Hospitals pay £1m a year to ‘efficiency experts’... who make things worse
HOSPITALS are wasting hundreds of millions of pounds on management experts who usually make matters worse, researchers have found.
The average NHS hospital spends £1.2million a year on external consultants who are brought in to improve efficiency, financial performance and reduce waste.
But a study by the universities of Bristol and Warwick has found hospitals that spent the most on them went on to lose more money in subsequent years. For every £100,000 spent on management consultants there was a negative impact of £880, they found.
Average losses were £10,600 a year – and that figure does not account for the money spent on consultants in the first place, which reached up to £5.6million a year at some hospitals.
The academics, writing in the Policy and Politics journal, said these ‘experts’ create ‘organisational inefficiency’.
They typically propose a raft of measures to improve performance, but in fact this simply disrupts the way the hospitals run.
That may be due to their ‘lack of knowledge about how the NHS works’ the report adds. The NHS in England saw demand for management consultants boom from £313million in 2010 to £640million in 2014.
But Professor Andrew Sturdy of Bristol University said: ‘Our research has clearly shown that management consultants are not only failing to improve efficiency in the NHS but, in most cases, making the situation worse,’ he said.
‘Data shows that it’s a systemwide problem.’
The research team examined the finances of 120 NHS hospital trusts in England between 2009/10 and 2012/13. They found a direct correlation between the amount of money spent on management consultants and their subsequent ‘organisational inefficiency’.
On average, hospitals could have employed 35 more senior nurses, ten consultant doctors or 20 managers if they had not employed management consultants.
Although some trusts did improve their performance after hiring consultants, it was the exception rather than the norm, researchers said.
‘Money better spent on services’
Professor Sturdy said: ‘ This is money which, many argue, could be better spent on medical services or internal management expertise. From the study data we can only speculate on what lies behind these findings.
‘One possibility is that consulting projects are highly disruptive, especially if the demand for them has been generated artificially by sophisticated selling, backstage deal making and revolving doors between politicians, regulators, healthcare managers and civil servants.’
Professor Ian Kirkpatrick, of Warwick Business School, added: ‘Given financial constraints facing the NHS, an obvious question is whether it is appropriate to continue using external consulting advice at the current level. This study highlights the need for organisations to be more circumspect in decisions about whether and how to use management consultants.’ Hospital bosses last night insisted they needed to use the ‘external expertise’ of consultants.
A spokesman for financial watchdog NHS Improvement said: ‘We are working with all trusts on reducing their costs, which includes spending less on consultants and have had some success.
‘Since 2013, trusts have reduced their spending on consultants by £150million, which is a significant improvement. We will continue to work with trusts to keep their consultancy spending to a minimum.’