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Hospitals 'waste more money' after hiring management consultants

NHS trusts which hire management consultants in a bid to cut costs end up spending more, new research suggests.

The study led by Bristol University said health service spending on such firms doubled between 2010 and 2014.

And analysis of spending by 120 NHS trusts suggests that the more they spend on management consultants, the less efficient they became.

Every £100,000 spent on such firms was associated with extra costs of around £900, the research found - amounting to losses of around £11,000 for the average trust.

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.

Prof Andrew Sturdy

And these did not include the actual spending on such firms, with the average trust spending £1.2m a year on management consultants - the salary of  35 senior nurses - the study found.

The study, published in the journal Policy and Politics, details how NHS yearly expenditure on management consultants almost doubled from £313 million in 2010 to £640 million in 2014.

The experts from the universities of Bristol, Seville and Warwick Business School linked data from 120 hospital trusts in England, between 2009/10 and 2012/13,  to measures used to track efficiency.  

They said that spending on management consultants was associated with inefficiency equivalent to an average annual loss of £10,600 a year for each hospital trust. This did not include the money actually spent on consultancy, with individual trusts spending up to £5.6 million per year.

Andrew Sturdy, professor in management at the University of Bristol, 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.

Why is the NHS under so much pressure?
Why is the NHS under so much pressure?

"Data shows that it's a system-wide problem. 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, from 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."

nurses  - Credit: Getty 
The average spending on management consultants by a trust could have funded 35 senior nurses or 52 new starters Credit: Getty

An NHS Improvement spokesman said latest figures suggest NHS trusts are spending £263 million a year on management consultants, a £150 million drop since 2013.

He said:  "We are working with all trusts on reducing their costs, which includes spending less on management consultants; and have had some success.

"Since 2013, trusts have reduced their spending on management consultants by £150 million, which is a significant improvement on the past.

"In future, we will continue to work with trusts on keeping their consultancy spending to a minimum, and on commissioning it better,” he said.