Why can't Yorkshire's NHS get over its addiction to consultancy?

With pressure on health services nationwide becoming ever more acute, the issue of NHS trusts spending millions on management consultancy firms to help them cut costs and restructure has been hugely contentious in recent years.

Saturday, 7th January 2017, 9:17 am
Updated Monday, 9th January 2017, 3:11 pm
Hospitals around Yorkshire are spending millions a year on consultancy fees.

The NHS spent £640m on private sector management consultants in 2014, up from £313m in 2010.

But prior to that, the costs associated with hiring in external consultants to manage aspects of restructuring and running the NHS had been flagged as an issue for some time.

At the time, Conservative Health Secretary Andrew Lansley said he was staggered by the scale of the expenditure and blamed the previous Labour government for the spiralling costs.

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Dewsbury MP Paula Sherriff says local health bosses face a dire situation.

Professor David Oliver, the Department of Health’s former National Clinical Director for Older People’s Services, uncovered the new details about spending on consultants in 2014 using the Freedom of Information Act.

And in a recent article in the British Medical Journal, the consultant in geriatrics and acute general medicine argued that the health and care sector “hasn’t got over its addiction to consultancy”.

This is borne out by The Yorkshire Post’s analysis, which shows that the region’s acute trusts have spent some £40m on management consultants between 2011/12 and 2015/16.

Dewsbury MP Paula Sherriff says local health bosses face a dire situation.

More than a third of this, £16.5m, was spent by Mid-Yorkshire’s trust, which runs hospitals in Wakefield, Pontefract and Dewsbury, but five trusts ran up bills of more than £2m each over four years.

York Teaching Hospital Trust, which runs eight hospitals across North Yorkshire and spent £3.9m between 2011/12 and 2015/16. Leeds Teaching Hospitals Trust, the largest in the region, spent £2.94m.

A York Hospitals Trust spokeswoman said the majority of its expenditure related to EY and Grant Thornton UK.

She said: “In 2011/12, EY were jointly commissioned by York Teaching Hospital NHS Foundation Trust and the Yorkshire and Humber Strategic Health Authority to support the acquisition of Scarborough and North East Yorkshire Healthcare NHS Trust.

“The acquisition has brought benefits for both staff and patients, strengthened clinical services, and ensured a long-term future for hospitals in Scarborough and the surrounding districts.”

A spokesman for the Leeds hospitals trust said the advice of external consultancies was “used from time to time to assist with projects where we need specialist expertise”.

He said: “Some of this is a statutory requirement, so the majority of payments to Grant Thornton reflect their role as the external auditor of our accounts over the past five years.

“As one of the largest NHS trusts in the UK we are always looking at ways to work more efficiently, and we seek targeted advice from consultancies on specific projects which help unlock significant savings.

“Examples have included advice on maximising our VAT recovery, work on staff salary sacrifice schemes, ensuring we get the best value out of our PFI schemes and assisting with our long-term financial planning and cost improvement.”

A year ago, figures from NHS Improvement, the body which helps support NHS trusts provide better and more financially sustainable care, revealed that spend on management consultants fell by £42m in the previous year.

The Department of Health claimed these figures are a result of spending controls announced in June 2015.

Health Secretary Jeremy Hunt said at the time: “Our plans to clamp down on management consultants and rip-off staffing agencies are bearing fruit.”

No figures have yet been released for 2017, but an announcement is expected in the coming weeks about NHS efforts to cut down on management consultant spending.

Andrea Jenkyns, Conservative MP for Morley and a member of the Parliamentary health select committee, said: “It is right that the Government has put tougher controls on third-party consultancy spending, which now requires prior approval by NHS improvement using strict criteria to ensure services are relevant and represent good value.

“As a result, NHS spending on consultancy fell by £42m last year, and it is right that we bear down on these costs so more money can be invested in frontline patient care.”

Paula Sherriff, Labour MP for Dewsbury, welcomed the recent fall in spending, but said: “This continuing expense is something I have repeatedly raised with the Mid Yorkshire Hospitals Trust.

She said: “This worrying state of affairs is a symptom of the dire financial situation faced by many NHS trusts – impossible spending decisions are being made daily due to the Government’s woeful underfunding of our NHS.

“Since 2010, Tory austerity policies have seen management consultants using public sector cuts as a business opportunity.

“Mid Yorkshire Hospitals Trust is reportedly facing budget cuts of £26m this financial year alone. It’s perhaps unsurprising that senior managers are looking to cover their backs for decisions being made in the face of truly unattainable targets.”

Figures in the management consultancy industry argue that the £40m figure in Yorkshire represents much less than one per cent of NHS spend in the region – with the aim of bringing about budget savings of 20 per cent.

Within these circles, the work done by EY in Yorkshire is seen as achieving impressive results. In the 2014 MCA Awards, described as the “benchmark for quality within the consulting industry”, its contract with Mid-Yorkshire won in the Performance Improvement in the Public Sector category.

Paul Connolly, director of the Management Consultancies Association, said: “It is quite right that NHS spend on management consulting should be subject to proper and sensible scrutiny, as should all public spending.

“However, many of the best initiatives in healthcare, from improved use of digital technology to the integration of community, social and acute care, are underpinned by the work of management consultants.

“Indeed, use of consultants by trusts and other NHS bodies to support exacting cost-cutting and efficiency targets is itself efficient practice.”

In his BMJ article, Professor Oliver argued that claims of the benefits from management consultancy were hard to contest because of the lack of hard data.

He wrote: “You won’t find many NHS organisations evaluating the quality or impact of consultancy advice – why would they risk submitting to it?

“Why would those who spend our money on consultants’ advice risk being held to account in this way?”