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MPs call for clampdown on NHS agency staff pay

MPs have criticised NHS hospitals for the sums being spent on temporary staff, which increased by £500m in a year, with some consultants charging £1,700 per day. 

The Public Accounts Committee (PAC) stated that despite the NHS being the dominant employer of temporary medical staff, the Department of Health (DH) has not made “best use of its position to reduce the costs involved”. 

The cross-party group of MPs highlighted that “radical changes” are needed to make the health service financially sustainable. 

In the ‘Financial sustainability of NHS bodies’ report, the MPs noted that in 2013–14 the NHS spent £2.6bn on temporary staff, who can be “significantly more expensive than permanent employees”, compared with £2.1bn in 2012–13. 

There are also claims that some consultants are choosing to work on an agency basis to make more money. This comes at a substantial cost to the NHS, with typical charges of £1,760 per day. 

PAC claims that some agencies do not participate in the DH’s framework contract, which limits local NHS bodies’ ability to achieve value for money when hiring agency staff, particularly those needed to fill high vacancy rates in emergency departments. They add that there is scope to make savings in the amount paid under private finance initiative schemes, which cost the NHS some £1.8bn a year, as there are some examples where refinancing or buying out existing schemes could provide better value for money in the long run. 

On top of this, the MPs criticised the current system of paying for emergency admissions saying that it “hinders, rather than helps, secure the financial sustainability of NHS bodies”. 

Although emergency admissions to hospitals have increased significantly in recent years, acute trusts are only paid 30% of normal prices for all emergency admissions above 2008–09 levels. This payment method was designed to discourage unnecessary admissions on the basis that commissioners would invest the remaining 70% of tariff income in services to improve patient care outside hospital and reduce inappropriate hospital admissions. 

To tackle this issue the MPs have suggested Monitor and NHS England should complete a review of the national payment system for emergency admissions promptly and implement the required changes within the next year. 

PAC chair Margaret Hodge MP said: “From all our work across all of government, the fragility of the NHS finances causes me greatest concern. The financial health of NHS bodies has worsened in the last two financial years.” 

Discussing pay for temporary staff, Hodge said that Barking, Havering & Redbridge University Hospitals NHS Trust told the Committee that it had a 50% shortage of emergency consultants and was spending £1.5m a month on temporary staff. 

“It costs the taxpayer £400,000 to train an emergency consultant, but there are claims that some consultants are choosing to leave the NHS to work on an agency basis at a substantial cost to the NHS,” she said. 

It has been recommended that the DH should require NHS bodies to use agency staff within a national framework contract unless they can demonstrate clear value for money benefits from local negotiation, and benchmark the cost of agency staff within and outside the national framework. 

Additionally, the Department should support the evaluation of alternative financing or operating options for costly private finance initiative schemes where there is a clear opportunity for improving value for money; and examine the obligations it places on consultants who are trained at taxpayers’ expense and then choose to work as temporary staff at extra cost to the NHS. 

Responding to the report, the DH said: “We know the NHS is busier than ever, which is why we’re increasing the budget by an extra £2bn next year to back the NHS’ long-term plan to move more care from hospital to home. 

“The majority of trusts are forecasting a surplus, but all NHS organisations know that financial discipline must be as important as safe care and good performance.” 

PAC also noted that the percentage of NHS trusts and foundation trusts in deficit increased from 10% in 2012–13 to 26% in 2013–14, with Monitor finding that 80% of foundation trusts that provide acute hospital services were reporting a deficit by the second quarter of 2014–15. 

Chris Hopson, chief executive of NHS Providers, said: “The NHS feels like it is on the brink because its funding just doesn’t match the demands it is facing. 

“Today’s PAC report is the latest evidence which shows the current funding for the NHS is unsustainable and that significant funding increases are needed to pay for realistic levels of patient care. Without the funds patient care will suffer as demand outstrips resources.” 

PAC added that NHS England, Monitor and the NHS Trust Development Authority recognise that radical change is needed to the way services are provided and that extra resources are required if the NHS is to become financially sustainable. This includes making better use of community and primary care services to reduce pressure on hospitals. 

“Making this change will require significant upfront investment, but the money available for this is reducing as the number of organisations in deficit increases,” said Hodge. 

It has been recommended that NHS England and Monitor should collect consistent and detailed cost data across the NHS to set efficiency savings targets for NHS bodies and to assess whether changes to service provision, including new models of care, are achieving measurable and sustainable savings in practice. 

Rob Webster, chief executive of the NHS Confederation, said: “The report calls for a ‘radical change’ to make the NHS financially sustainable. This is in line with the NHS Confederation’s thinking, set out in the 2015 Challenge Manifesto, which calls for a longer term approach to health spending. The NHS Confederation wants to see a 10-year settlement. Such a ‘decade deal’ would benefit an NHS that needs financial certainty to plan health services and taxpayers who would like clarity on how the NHS will be funded.

He added that in order to reduce emergency admissions and better integrate health and social care, a one-off transition fund of at least £4bn over two years is required to assist local NHS organisations in transforming how they provide care. 

“As part of this transformation we urgently need to see progress on a strategy for our workforce that reflects the scale of change in where, and how, staff will need to work in the future,” said Webster. 

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