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10.12.14

NHS bill for consultants more than doubles despite government promises to cut spending

The NHS bill for management consultants has more than doubled since 2010, despite government promises to “slash” spending.

In 2010 the NHS spent £313m on management consultants, a figure that “staggered” the health secretary at the time, Andrew Lansley. He pledged to cut this spending by 45%.

However, figures obtained through FOI requests show that the cost has actually more than doubled to £640m between 2010 and 2014.

David Oliver, a former clinical director at the Department of Health, who uncovered the spending, compared consultants to “racketeers” profiteering from “times of chaos,” and warned that the staggering fees are hurting the health service.

He said the money spent on consultants is enough to run three hospitals or employ 2,000 extra nurses each year.

“In times of war, arms dealers, rebuilders and racketeers, profit from the chaos. ‘Disruptive innovation’ has led to similar spoils for management consultants, with taxpayers’ money diverted from already struggling health and social care services,” wrote Oliver in the British Medical Journal.

Oliver warned that consultancy firms “are unaccountable and can walk away from bad or damaging advice with no consequences”.

“I have lost count of the number of reports that model drastic reductions in urgent activity or cost, based on no credible peer reviewed evidence,” he added.

Monitor, the NHS’s economic regulator, whose leading figures trained in management consultancy, has given contracts worth £32m consultancy firms.

“The door between the Department of Health, NHS England, Monitor, 10 Downing Street and the consultancy firms, is constantly revolving, creating commercial advantage,” Oliver said. “Consultancy doesn’t come cheap. Senior partners charge £3,000 to £4,000 a day, the amount a senior doctor earns in two weeks. Consultants have told me that their advice is not valued unless they charge at these rates.”

He singled out Barts and the Royal London Hospitals, which spent £935,000 on advice from Global Titanium Solutions, about twice the combined salary of the trust's chief executive, chairman, and finance director. West Dorset Clinical Commissioning Group is also currently spending £ 2.7m with McKinsey for a 'strategic review.'

“Why do NHS leaders continue to pour money into consultancy?” continued Oliver. “Do these trusts have no one in house with the right expertise to have done that work at public sector rates?

“Many consultants have no coalface expertise of the services that they are advising on, and many have gone straight into firms from university.”

A Monitor spokesman said it only used external consultants occasionally, but was reviewing whether more work could be done in-house.

A Department of Health official said: “We have slashed NHS administration costs by £1.5bn a year and made the NHS publish consultancy spend for the first time, so managers have to justify how they spend every single penny.”

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