Hold firm! How hospitals working together can break the cycle of agency dependency and exorbitant hourly rates

 

In October 2015, NHS Improvement set out to clampdown on spend on agency workers. With high-cost medical locums (doctors) driving much of this spend, hospitals were instructed to only exceed ‘capped’ hourly pay rates in ‘exceptional circumstances’; when an unfilled shift would put patients at risk.

3 years on and, according to NHS I, agency controls across all staff groups have reduced expenditure by £1 billion since they were introduced.

Whilst attempts to regulate a previously unfettered agency market are commendable, the hourly caps haven’t fixed the problem with medical locums. Overall spend on medical locums is expected to be around £1.1 billion nationally. The top 5 paid locums cost the NHS over £5 million, and £300 million per year could be saved if all medical locums charged rates within the set price cap.

So, what’s the problem with these controls for medical locums

The locum caps are too low.

In certain specialties, especially those where the NHS is struggling with national skill shortages, locum Consultants have historically been able to charge c.£150 p/hour when picking up agency work. A price cap of £76.10 p/hour misunderstands the bind hospitals find themselves in when faced with a gap in their rota and the negotiating position skilled Doctors and slick, commercial agencies hold.

Booking a locum is sometimes unavoidable.

To ensure safe staffing levels, hospital executives are often left without much of a choice but to ‘break glass’ (the term given to breaching caps and escalating the hourly rate) – culturally and operationally nullifying the agreed caps.

Competition among Trusts for the same agency workers drives up rates.

Locums and agency suppliers alike have profited for years from bidding wars between hospitals. They know that, as hospitals grow more desperate to increase their fill rate, the hourly rate climbs. Multiple hospitals within the same region can be played against one another as doctors are willing to travel. The price caps have not altered this. In fact, we asked agency suppliers themselves how NHSI price caps have changed their business model. Their response? “They haven’t”.

With demand for services on the rise, agency spending shows little sign of slowing. But as deficits grow, curbing agency spend is high on the priority list. Price caps haven’t yet proved to be the quick fix. Hospitals working in collaboration stand the best chance of breaking the cycle. We must tackle agency dependency on two fronts: 1) re-gaining grip of locum rates, and 2) curbing locum demand.

 

Systems must come together to step-down rates over an agreed period of time – and hold firm

Admittedly, NHS Improvement caps may be set over-ambitiously low. But NHS I has also empowered hospitals and networks of providers to develop their own escalation rates above the NHS I caps, and to map their own trajectories to reducing spend over time.

That’s exactly what some networks of Trusts have done. By coming together to agree a common break glass rate card, they have silenced the rates rumour mill that can exist, and disempowered agencies looking to intensify the competition between Trusts.

This, however, relies on individual Trusts ‘holding firm’ to operational processes that ensure these rates are adhered to. Otherwise, all that will change is how Trusts report breaches internally. For instance, we have worked with one system to agree a common escalation process which culturally reinforces that contacting an agency is a last resort – all other alternatives must have been exhausted before Executives approve a breach.

This represents a key step-change for organisations. Statutory organisations will have to be bold in holding firm to agreed rates for the good of a collective; this means resisting the temptation, even amidst severe operational pressures, to blink first and escalate rates, shifting the problem to neighbouring Trusts.

 

Engage Clinical Leads in forward planning and tackle underlying demand for locums

Clinical Leads want substantively staffed services and they understand the implications of agency dependency. HR Directors and Temporary Staffing Leads must work alongside Clinical Leads to review rotas proactively; emphasising the quality dimension to all of this – high agency usage is associated with increases in clinical adverse events and can act as barrier to patient flows.

Yes – hospitals must maintain the primacy of safe staffing, and there will always be a need for agency staff to cover shorter-term absences or emergencies. However, from our analysis of booking data from the hospitals we work with, short-term cover (with a Lead Time of under 7-days) accounts for just ~40% of agency usage. 30% of booking Lead Time is over 7-days and a further 30% is over 30-days, much of which will be cover for long-term vacancies.

That implies that agency usage isn’t primarily driven by the adage, ‘It’s Friday night, 9 o’clock, we need a doctor, urgently.’ Provider networks can share learning as to how hard-to-fill vacancies can be mitigated with re-engineered roles.

Within every health economy, there will be individual wards or clinical specialties within which agency dependency may have been normalised over time. Part of the CF approach is identifying select wards where high agency costs correlate with a high proportion of medically optimised patients (see Figure 1). We have written recently on the topic.

 

Figure 1