When Outsiders are Called in

Civitas, 11 May 2009

Health sector employment of external management consultants has been making headlines lately. The HSJ reports DH board member anger over the appointment of McKinsey and Company to advise a panel of experts on how to measure GP quality, and today, the Royal College of Nursing (RCN) announced it has obtained, through use of the Freedom of Information Act, figures on the amount the NHS in England spent on such consultants in the past year: a reported £350 million. If the comments following related news articles are anything to go by, the reaction among patients and NHS employees alike is one of alarm.

Public sector use of private advisors is nothing new—in fact, the NHS has been delegating major projects and reforms to outside management firms since the Conservatives introduced the purchaser-provider split in the early 1990s. In response to a June 2005 House of Lords question, DH Health Minister Lord Warner explained McKinsey had completed four projects for the DH in the past two years alone and was at the time working on a fifth. The BBC reported that NHS England was to spend £172 million on management consulting in 2006.

So why the current shock and contempt?

According to the RCN, 39 per cent of the money spent on management consultants this past year was allocated to NHS market testing designed to help providers identify the most profitable options and commissioners to find the most value for money. There is certainly a question of the appropriateness of such great expenditure on ‘profitability’ when it seems patient care is already being put second to the priorities of meeting targets (e.g. the situation in Mid-Staffordshire).

Profitability itself is not a bad thing, as profitable organisations should in theory have greater resources to devote to improving quality of care. However, current policy supports market expansion and alternative sources of financing as means of achieving profitability, and the need to employ such private-sector-favoured mechanisms may pressure NHS organisations to feel they need further private sector advice—and even more spending on such consulting—simply to stay competitive. This is especially concerning in light of the 11% reduction in health spending called for in the 2009 budget.

Management consultants have been behind some of the major health policy initiatives implemented throughout the past few years, many of which are controversial. In his June 2005 response, Lord Warner reviewed McKinsey’s work with the DH, which included developing best practice commissioning and payment-by-results programmes, and providing ongoing advice to the Commercial Advisory Board and the Foundation Trust regulator organisation, Monitor, which the consultancy helped to create.

But what impact does all of this delegation of work have on NHS employee morale? The HSJ reports that many members of Lord Darzi’s clinical advisory group for primary and community care were unhappy the DH hired McKinsey to come up with ideas, rather than consulting panel members first. And who can blame them? One can only imagine the hundreds of NHS managers and clinicians who feel their hard work, autonomy, hands-on experience and insight have been overridden in favour of advice from big consultancies.

Aside from the obvious potential to dampen staff enthusiasm and motivation, is this in itself a waste of resources? How much does the NHS spend each year on management training and recruitment? Probably not a small sum.

To be fair, there are situations in which external views may be beneficial, such as instances of internal conflict. It also makes sense that if NHS organisations are to be run as businesses, they should be allowed to compete as businesses, using necessary resources and guidance.

The difficulty, however, is twofold. Most top companies are not operating on taxpayer income; and if the NHS is a business, patients and the public should certainly be treated as investors and key stakeholders, with their opinions taken into consideration on issues as contentious as this one. Most successful companies also take the attitude that the best ideas are generated by those closest to the work, and that each time a frontline employee’s idea is used, a culture of creativity and innovation is reinforced. NHS organisations should make sure they are aware of the thoughts and feelings of their staff when inviting outside advisers to come in and prescribe reform. After all, those employees are the ones whose support and commitment will be needed to turn consultant ideas into reality.