Listen to this article
The work carried out by consultancies in health and life sciences goes beyond the National Health Service but it is these firms’ involvement in the UK’s taxpayer-funded system that often attracts the most attention.
In recent years tighter restrictions have applied to the use of consultants within the NHS. The most financially troubled trusts have been required since 2015 to seek approval from NHS Improvement (NHSI), the financial regulator, for any consultancy contract worth more than £50,000. Other trusts are “strongly encouraged” to do the same.
Data from the NHSI show hospitals and other healthcare trusts have reduced their spending on management consultants by more than £150m since 2013. Spending fell by a third from £422m in 2013-14, to £263m in 2016-17, according to the latest figures released this month.
An NHSI spokesperson told the FT that “local support for trusts and a tough central approval process is helping the NHS save millions of pounds by reducing how much organisations spend on management consultants”.
As a result, when consultants were used, “it’s because it represents good value in improving clinical services, operational productivity or financial efficiency”, the spokesperson added.
While use of consultants can stir controversy, a cash-strapped system continues to rely on their expertise as it seeks to boost productivity and make better use of resources to tackle the twin challenges of an ageing population and expensive new technologies.
However, the type of work that professional services firms are undertaking for the NHS has changed over the years, reflecting changing needs and priorities. The health team at KPMG Advisory works across the whole of the health service, including community care, general practitioners, hospitals, commissioners of healthcare and the department of health.
The KPMG team is made up of clinicians, financial and tax experts, auditors and management consultants, led by Jason Parker, head of health. It was “frequently recommended” by clients and peers, earning a five-star rating in the ranking of the UK’s Leading Management Consultants, compiled by the FT and Statista, the research and data provider.
KPMG says that a decade ago, the NHS was still tackling basic productivity problems and aged estates, so its advice tended to be concentrated in areas like the hospital building programme and basic performance improvement.
Now, however, the health service is facing more complex challenges and KPMG’s work has changed accordingly. The company says its advice “now centres much more around helping systems to work together to plan entirely new ways to organise themselves”. The aim is to focus services on the needs of patients rather than clinicians, it says.
There are few cost-cutting initiatives left that trusts have not tried, “so performance-improvement approaches and transformation programmes need to be much more sophisticated, with new ways to organise and empower staff so that they can do their jobs more effectively”. One example is a successful US hospital group, with whom KPMG partners on continuous improvement programmes for acute and mental health trusts.
Nitin Chaturvedi, head of UK healthcare at Bain & Co, argues that as the needs of the service become more complex, NHS leaders will become ever more demanding and more focused on the quality of advisory services they receive “rather than on more of the same”.
This, he believes, will put a premium on tailored and innovative approaches: “The bar is getting higher and higher.” He welcomes this development, saying that “we are at our best, and add most value to our clients, when they are looking for truly innovative approaches and commitment to results”.
Mr Chaturvedi argues that two areas are especially important in making the NHS work better. The first is improving the performance of big UK hospitals called Foundation Trusts so they can act as catalysts to wider improvements in the health service. The second is to get the NHS working more closely with big pharmaceutical companies to develop innovative drug-pricing models that in turn can improve patients’ access to medicines.
Bain, which received four stars in the FT’s ratings, has operated globally in the broader healthcare sector for many years, working “with both payers and providers” of all sizes and acquiring experience in strategy, analytics and changing behaviour on the frontline. This focus on the broader market is likely to serve it well as trusts heed the injunction to be more cautious about using consultants.
In assessing the business case for using consultants, NHSI says it requires “an explanation as to why the proposed service cannot be resourced internally or sourced from peer organisations. We are also looking for efforts to ensure skills will be transferred to permanent staff, where appropriate”.
Despite this stricter climate, one area of NHS work is proving a fertile ground for consultancies: the creation of Sustainability and Transformation Partnerships in which all parts of the health service must work together to ease demand and use money efficiently.
In a report last year, the King’s Fund, a leading London-based health think-tank, found that management consultants were being used to support the development of STPs in three out of four areas.
The reasons for this varied, it found, with some filling gaps in NHS capacity while others were used to fill “perceived gaps in NHS capability — for example, providing specialist expertise in financial modelling”. While such skill shortages remain, the role of consultants within the UK health service seems set to continue.
Get alerts on Management consulting when a new story is published