The common experience from the front-line is that management consultants come in and, with great fanfare, tell managers and senior doctors what they already know. It recently prompted Dr Jonathan Fielden, chair of the BMA’s consultants’ committee, to call for the NHS to stop using them altogether.

I don’t agree. Maybe they can be useful. Nicholson claimed they were instrumental in taking the NHS from deficit into surplus. But, we need more evidence on the value of their work.

I’d also like the HSC to throw a little light on the role of senior civil servants and their advisors within the Department of Health. There have been a steady stream of them - with some big name new additions - who have tub thumped for the introduction of the private sector into the NHS only to then move into that sector and benefit from the reforms.

I’m sure they’ve made their decisions for the right reasons - but we should have procedures in place to prove it.

Tags: David Nicholson, Health Select Committee, Management consultants
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