What has the impact been of recent caps on NHS agency staff spend?

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Almost four months to the day since the first caps on agency spending were introduced by Monitor and the NHS Trust Development Authority – and with new framework agreements due to come into force next week – what do we know about the impact of these measures so far?

Unfortunately, not a huge amount. Although NHS providers are submitting weekly data returns to Monitor and the Trust Development Authority, no official figures have yet been published. Without this we are, to some extent, in the dark about the effect of the measures, instead relying on piecing together other sources of information such as Freedom of Information requests and individual trust and agency experiences, to try and gauge early indications of impact.

Before we delve into what these sources indicate about progress, here’s a quick rundown of the measures.

  • In September 2015, trusts were set individual expenditure ceilings for agency nursing staff.
  • In November 2015, caps on the hourly rates paid for agency staff were introduced (set at 150 per cent above basic pay for junior doctors, 100 per cent for other medical and all other clinical staff, 55 per cent for non-clinical staff).
  • The caps on hourly rates were further tightened on 1 February (to 100 per cent for junior doctors and 75 per cent for other medical and all other clinical staff, remaining at 55 per cent for non-clinical staff). The caps are supposed to fall again on 1 April to 55 per cent above basic pay for all agency staff (still TBC).
  • There is a ‘break glass’ provision for trusts that need to over-ride the caps on ‘exceptional safety grounds’. Shifts exceeding the caps are reported to Monitor and the Trust Development Authority weekly.
  • From 1 April 2016, all staff groups will be procured through Monitor and Trust Development Authority-approved frameworks.
  • The caps on hourly pay rates will extend to ambulance trusts from 1 July.
  • Compliance is a condition of access to the Sustainability and Transformation Fund.

So what do we know about the effects of the caps to date? On the whole, the information points to only patchy success in enforcing even the more ‘generous’ early caps. A recent discussion with one agency suggests that it has largely managed to reduce its rates to below the cap for nurses in London (which benefits from the London weighting on pay) but that it has been more difficult in areas outside the capital, where in the majority of cases (particularly for highly specialised or critical care nurses) rates have been above the 75 per cent cap. In the case of allied health professionals, some areas are operating within the cap but a majority are not, again particularly outside London. For doctors the story is even more marked. Here the agency report that they were not able to meet the first round of caps in the vast majority of instances, with wide variation between grades and specialties.

Figures published in the Nursing Times paint a similar picture: 85 per cent of acute trusts that responded to their Freedom of Information request had exceeded the nursing cap since it was introduced. More than 20 trusts had gone over the cap for more than 100 shifts a week.

This intelligence may not tell us much about what will happen as the hourly pay limits continue to ratchet down and begin to bite. The real test will come when all the price caps – for doctors and nurses alike – drop to 55 per cent above basic rate of pay (originally planned for April 1 2016). (This might not seem particularly low, but it includes all related costs – employer pension contributions and National Insurance, holiday pay and an administrative fee. Effectively the 55 per cent cap means an agency worker ‘should not be rewarded more than an equivalent substantive worker’ which may not be enough to attract staff to work what is sometimes effectively overtime).

There may be two scenarios: the optimist view is that trusts will be increasingly able to operate in line with the measures as they bed in and the market adjusts to new, lower rates of pay for agencies and for their staff. Alternatively, if for whatever reason the caps are not enforced on such a widespread basis and the majority of providers cannot live within them, the credibility of these measures and any future decisions to further tighten the rates may be called into question.

The major risk we see is that the solution being pursued by the national bodies fails to address the underlying issue of shortage of supply; in recent years providers have increasingly been forced to rely upon more expensive temporary staff to fill vacancies because they simply cannot recruit sufficient permanent staff.

This view is echoed in recent reports from the National Audit Office, the NHS Pay Review Body and the Public Accounts Committee, which concluded that ‘the NHS will not solve the problem of reliance on agency staff until it solves its wider workforce planning issues’. The danger then, if more stringent caps are enforced and the shortage of permanent staff not tackled, is that providers will simply not be able to get the staff they need. This was a very real concern highlighted by finance directors in the February edition of our Quarterly Monitoring Report, where more than 20 per cent thought that agency limits would affect their ability to recruit the staff they needed to provide safe care to patients. Controls on agency staff should be part of a wider workforce strategy that ensures the NHS can attract the staff it needs.

Comments

Darren Kilroy

Position
Deputy Medical Director,
Organisation
East Cheshire NHS Trust
Comment date
24 March 2016
In our organisation, through a structured and consistent series of agency spend review groups which meet weekly with senior clinical and managerial membership, we've made huge strides in improvement. The agency spend challenge has given us a catalyst to review rosters, job plans and processes, flushing out inefficiencies, highlighting inconsistencies in shift allocations, and - importantly - enabled us to use this work as a real-terms boost to workforce engagement.

Although we, like everyone else, continue to struggle with some elements of supply, we have eliminated medical agency spend in A&E above cap, eliminated the use of any HCA agency staff completely, improved our rota management systems, introduced a medical internal bank with weekly pay, and forged a strengthened network of relations within and beyond the organisation.

We have worked, via our procurement team and through diligent conversations, with our agency partners to collaboratively trim margins and rates. We have negotiated with agency doctors one by one to drive down costs. And we have monitored it all through a series of financial and operational trackers which are reviewed weekly.

So although there is pain in this exercise, there is also organisational reward to be had.

Duncan Kennedy

Position
Director,
Organisation
Audity Ready
Comment date
24 March 2016
It is fair to assume caps are hear to stay therefore I agree that a collaborative approach between supplier, agency worker and trust must be the way forward. From a patient safety perspective it is vitally important the NHS employment checks required are not compromised by agencies in their attempt to protect shrinking margins. The impact of the caps on the quality checks that should be performed needs to be watched to ensure this does not happen.

Andy Harrison

Position
Director,
Organisation
Path-to-Health Limited
Comment date
24 March 2016
From comment above looks like it could cost a lot of management time trying to stay in line to be successful. Though maybe too early to tell and overall assessment may depend on how uneven much of the staffing shortfall is e.g. regional/local differences. Also on how much more pressure will be placed on existing staff to increase their hours worked. Interesting to see if CQC inspections pick up increasing problems with staffing levels as move forward

Jon Kyffin

Position
Clinical Site Manager,
Organisation
Basildon & Thurrock NHS Trust
Comment date
25 March 2016
Additionally, any work people undertake for an agency is taxed as a second job, at 40%, and usually in the bottom of half of a particular pay band. people are relucted to carry out additional hours in thier usual work only to be paid significantly less than what they should. Trusts should be free to pay staff overtime as there are benefits- Trust already have payroll systems in place, there is no agency markup to pay and the indidial staff members get paid there wort and don't have to pay excessive tax on thier earnings. As long as the unjust way people working extra shifts are treated are addressed the agency caps will lead to worrying staff shortages.

Daniel Stevens

Position
Urology Trainee,
Organisation
NHS
Comment date
26 March 2016
Junior Doctors will not cover rota gaps if shifts are subject to these rates. The odd locum shift was attractive as they were well remunerated and justified the loss of time with family (and rest) that extra work meant. Rotas are already staffed at unsafe levels all over the country, and these caps will endanger patients by worsening this. There is no goodwill left in the NHS and managers will either have to accept dangerous staffing levels or be extorted for last minute locum by agencies.

Jennifer Burgess

Position
FY1,
Comment date
27 March 2016
Bringing back the internal medical banks would be fantastic. I worked as an HCA at my local hospital during 2006-2009 whilst I was doing my psychology degree. At some point after I left it was shut down and the job contracted out to a private agency. The bank had one part time admin who co ordinated the shifts from onsite, and had a good relationship with the matrons and her staff so she was ideally placed to serve the clinical needs of the hospital and the needs of her staff. In addition the ward had my number so they could contact me last minute. What a waste of money to outsource this to a company when it can be done in-house, with the additional benefit of increasing loyalty and morale in the workforce as they see themselves as hospital, and not agency, staff.

Umesh Prabhu

Position
MD,
Organisation
Wrightington Wigan and Leigh FT
Comment date
28 March 2016
Life is all about demand and supply. It is easy to cap the rate if there is adequate supply of well trained doctors, nurses or other professionals. But when there is sever shortage of supply the market force decides the rate. Imposition of junior doctors contract will make sure the shortage of doctors will increase hugely over next year or two.

Capping agency rate may reduce agency bill to some extent but unless there are more well trained doctors, nurses and other professionals to recruit either the cost will go up or quality of care and patient safety will suffer. When patients suffer staff will also suffer and when there is shortage of doctors, nurses or other professionals patients and staff will suffer and NHS will suffer.

Chris Jingree

Position
Oncology Clinical Fellow,
Comment date
28 March 2016
It's very interesting to see that some trusts are clearly taking the imposition of this market restriction to act on issues of rota management and effective in-house locum work. The benefits are enormous to both the trust and the agency worker with no requirement for a middle man. Most staff would prefer to work in-house for a reasonable rate but unfortunately many trusts have not focussed on trying to modernise their rota management with well trained staff or modern software. This leads to many people using external agencies instead.

I remember working at a northern hospital that had extremely low rigid rates for most grades of work - only one of my colleagues ever volunteered to take these shifts and the rest were either unfilled or a more senior staff member took the role (@ their pay rate). I suspect this is what will happen over the next few weeks to months.

Matthew Lewis

Position
Consultant and Group Director,
Organisation
Sandwell and West Birmingham
Comment date
30 March 2016
One can only hope that the effect of the cap will be to encourage some staff to take up substantive posts, instead of working as long-term locums - this would have a positive effect on stability and expenditure.

Santosh Pradhan

Position
Consultant EM,
Organisation
ASPH
Comment date
31 March 2016
Few doctors will work at the suggested capped rate from April. Huge rota gaps so demand vs supply don't match- bound to breach cap rates.
Suggestion1- caps not applicable to Trust staffs either permanent or bank temporary. This has attracted some full time Locums to join banks. However we don't have enough people to cover gaps. If this exclusion can be applied to Locums not only to bank staffs, but to any staffs who have permanent jobs at same level in any NHS trust. This would help doctors working in neighbouring trust to help each other without the capped disadvantage. This would then minimise the role of people who have exploited the role of Locums only lifestyle.
Suggestion 2. More transparent and visible caps on spend on managers, or number of high profile exec members. Eg. Salary +bonus for CEO, CFO, director of operations, etc, as well as hourly rate for their oncall - director on call, senior site manager. This can then be compared to senior doctors hourly rate or shift rates which is publicised in media widely. This will at least give some reassurance that saving is not forced to frontline healthcare staffs.

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