Agency staff expenditure within the NHS and beyond

Growing pressure on the NHS is leading to increased reliability on agency staff for support, but this is bringing its own challenges

In today’s complex healthcare landscape, the National Health Service (NHS) plays a critical role in providing essential medical care to millions of people across the United Kingdom.

However, the NHS faces a recurring challenge – the utilisation of agency staff. Agency staff, often referred to as locum or temporary staff, are hired to fill gaps in staffing levels, especially when the demand for healthcare services surpasses the available workforce.

While agency staff play a crucial role in maintaining healthcare services, their employment comes at a cost. This article delves into the dynamics of agency staff expenditure within the NHS and explores its implications beyond the healthcare sector.

The need for agency staff

The need for agency staff within the NHS is multifaceted. A fluctuating demand for healthcare services, seasonal variations, unexpected events (such as pandemics), and staff absences due to illness or other reasons can lead to staffing shortages in hospitals and clinics.

Agency staff step in to ensure that patient care remains uninterrupted. Moreover, some specialised medical fields may have a shortage of permanent staff, prompting the need for locum professionals to provide specialised care.

The cost of agency staffing

While agency staff provide critical support, their employment can result in significant financial implications for the NHS. The cost of agency staff can be substantially higher than that of permanent staff due to various factors.

Higher pay rates

Agency staff often demand higher pay rates than their permanent counterparts due to the temporary nature of their employment. This can lead to increased labour costs for the NHS.

Administrative expenses

Hiring agency staff involves administrative costs related to recruitment, onboarding, and management. These costs can accumulate over time.

Overtime and premium

During times of staff shortage, permanent employees might need to work overtime or extra shifts. This can result in additional expenses due to overtime pay and other associated premiums.

Examples of Agency Staff expenditure

Winter pressures

During the winter months experiences a surge in patient admissions due to illnesses such as flu and respiratory infections. To manage the increased workload, hospitals often hire agency nurses and doctors. In 2019, the NHS spent over £400m on agency staff during the winter period.

COVID-19 pandemic

The COVID-19 pandemic highlighted the importance of healthcare staff. As hospitals faced an unprecedented influx of patients, the demand for healthcare professionals soared. The NHS had to rapidly recruit agency staff to manage the crisis, leading to a significant spike in agency staff expenditure.

Specialised medical fields

Some medical specialities, such as radiology or anaesthesiology, require highly trained professionals who might be in short supply. The NHS often relies on agency staff to fill these specialised roles, but the associated costs can be notably higher.

Implications and challenges

The excessive expenditure on agency staff poses several challenges and implications:

• Financial strain
  • High agency staff costs can strain the financial resources of the NHS. This can potentially impact the funding available for other critical areas such as equipment, research, and infrastructure development.
• Lack of continuity
  • Frequent turnover of agency staff can lead to a lack of continuity in patient care. Continuity is important for building trust between patients and healthcare providers.
• Quality of care
  • While agency staff are often well-qualified, the lack of familiarity with specific hospital procedures and practices can potentially impact the quality of care provided.
• Reduced morale
  • The reliance on agency staff might lead to dissatisfaction among permanent staff who might perceive inequities in pay and benefits.

Mitigation strategies

Addressing the issue of agency staff expenditure requires a varied and comprehensive approach:

• Workforce planning: Better long-term workforce planning can help predict periods of increased demand and avoid the need for excessive agency staff hiring.
• Investment in training: Investing in the training and development of permanent staff can help bridge skill gaps and reduce the need for specialised agency staff.
• Negotiating rates: Negotiating favourable rates with agency providers can help minimise costs associated with agency staff employment.
• Creating talent pools: Establishing internal pools of available staff, including retirees and professionals from other regions, can provide a cost-effective solution during staff shortages.

“While agency staff play a crucial role in maintaining healthcare services, their employment comes at a cost.”

How Rockford Associates can help

Effective financial management is paramount in any organisation, especially within the healthcare sector. The National Health Service (NHS) faces the challenge of managing agency spend efficiently while providing quality patient care. Errors and inefficiencies in agency spend can lead to financial strain and hinder the delivery of essential healthcare services.

Rockford Associates have identified the best strategies to avoid errors in NHS agency spend and developed an Analysis, Review and Recovery solution that enables the NHS to optimise their resources and allocate funds more effectively.

Comprehensive data collection and analysis

One of the primary steps in identifying errors in NHS agency spending is to gather comprehensive and accurate data. This includes data related to different types of agency staff, departments, roles, dates, and expenditure. Aggregating and organising this data gives a clear view of their agency spending patterns and trends.

Establish benchmarks and targets

Setting benchmarks and targets for agency spend can serve as a valuable tool for identifying errors. By comparing actual spending against established targets, deviations can be easily detected. For instance, if a department consistently exceeds its budget for agency staff, it signals the need for further investigation into potential errors or inefficiencies.

Regular reconciliation

Reconciliation of agency spend data with payroll and financial records is essential. This process helps ensure that the amounts paid to agency staff align with the agreed-upon rates and hours worked. Discrepancies can indicate overpayments, incorrect billing, or other errors that need immediate attention.

Interdepartmental collaboration

Effective error identification requires collaboration between various departments, including finance, human resources, and departmental managers. Regular meetings and discussions can help highlight anomalies, clarify discrepancies, and offer a more detailed understanding of agency spend.

Monitor variance from historical data

Comparing current agency spend data with historical data can reveal unexpected variations. Significant increases or decreases in expenditure should be scrutinised to determine the underlying causes. This may involve examining changes in staffing needs, policy changes, or errors in data entry.

Conduct regular audits

Conducting regular internal audits of agency spend can provide an independent assessment of financial processes. Audits can identify errors in data entry, inaccuracies in billing, and potential instances of fraud or abuse. These assessments offer valuable insights into the overall accuracy of agency spend records.

Verify invoices

Verification of invoices from agency providers is a vital step in error identification. Mistakes in billing rates, hours worked, or services provided can result in overpayments. Careful scrutiny of invoices helps ensure that the charges align with the agreed-upon terms.

Analyse staffing patterns

Examining staffing patterns can highlight opportunities for efficiency improvements. For instance, if certain departments consistently rely heavily on agency staff, it may indicate underlying staffing issues that need to be addressed, such as inadequate workforce planning or turnover.

Seek feedback from stakeholders

Engaging departmental managers, permanent staff, and agency workers in discussions about agency spend can provide unique insights. These stakeholders might identify errors or inefficiencies that are not immediately apparent from a financial perspective.

NHS – agency expenditure recovery service

The expenditure associated with agency staff can pose financial, operational, and quality challenges. To address these challenges, Rockford Associates have developed an Analysis, Review and Recovery service specifically for the NHS to analyse Agency Expenditure. The service includes: Bespoke agency spend report; contract compliance; double shifts identified; staffing patterns analysis, duplicate payments and historical payment accuracy

To find out how you could benefit from an NHS Agency Expenditure Review delivered by Rockford Associates, or if you would like to see some case studies of how we have assisted other organisations benefit, please get in touch.