How the NHS wastes £7.6BN A YEAR

Overpriced loo rolls. Crutches and wheelchairs never returned. Millions blown on management consultants. The Left’s always demanding more cash but our disturbing investigation reveals...

The profesionally produced video, posted on YouTube, looks and sounds like the sort of human resources promo that Ricky Gervais’s David Brent would make.

‘Morning all, you’ve died and gone to heaven, it turns out I’m president number 67 . . .’ So begins the excruciatingly embarrassing rap song, featuring a middle-aged accountant driving a BMW and wearing a pair of trendy glasses.

In fact, the truth is even more tragic. The wannabe rapper is Mark Orchard, director of finance at Poole hospital NHS Foundation Trust, who had the video shot to celebrate his appointment as this year’s president of the healthcare Financial Management Association (HFMA) — president number 67, as it happens.

With a membership of more than 12,000 NHS finance managers, the HFMA’s turnover (last year £8.5 million) is generated chiefly by charging hospital trusts to send their staff on its conferences and courses and to play The Operating Game — a ‘fun’ day-long board game designed to ‘simulate the running of a hospital’. The HFMA is ultimately funded by the taxpayer.

The organisation coyly declines to say how much was spent on the video — there was ‘no specific cost’, as it was shot during three days of recording the organisation’s conference in December.

But while wannabe rap star Mr Orchard might be wasted in accountancy, whatever was spent on one man’s vanity project is a drop in the ocean of resources wasted every year by poor management of the NHS.

By now, surely no one can doubt that the health service is in deep trouble. With staff overwhelmed, at one point in January no fewer than 23 hospitals declared a ‘black alert’, meaning they were unable to guarantee life-saving emergency care. That month an elderly woman suffered a fatal cardiac arrest after waiting 35 hours on a trolley in A&e at Worcester Royal hospital.

Further evidence that the health service is in crisis came last Friday with the announcement by Simon Stevens, the chief executive of the NHS, that he was abandoning the commitment that patients would wait no more than 18 weeks for operations.

Many trusts are struggling financially; in 2015-16, two-thirds were in deficit to a total of £ 2.45 billion, up 185 per cent from £859 million the year before. All of this comes as the NHS is expected to deliver savings of £22 billion by 2020.

The depth of the crisis was acknowledged last week when Mr Stevens announced plans for a series of common-sense cost-cutting measures. If they go ahead, there would be no more gluten-free foods, suncreams, indigestion pills or hay fever remedies doled out on prescription, and a crackdown on foreign health tourists.

Mr Stevens estimates the reforms could save the NHS up to £1 billion in two years.

BUT this barely scratches the surface of the waste. An investigation by Good health has identified more than £7.6 billion that could be being wasted in the NHS every year — itself almost certainly only the tip of an iceberg.

As this series will reveal, this includes £100 million on consultants in yet another major reorganisation of the NHS that few people — including many doctors — know about.

Waste is endemic in almost every corner of the service, ranging from the huge variations in prices paid by different trusts for the same basic supplies — with some hospitals paying twice as much as oth- ers for identical loo rolls and wet-wipes — to harebrained IT schemes and management reorganisations that see billions of pounds diverted into the pockets of technology companies and management consultants (many of whom once worked for the NHS).

One of the worst problem areas is when, to put it simply, the NHS has to buy stuff.

Trusts spend about £9 billion a year buying goods and services — a third goes on everyday costs, such as transport and stationery, a third on ‘medical consumables’, such as dressings, syringes and gloves, and a third on ‘ high- cost medical devices’, including artificial joints and pacemakers.

here alone the waste is enormous, as Lord Carter of Coles iden- tified in a report on NHS inefficiencies carried out for the Department of health last year.

Most trusts ‘don’t know what they buy, how much they buy, and what they pay for goods and services’, Lord Carter concluded. If all the ‘unwarranted variations’ were eradicated, an astonishing £5 billion of the £55.6 billion spent annually by acute hospitals could be saved in the next three years.

One of the most shocking examples he found was the wildly different prices paid for artificial hips and, in a perverse reversal of realworld economics, those buying the most were not getting the best prices. Ah, but expensive is better, you may think. Not so.

Dr Timothy Briggs is an orthopaedic surgeon who, as national director of quality and efficiency, visited 265 hospitals and uncovered ‘vast differences’ in the costs and results of orthopaedic care.

‘I don’t think the NHS does need more money,’ he says. ‘It has to prove it can use every pound the taxpayer gives it to the best possible outcome at best value, which it is not doing at the moment.’

Dr Briggs found some orthopaedic centres were using artificial hips costing £650 while others used ones that cost £5,000 — despite ‘no evidence of a better outcome’.

What the NHS pays for more mundane items such as loo rolls also varies absurdly — for example, City hospitals Sunderland NHS Foundation Trust paid £66.72 for a pack of 100, while Pennine Care Foundation Trust paid half that, a mere £34.14, according to the NHS Procurement Atlas of Variation.

The problem, as Lord Carter put it, was that ‘a devolved NHS’ with ‘hospitals making their own decisions about what they want to use [was] reducing . . . NHS purchasing muscle’ when it comes to negotiating with suppliers. And compa- nies were quick to take advantage of the institutional chaos. In one trust, Lord Carter found 650 sales reps targeting the hospital — with 65 on site at any one time.

Decentralisation had also led to widespread waste in basic property management.

In his report, Lord Carter found that the overall costs for running hospitals — everything from cleaning to electricity — ranged from £105 to £970 per square metre. If all trusts performed as well as the best, the NHS would save £1 billion every year.

how did we reach the absurd situation in which, instead of being able to take advantage of the vast collective buying power of the NHS, whose annual budget last year of £116.4 billion makes it one of the world’s biggest-spending organisations, individual hospitals are being chiselled by unscrupulous suppliers into paying more?

undoubtedly much of the blame for the Alice-in-Wonderland land-

scape of the modern NHS must lie in the way the Labour government’s decision in 2002 to launch its foundation trust revolution was implemented.

Giving control of finances to individual hospitals, while peddling the twin myths of competition and patient choice, must have seemed a good, vote-winning idea. It was, pronounced Tony Blair’s health secretary Alan Milburn at the time, ‘wrong to try to run the NHS nationally’.

But at a stroke, Labour neutered the ability of the NHS to wield its collective buying power.

Of course, you might expect individual hospital managers to drive the toughest possible bargain as they would do in the private sector. But one reason this isn’t hap- pening, according to Dr Dan Poulter, an MP and former Conservative health minister, is that ‘suppliers demand secrecy and won’t allow the publishing of prices . . . you don’t know whether you’ve got a good deal compared with the hospital down the road’.

It’s not just administrative waste that’s costing the NHS dear. Take the boring, everyday issue of stock control — apparently beyond the wit of highly paid NHS executives. It should be easy for patients to return equipment such as wheelchairs and crutches, but there is no straightforward system in place. The result? Millions of pounds wasted replacing items.

No one has a clue as to how many such items are lying around unused in homes around the country. But in 2015 NHS England spent £18 million buying even more new crutches, walking sticks and frames alone and, with the average cost of a pair of crutches at about £25, it is clear that there could be hundreds of thousands of unreturned items.

It doesn’t have to be this way — step forward Liz Scott, practice manager at the Arthington Medical Centre, Leeds. After she’d injured her foot, St James’s University Hospital issued her with crutches and a boot, but she then found out the hospital had no system to recover such equipment.

‘I thought: “right, something needs to be done,”’ she told Good Health. So she invited all her GPs’ patients to bring in any NHS equipment they no longer needed. ‘In the first week we got about 20 pairs of crutches, ten Zimmer frames, and various commodes, foot and wrist braces,’ she said.

Staff give the equipment a quick clean with antibacterial wipes ‘and then I stick it in the back of my car and take it back to the hospital’.

A spokesperson for the trust insisted there were ‘a number of routes for people to return items’, such as taking them to clinics, although ‘we don’t have a centralised equipment service’. So why can’t NHS managers organise a system like Liz Scott’s on a national or regional scale, that could potentially save millions?

Probably because they’re too busy rearranging the deckchairs in yet another of those wasteful reorganisations of the entire NHS that come along every now and then.

The latest are the snappily monikered Sustainability and Transformation Plans (STP), a radical reorganisation in which trusts, clinical commissioning groups and local councils have been combined into 44 regional organisations in a bid to rationalise services and save money.

Sound familiar? That’s right, not unlike the Strategic Health Authorities scrapped in 2013 in yet another reorganisation.

If you’ve not heard of STPs, you aren’t alone. A survey for the British Medical Association in November found that one-third of doctors hadn’t heard of them either, while most of the rest said there had been no attempt to consult them.

Predictably, one group of professionals has been consulted — management consultants, that breed of gurus without whom highly paid NHS managers appear unable to do almost anything.

SO FAR, in one London STP alone, no fewer than 17 consultancy firms have been paid a total of £2.3 million in the past year to tell NHS managers how to go about amalgamating hospital trusts, clinical commissioning groups and local councils.

One of the firms advising the North London STP is Methods Advisory, whose managing director, Andrew Hartshorn, is a former NHS and Department of Heath manager. The company has so far billed £617,850 for ‘ programme management office and strategy support’, says the BMA. As one local GP put it: ‘ The words that come to mind . . . are shocking, disgusting, and appalling.’ The company declined to comment.

If each of the 44 new STPs across the country were to spend as much on consultants, the bill across England — so far — would come to more than £1 billion. Money well spent? No, say the local health authorities themselves.

A recent survey of NHS chief executives and others running 136 hospital, mental health, community and ambulance trusts found that ‘only 11 per cent were either confident or very confident that their plans will actually achieve long-term sustainability’.

In which case, all that money being spent on consultants will have been a complete waste.

Yet NHS managers excel at spending our money on management consultants. Under the 2013 reorganisation, the commissioning of services was placed in the hands of GP-led clinical commissioning groups (CCGs). But these CCGs ‘do not . . . have the skills necessary to run commissioning’, as the Commons Select Health Committee was told in evidence last year.

The solution? Consultants, naturally, in the form of commissioning support units.

There are seven of these nationwide, formed initially from staff made redundant when strategic health authorities and primary care trusts were scrapped in 2013.

If you’re struggling to keep up with the reorganisations, this is what you really need to know: the redundancy bill for that 2013 reorganisation, which saw 10,094 fulltime staff lose their jobs, came to well over £1 billion, with some senior managers walking away with as much as £580,000. Shockingly, more than 2,000 staff were subsequently taken back on by the NHS, according to the National Audit Office.

Commissioning support units are valued, insists NHS England, for ‘their breadth of skills, experience and expertise’. Not qualities the NHS demands of its managers.

In fact, according to the health service regulator Monitor, they may not even know how to make the most of the advice for which they pay so dearly.

Since 2010, NHS spending on management consultants more than doubled, from £313 million to £640 million in 2014. Monitor (which was absorbed last year in another reorganisation by new body NHS Improvement) concluded in 2015 that ‘we cannot continue to spend on this scale without getting good value for money’.

A spokesperson for the Department of Health said the Mail’s tally of £7.6 billion in NHS waste was ‘inaccurate’ and did not acknowledge ‘recent measures we have taken to make savings in some of these areas, for instance . . . introducing a new bill on generic medicine pricing to prevent exploitation by companies’.

However, he added, ‘ any unwarranted waste, particularly at a time when the NHS is under financial pressure, reduces the amount of money available for frontline patient care’.