DoH reveals true extent of NHS management consultant spend
The imposition of turnaround teams on cash-strapped trusts has cost the NHS more than £22m, new Labour figures reveal. And the report showed that the DoH spent a massive £133m on management consultants last year -more than the £94m projected net deficit for the NHS next year.
Three of the trusts with the worst financial problems have each paid out over £1m to finance the management consultants. Surrey and Sussex Healthcare trust came out on top with a £1.5m bill. The Department of Health contributed just £93,000 towards the costs.
The figures were revealed in a 300-page memorandum from the Department of Health to the Commons health select committee's annual inquiry on public expenditure. The response was one of the answers to over 140 questions posed by MPs contained in the dossier.
In the document, the DoH admitted the accuracy of HSJ's revelations on the estimated redundancy costs of the current NHS restructuring (news, page 5, 24 November 2005). The evidence said the cost of payments to staff who lost their jobs under the reconfiguration of primary care trusts and strategic health authorities has been projected at 'around £325m', assuming an average age profile.
And the report showed that the DoH spent a massive £133m on management consultants last year -more than the £94m projected net deficit for the NHS next year.
It confirms that the DoH underestimated the annual cost of the consultant contract by £90m, and the Agenda for Change contract for nurses and managers by £220m, due to mistakes in calculating overtime and the cost of replacing staff working fewer hours under the contract.
The document also shows that in 2005-06 PCTs overspent by £196m on the GP contract, due to better than expected results from the quality and outcomes framework, and extra spend on out-of-hours care.
This was despite a £322m injection from the DoH to help PCTs commission and provide new services after 90 per cent of GPs opted out of the out-of-hours part of their contract.
The memorandum shows that in 2005-06 total management costs rose on the previous year to £2.6bn; but as a proportion of total NHS spend it fell slightly, to 3.7 per cent. Nevertheless it reveals that the number of managers and senior managers has leapt by more than three-quarters since 1997.
The £21.1m turnaround bill comprises only 97 trusts and PCTs. Since the figures were compiled for MPs in May, the number of turnaround teams has risen to 143.
Turnaround trusts have had to fund their own support; the DoH only contributed £93,000 towards the first three months of the 23 turnaround trusts with the deepest problems.
NHS Confederation chief executive Dr Gill Morgan said: 'Before we can say whether this has been money well spent, we need to know what has been released in terms of savings. If it has delivered more than £22.1m it will have been money well spent; if it has only delivered £5m it may have been a waste.'
Of the extra £5.5bn invested in the NHS last year, 56 per cent was spent on pay and 33 per cent on drugs and supplies.
The HSJ first published the findings at:
http://www.hsj.co.uk/healthservicejournal/pages/n5/061130
On Sept 12, 2006 Health Direct commented that the NHS external manager bill soars to over £172m this year when the NHS in England is set to spend £172m this year on external management consultants - a rise of 83% in two years - the Conservatives have claimed. The Tories warn spending on managers is detracting from clinical services. Welwyn Hatfield MP Grant Shapps used the Freedom of Information Act to obtain figures from 76% of NHS trusts. The data shows a link between trusts with the biggest debts and most job cuts, the Tories said.
The labour government has also enlisted companies like KPMG and Price Waterhouse Coopers to act as "turnaround teams" for some failing trusts.
In their report, the Tories said trusts' spending on management consultants was increasing, and that the use of consultants was a "reliable yardstick" for job losses and debts. The report added that a total of £93.8 million was spent in 2004/05 on external consultants, rising to £117.9 million in 2005/06.
The projected spend for was 2006/07 is £171.6 million. However these new figures suggest that even this figure may be an underestimate of how Labour is wasting our money.
Three of the trusts with the worst financial problems have each paid out over £1m to finance the management consultants. Surrey and Sussex Healthcare trust came out on top with a £1.5m bill. The Department of Health contributed just £93,000 towards the costs.
The figures were revealed in a 300-page memorandum from the Department of Health to the Commons health select committee's annual inquiry on public expenditure. The response was one of the answers to over 140 questions posed by MPs contained in the dossier.
In the document, the DoH admitted the accuracy of HSJ's revelations on the estimated redundancy costs of the current NHS restructuring (news, page 5, 24 November 2005). The evidence said the cost of payments to staff who lost their jobs under the reconfiguration of primary care trusts and strategic health authorities has been projected at 'around £325m', assuming an average age profile.
And the report showed that the DoH spent a massive £133m on management consultants last year -more than the £94m projected net deficit for the NHS next year.
It confirms that the DoH underestimated the annual cost of the consultant contract by £90m, and the Agenda for Change contract for nurses and managers by £220m, due to mistakes in calculating overtime and the cost of replacing staff working fewer hours under the contract.
The document also shows that in 2005-06 PCTs overspent by £196m on the GP contract, due to better than expected results from the quality and outcomes framework, and extra spend on out-of-hours care.
This was despite a £322m injection from the DoH to help PCTs commission and provide new services after 90 per cent of GPs opted out of the out-of-hours part of their contract.
The memorandum shows that in 2005-06 total management costs rose on the previous year to £2.6bn; but as a proportion of total NHS spend it fell slightly, to 3.7 per cent. Nevertheless it reveals that the number of managers and senior managers has leapt by more than three-quarters since 1997.
The £21.1m turnaround bill comprises only 97 trusts and PCTs. Since the figures were compiled for MPs in May, the number of turnaround teams has risen to 143.
Turnaround trusts have had to fund their own support; the DoH only contributed £93,000 towards the first three months of the 23 turnaround trusts with the deepest problems.
NHS Confederation chief executive Dr Gill Morgan said: 'Before we can say whether this has been money well spent, we need to know what has been released in terms of savings. If it has delivered more than £22.1m it will have been money well spent; if it has only delivered £5m it may have been a waste.'
Of the extra £5.5bn invested in the NHS last year, 56 per cent was spent on pay and 33 per cent on drugs and supplies.
The HSJ first published the findings at:
http://www.hsj.co.uk/healthservicejournal/pages/n5/061130
On Sept 12, 2006 Health Direct commented that the NHS external manager bill soars to over £172m this year when the NHS in England is set to spend £172m this year on external management consultants - a rise of 83% in two years - the Conservatives have claimed. The Tories warn spending on managers is detracting from clinical services. Welwyn Hatfield MP Grant Shapps used the Freedom of Information Act to obtain figures from 76% of NHS trusts. The data shows a link between trusts with the biggest debts and most job cuts, the Tories said.
The labour government has also enlisted companies like KPMG and Price Waterhouse Coopers to act as "turnaround teams" for some failing trusts.
In their report, the Tories said trusts' spending on management consultants was increasing, and that the use of consultants was a "reliable yardstick" for job losses and debts. The report added that a total of £93.8 million was spent in 2004/05 on external consultants, rising to £117.9 million in 2005/06.
The projected spend for was 2006/07 is £171.6 million. However these new figures suggest that even this figure may be an underestimate of how Labour is wasting our money.
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