22.07.15
Clampdown on management consultants could be counter-productive
Guest blog by Alan Leaman, CEO of the Management Consultancies Association, following last month's Department of Health clampdown on the use of management consultants in the NHS, including a £50,000 cap and more regulation.
Our politicians did the easy bit during the general election campaign. They pledged to provide an additional £8bn for the NHS, coupled with a dose of ‘ring-fencing’ and fiscal protection.
But the much bigger question – the far larger £22bn of efficiency and other savings that Simon Stevens says is necessary to give the NHS a secure future – has largely been ignored.
As Mike Turley of Deloitte recently put it: “For too long, political debates have been focused on inputs rather than outputs. In the election campaign, parties clambered to explain how they would find the £8bn the NHS needs, with hardly anything said about the £22bn in efficiency savings it also requires.”
One early sign of a post-election agenda for health savings was Jeremy Hunt’s set of controls to clamp down on agency staffing costs. This gained plenty of headlines. It looks like the NHS might be increasingly directed from the top to make the savings it requires.
And, hidden in the small print, was a new system for approving NHS spending on management consulting services. Trusts now must seek permission from their regulator – Monitor or the Trust Development Authority – to proceed with any consulting contract valued at more than £50,000.
At one level this is posturing and a small matter. Expenditure on management consultancy within the NHS is, while important, nowhere near high enough to be more than a marginal consideration. But, clearly, many ministers and administrators still think that it is good politics to be ‘seen to be doing something’.
But there are also risks.
Our evidence is that consulting firms have made a significant difference within the NHS in recent years, helping to deliver both much-needed savings, for instance for many of our major hospital trusts, while also stimulating great improvements in patient service.
In the past two years, consulting projects for hospital trusts have been winners in the annual MCA Awards. These awards are judged by an independent panel of experts. Our judges were impressed by fantastic achievements for consultancies and clients alike.
For instance, in 2014, EY were winners for their work with Mid Yorkshire Hospitals NHS Trust. This programme, which featured in NHE last year, reduced one of the largest budget deficits in history, while also improving outcomes and access for patients. The turnaround was remarkable.
And, this year, PwC and South Tyneside NHS Foundation Trust worked over 11 service areas to release savings but also improve the quality of services. Patient complaints fell away to nothing, length of stay was reduced by up to 45%, and the number of long-stay patients was reduced by 62%.
It is not just the large consulting firms who are making a contribution. Many of the MCA’s specialist member firms are also active in the NHS, helping to drive innovation, introduce the benefits of digital technologies, work with staff to improve their productivity and enable managers to work with the new systems and reforms that legislation requires.
So, while no-one would argue that the NHS should be anything other than careful with all its resources, including what it spends on the services of management consulting firms, it should also ensure that it has cost-effective access to the skills and resources that they bring to bear.
In particular, it would be madness to have controls that simply add costs – either for consulting firms or their NHS clients. And we should make sure that they don’t introduce counter-productive delays that hold up much-needed projects or wider initiatives.
The reality is that a service of the size and complexity of Britain’s NHS is always going to need strategic and operational capacity to optimise performance, over and above the professionals that work at the front line. The periodic use of management consultants –properly procured and managed – represents the value for money option, particularly as the sector’s leaders strive to deliver the savings and performance improvements that government and patients demand.
The MCA has recently worked with client representatives from all sectors to develop a good practice guide to buying consulting. We are also working with the Crown Commercial Service and others to help create the best procurement vehicles to serve central government and the wider public sector. We are proposing more use of contracts that enable clients and their consulting firms to share risks and rewards, and pressing for more evaluation of the impact of consulting interventions.
In that context, new controls seem largely beside the point. Everyone believes that consulting projects should have a clear business case, and well-defined objectives. Let’s get that done, and then get down to delivering value for the public.
FOR MORE INFORMATION
www.mca.org.uk
www.cbfblueprint.co.uk