Putting the brakes on the runaway agency train

Source: NHE Mar/Apr 16

James Foxlee, co-founder of Circular Wave, discusses the government response to the rapidly escalating NHS agency spend and how technology can help.

Spending on agency staff is now recognised as the major cause of the growing NHS provider deficit. In an attempt to curb it, Monitor and the TDA have directly intervened in the agency market by implementing caps on the hourly rates paid to workers, despite acknowledging that this risky move goes against economic wisdom. After all, free markets determine price at the ‘equilibrium point’ of supply and demand – and artificially setting a price below this inevitably leads to a reduction in the supply. 

The first phase of the price caps implemented in November 2015 represented only a modest reduction in hourly rates for most agency workers. But the signs of stress are already present – 85% of trusts are breaching the maximum rates set by Monitor, amounting to a staggering 20,000 shifts per week. This doesn’t bode well for the next phases of the rate caps, whose pay reductions will be much more severe. Given that around nine in 10 agency workers have permanent employment with the NHS, agency work is very much an ‘optional extra’. They can either hold out for trusts to use the ‘break glass’ clauses, or simply not work at all. 

In conjunction with record numbers of people leaving the NHS, and some agencies shifting their focus to the private sector, the rate caps look set to deepen the supply-side crisis. A microcosm of this is currently being witnessed by a major London trust. Despite outsourcing its temporary staffing operations to a specialist managed service, its spend has increased due to the inability of the provider to source the necessary staff at the required prices. Simply put, the NHS has lost control of its workforce to the agencies. But why? 

Agency workers are served a steady stream of work by placement agents, who are incentivised to maximise rates for mutual benefit. Many agencies offer jobs tailored to the individual, and they universally provide choice and flexibility. They do the timesheet chasing and pay their staff quickly, often running daily payroll. Some even offer reward schemes. 

Contrast this to the in-house bank. Workers must trawl through unfiltered job boards on the trust intranet, sift through email job bulletins, or answer barrages of calls from increasingly desperate co-ordinators. Choice is limited, and pay is often not received for several payroll cycles. It is even worse for those who directly engage with trusts as an external contractor – doing so incurs a large administrative overhead, and sees invoices taking up to six months to be paid. It is no wonder that the permanent staff of neighbouring trusts frequently cross paths and “go down the road on the agency” when it comes to their time off. This absurd reciprocal flow of staff is responsible for the escalating spend, with agencies reaping commissions for every single shift. 

Replacing inefficient processes 

So, a prescription: the NHS needs to stop using agencies altogether – an entirely achievable goal if management are committed to replacing old, inefficient processes. Software can allow trusts to break out of their silo by forming a unified bank across multiple NHS sites, and ultimately the whole country, doing away with the need for any intermediaries. 

Some trusts have looked to unify their staff banks in the past, but managing them using traditional methods and paper processes is onerous and not scalable. Transitioning to paperless staff onboarding – facilitating easy, rapid and fully auditable direct engagement with any individual – would allow them to grow their banks further, driving huge savings and efficiency benefits. 

In a world of growing digital content and reducing attention spans, NHS trusts can no longer expect workers to come looking for work. Conversely, they must be extremely careful to avoid disengagement by only notifying workers of vacancies that are appropriate to their experience and availability. Engagement can be increased through the use of reward schemes, such as those tried at Lincolnshire & Goole to good effect – but rapid payment is even more important. Adoption of new payment technologies by NHS trusts could allow same-day transfers and level the playing field. 

Such a huge shift will certainly require policy change, concerted effort and regional co-operation – but the right technology can remove all the barriers. Given time and commitment, the NHS can turn the tide.

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