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NHS Improvement to ‘disrupt agency market’ as temp bill hits £4bn

NHS Improvement and NHS England will tighten controls on temporary staffing agencies to drive down their mammoth financial impact on the health service – currently on track to hit £4bn this year.

Speaking at a Commons Public Accounts Committee (PAC) meeting this week, NHS Improvement boss Jim Mackey said the current capped agency rate is “having some impact” this year, but the organisation will further disrupt the market in the coming year by “effectively re-procuring for new agency and locum contracts to have a competitive fee process”, to squeeze fees even more.

“More importantly, those contracts will give us, NHS Improvement, the ability to set the terms and conditions,” he said.

MPs attacked both Mackey and NHS England chief Simon Stevens, also in attendance, for considering this potentially illegal way of controlling agency spend.

They argued that some doctors and nurses must go through expensive agencies because the term and conditions are better than those offered by the NHS, and blocking their access to this would be “using monopoly power to very seriously impact the market”.

Conservative MP Stephen Phillips also questioned whether the national bodies had asked the European Commission whether “this amounts to an abusive, dominant position under articles 81 and 82” of the constitution.

But Stevens, admitting that they had not, said: “You understand that given substantial profits on the part of a number of organisations are at stake here – it probably isn’t going to strengthen our hand to go into great detail about the legal preparations that have been taken.”

He added that it was not the case of using a dominant market position to “do what needs to be done to keep salaries lower”, but merely “making use of the N in NHS, which stands for National”.

PAC chair Meg Hillier was among the MPs who enquired about improving workforce planning and upping the retention effort in the NHS instead of tightening agency controls, but Mackey said the “retention argument is a weaker one than the supply argument”.

Regardless, he said, there are problems in workforce supply that are being address in different ways.

Stevens added: “The collective commitment we all have made is to seek to increase 5,000 doctors in general practice by 2020. We intend to put forward a big support package for primary care next month, in February, that will lay out in considerable detail how, together with the Royal College of GPs and the BMA, we’re going to take action on that front.”

The total agency spend across the health service looks set to reach £4bn this year, according to Stevens, up from £2.6bn in 2013-14.

He argued that this fact alone explained the vast majority (if not all) of the increase in provider deficit this year – which the national body is hopeful will not go over £1.8bn, despite already having reached this in the half-year mark.

‘Unprecedented exploitation’ by staffing agencies

Asked about the forecast deficit, Dame Una O’Brien, the outgoing permanent secretary at the Department of Health, claimed that no-one could predict “this scale of exploitation” by staffing agencies.

Stevens did not go so far as to call the situation exploitative, instead deeming it a “rip-off”. But he said: “Obviously there are many moving parts, but if you want a parsimonious explanation, the increase in temporary staffing pretty much matches the increase in the deficit pressures in providers.

“I believe we’ve had a collective action problem across the totality of the health service, and that has enabled individual agencies to play off one part of the health service against the other at a time when there’s been understandable desire to increase staffing levels at just the same time as supply’s been constrained.”

He concluded that this was “the perfect storm in terms of one workforce”.

MPs then questioned the alleged inconsistency in advice and guidance given to trusts about balancing patient safety with clinical targets.

Conservative MP David Mowat said: “You really can’t complain about the increased use and trend to use non-permanent agency staff when essentially the trusts are between a rock and a hard place.

“You’ve either got to clarify and be consistent or you release further funds for them to meet their obligations and imperatives in terms of clinical work.”

But Stevens said there was a third alternative, which was for the NHS collectively, with all hospitals together, to “exert some bargaining power” on the prices being paid to agencies.

“There’s an issue there,” he said. “Hospitals individually are not ‘to blame’ for that, but collectively, we’ve got to raise our game. As it happens, legally of course, each individual trust is its own employer – so part of what we’ve got to do is work around that so we do get more collective action, and that’s what Jim is leading,” he said.

In some regions, trusts are already coming together to block off agencies who refuse to lower their prices to the government’s capped rates.

In Greater Manchester, for example, five large trusts and FTs have been collaborating to cease working with certain non-compliant companies.

Deputy director of nursing at Stockport Hospitals NHS FT, Tyrone Roberts, told NHE: “Because we’re also able to say that our four neighbouring trusts are also doing the same thing, the staff really don’t then have an option to pick up those shifts with a neighbouring trust down the road. The key to that is all five of us sticking to it and doing the same thing.”

Read more about agency spending and how trusts and NHS Professionals are improving the bank offer in NHE’s upcoming January/February edition.

(Top image c. Jonathan Brady, PA Wire)