NHS Takes a Strong Step Towards Healthier Spending

Posted on November 26th, 2015 by

Monitor, the regulator for health services in England, and the NHS Trust Development Authority (TDA), have published the results of a consultation that ran from 15 October to 13 November 2015. It involved NHS foundation trust and NHS trust chief executive officers, nurse directors, medical directors, finance directors and operations directors: and addressed measures to “support trusts and foundation trusts in managing workforce challenges.”

This was in light of Q1 data on trust and foundation trust financial performance, which highlighted the need for concerted further action in 2015/16, specifically to address some immediate workforce challenges and the consequential spiral in deficit. These included the rapid growth of spending on agencies and the need for a rounded approach to staffing decisions.

The NHS had been strongly pressed by a large number of providers to take urgent national measures to cap the rates paid for agency staff and to encourage workers back into substantive and bank roles: that is, full time, part time and “on call” employment. As a result of the consultation, the NHS will introduce caps on the hourly rates paid for all agency staff, to take effect from midday on 23 November 2015.

The proposed hourly price caps would apply to:

  • all staff groups employed by NHS trusts and NHS foundation trusts: nursing, medical, all other clinical and other non-clinical staff
  • all agency staff and bank staff

The price caps would not apply to substantive/permanent staff or staff employed by ambulance trusts.

NHS crop

The capping approach has been developed with, and is fully supported by, clinical leaders in Monitor, TDA, Care Quality Commission (CQC) and NHS England, with a major caution to trusts that, on implementation of the caps, they ensure that they maintain patient safety at all times. Trusts may need to override the caps on exceptional safety grounds, in which case they would be scrutinised by Monitor and TDA .

The effect on staffing supply, though difficult to predict, could be significant, particularly in the short term and for some trusts and specialties. National bodies are therefore urged to work together to support trusts in meeting the price controls and other agency rules.

SpringTide welcomes this government intervention over costs that have, in recent times and for many reasons, gone out of control. We have recently engaged in a pilot programme in a “sample” trust, looking at the “procurement angle” on staffing issues and NHS overspending – with revealing results.

Capping the top line and proportion of rates paid to agencies is just one aspect of managing this category of spend. We are currently looking into how many Trusts have actually sat down to fully understand all aspects of the price and cost model and/or undertaken a full strategic sourcing or category plan over 1:3:5 years.

This is just one area of a nationwide procurement “habit” that, for various reasons, tends to be reactive. Yet with planning and full evaluation of the options, trusts at both local and national levels could see dramatically different outcomes.

Given the “firefighting” nature of much NHS procurement, and understanding, as we do, how communication is often restricted to local exchanges between stakeholders, we have wondered how any hospital could possibly manage 100+ temp labour agencies… Our findings indicate that – they can’t! Nor is it necessary or even desirable.

Whilst the agency capping is a welcome step, SpringTide strongly feels that more strategic relationships need to be fostered, to evolve a supply chain that is forward thinking and also transparent in the way it interfaces and behaves. This will only be achieved with all sides sitting down and forecasting demand through rigorous disciplines of analysis and modelling and open stakeholder involvement.

SpringTide are experts in Strategic Sourcing and we have already shown that the application of procurement best practice within a pilot trust has  generated considerable, quantified benefits. We welcome the opportunity to help any area of the NHS in managing this category of spend more efficiently and hope that NHS stakeholders will feel free to engage with us at any time to further explore the challenging but exciting improvements and savings we know can be realised.

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