The Health Secretary Jeremy Hunt has ordered a clampdown on staffing agencies charging the NHS exorbitant rates as part of tough new financial controls to cut down on waste in the NHS.
Tackling staffing agencies is part of a package of measures that aims to cut costs while improving frontline care. Spiralling agency staff bills cost the NHS £3.3 billion last year – more than the cost of the entire year’s 22 million A&E admissions combined. The use of expensive management consultants will also be limited. The NHS is paying agencies up to £3,500 per shift for doctors, and the total bill for management consultants was more than £600 million last year.
New rules will set a maximum hourly rate for agency doctors and nurses, ban the use of agencies that are not on approved frameworks, put a cap on total agency staff spending for each NHS Trust in financial difficulty and require approval for any consultancy contracts over £50,000.
The agency staff cap will firstly apply to nursing staff but will be extended to other clinical, medical, management and administrative staff. Capped rates will be reduced from the initial set level over time.
Announcing the initiative, Jeremy Hunt said: “The path to safer, more compassionate care is the same as the path to lower costs. Simon Stevens said the NHS needed an extra £8 billion by 2020 and the government has invested that. Now the NHS must deliver its side of the bargain for patients by eliminating waste, helped by the controls on spending we’re putting in place.
“Expensive staffing agencies are quite simply ripping off the NHS. It’s outrageous that tax payers are being taken for a ride by companies charging up to £3,500 a shift for a doctor. The NHS is bigger than all of these companies, so we’ll use that bargaining power to drive down rates and beat them at their own game.”
The use of agency staff has risen from £1.8 billion to £3.3 billion in three years to help correct historic understaffing on wards. The government wants to see hospitals employing more permanent staff and says there is clinical evidence this improves patient care.
Hospitals are increasingly hiring management consultants by default instead of looking at the skills they have within the hospital. An immediate cap of £50,000 will be applied to all management consultancy contracts and Trusts that need to break it for clinical reasons will have to get permission from their regulator, Monitor, or the Trust Development Authority to do so.
Hospitals currently negotiate prices for supplies individually and as a result cannot always secure the best prices for products. The NHS will collectively negotiate with suppliers using economies of scale to drive a harder bargain. For example, the government says hospitals could save up to 38% on sterile surgical gloves by switching suppliers.
The savings will go alongside a £2 billion budget increase for the NHS this year, set out by the Chancellor in the Autumn Statement, and a further £8 billion increase by 2020, which was requested in the NHS’s own long term plan. That plan - the ‘Five-Year Forward View’ - said that the NHS could find £22 billion of efficiencies by 2020