de Poel health+care on new Government measures to reduce locum spend

Latest figures published by NHS Improvement (NHSI), showing that their agency controls have saved the NHS £1 billion since they were introduced in October 2015, have been accompanied by a stark warning from NHSI Chief Executive, Jim Mackey.

In a letter sent to Trusts, Mackey announced new measures aimed at further reducing locum expenditure by £150 million in the next financial year. Whilst news of the significant savings already made since the agency rate cap was introduced is a very positive step forward, Mackey admitted most of this has been a reduction in nursing spend.

Overall spend on medical locums is expected to be around £1.1 billion nationally, and NHSI evidence shows there are still very high prices paid in places for these locums. According to NHSI, the five most expensive locums cost the NHS more than £5 million last year, with £300 million of this above the agency rate caps.

With this in mind, NHSI’s new measures set to further curb spending from April 2017 include:

  • Banning trusts from employing agency workers who hold substantive roles at other Trusts from April 2017. Instead, these staff will have to be employed through the Trust’s staff bank
  • A significant reduction in the use of Personal Service Companies (PSCs) from April
  • A national target to reduce medical agency spend by £150 million in 2017-18
  • Every Trust will be required to agree a medical locum spend target, with NHSI, for 2017/18
  • Trusts may have to publish rates of agency staff earning more than £150,000 a year.

The review also found substantial differences in the rates paid by providers in the same local workforce market, particularly around escalation rates. NHSI will therefore be working with providers to agree local escalation rates that all trusts should abide by.

Mackey comments: “We expect these new measures to take another big chunk out of excessive agency costs; there are far too many agency staff making the most out of the lower tax rates paid via PSCs and limited liability partnerships. This is a key part of the problem of so many staff choosing to work as agency staff, instead of NHS staff.”

He continues: “These new rules will make sure most agency staff get paid and taxed in the same away as their NHS staff colleagues. This will make it fairer and more attractive for people to become permanent NHS staff, which is great news for hospital and patients”.

As an approved supplier under the Crown Commercial Service (CCS) Multidisciplinary Framework RM3711 and Non-Medical, Non Clinical Framework RM971, de Poel health+care is a leading independent expert in managing the supply of temporary staff of all grades to the NHS and wider private health and care sector. As such, we are acutely aware of the challenges providers face when it comes to balancing safer staffing and slimmer budgets with workforce supply and demand, and are well positioned to assist Trusts with adhering to changing Government requirements.

We can call ourselves truly independent because we are not an agency – nor affiliated with/owned by a company that owns any – but rather a ‘neutral vendor’, acting as an intermediary between our panel of approved supplying agencies and NHS Trusts. Our unique position enables Trusts to engage and manage their temporary workforce in a completely different way – providing them with the cost efficiencies, controls and reporting capability demanded by the agency rate cap.

For the last 16 years, our mission has been to drive best value from the supply chain – with spend under management over £750m per annum, we have a significant presence in the market. By working with us, client organisations have saved an average of 12% on agency costs – representing tens of millions of pounds.

With the NHS’ current national medical locum spend at £1.1 billion, we are working with Trusts to dramatically reduce this by helping them to procure locum staff at more affordable rates. Importantly, these significant cost savings are never at the risk of patient safety. Through our relationships with over 3,500 compliant, framework-approved agency suppliers, we ensure qualified, high-calibre healthcare professionals are always in place, at the right time.

Through the creation of a level-playing field by a process of rate standardisation and fixed pound agency margins, we put a stop to charge variation – restoring the balance of bargaining power with the Trust, not the agency. We set and monitor KPIs so agencies compete on quality, and improve fill rates through rigorously audited channels, streamlined invoicing and timesheet management.

Our web-based technology, e-tips®, provides the perfect answer to many of Mackey’s requests to Trusts; including tracking agency workers who hold substantive roles at other Trusts from April 2017, and ensuring these staff are employed through the Trust’s staff bank. With access to real-time Management Information, reports can be run on e-tips® at the click of a mouse. Additionally, with full visibility and control of spend, e-tips® removes the need for paper records – reducing the burden and cost of administration and onerous reporting, so Trusts can refocus their time and energy elsewhere.

Whilst we welcome NHSI’s latest measures to further reduce agency staffing expenditure, we believe that as we head toward a seven-day service in a marketplace where demand is already exceeding supply, the use of agency staffing in the NHS is set to increase even further. Rather than pointing the finger of blame towards the staffing agency supply chain, it should be recognised that agencies have an important part to play in supporting the NHS to plug resource gaps, ensure services keep running smoothly, and that, most crucially, patient care is continually delivered.

In NHSI’s mission to tackle locum spend in the next financial year, it should be noted that, in doing so, this could potentially intensify the risk that even more agency business will end up being in the hands of the non-framework provider, which is totally contrary to what the Department of Health (DoH) is trying to achieve. This is shown in 2016 research released by MSI Group, stating that 90% of Trusts in England are regularly using ‘off-framework’ agencies to ensure adequate staffing coverage. The figures also show that just 4% of Trusts are fully compliant with the capping guidelines, and that many do not have data systems in place that would tell it which staff had been hired from an on-framework agency.

With this in mind, now is an opportune time for Trusts to look to their counterparts in the neutral vendor recruitment space for a solution to onerous data collection, enforcement of Government-capped rates and as means to managing the latest dictate. In addition, a solution like that of de Poel health+care’s can bring visibility and control of temporary staffing spend to the fore, alleviate financial pressures and provide Trusts with the peace of mind that supplying agencies are fully compliant and operating on strict frameworks. In short, those who have reporting, people and budget management responsibilities can turn to us, secure in the knowledge that we’re already delivering for client organisations what the DoH and NHSI demand must be achieved in theirs.