No evidence that employing management consultants improves NHS efficiency
Authors: Matthew Limb
Publication date: 27 II 2018
NHS trusts have spent millions of pounds on external management consultants which has led to a “significant” rise in inefficiency, ultimately worsening services, an analysis has found.
The study linked spending on management consultants by 120 English trusts with measures of organisational efficiency, and found that only a minority experienced efficiency gains. It was carried out by academics at the universities of Bristol, Seville, and Warwick Business School and published in the journal Policy and Politics.
The trusts spent around £600m in total on management consultants from 2009 to 10 to 2012-13. Researchers compared the expenditure against the reference costs index (RCI) used to measure the efficiency of NHS providers and to set prices for NHS funded services in England.
They found that on average, for every £100 000 spent on management consultants, there was a negative impact on the RCI of approximately 0.1 point and an increase in total costs of roughly £880.
This meant an average trust spending £1.2m a year on consulting services was around £10 600 worse off each year, on top of the fees paid.
The authors said that a review of the spending was urgently needed as it seemed to have “the reverse effect to what is intended” and the money might be better used in other ways.
Study co-author Andrew Sturdy, a Bristol University professor in management, said, “The fact this is across the whole system, and that efficiency gains are the exception rather than the norm, is something of particular concern.”
He told the BMJ, “We are not arguing there is never any need for external management advice because the NHS is a complex organisation. The question is, how might you have spent this money to better effect?”
The authors said further research was needed to find out the reason for the inefficiency but suggested it could be because of external consultants not knowing how the NHS works or the failure of NHS managers to manage them or follow up on their advice.
Spending on management consultants by the NHS as a whole rose from £313m in 2010 to £640m in 2014 and remains “consistently high,” said the authors.
They said the trend for management consultants to be “partners in governance” has become embedded in the formation of public policies, through networking, and lobbying strategies.
Sturdy said the study had tested for the possibility that trusts which were already inefficient and performing poorly might be more likely to hire external consultancy advice. It found prior expenditure on management consultants seemed to influence inefficiency, rather than the other way around. Sturdy said one possibility was that consulting projects were “highly disruptive.”
There was no evidence that external consultancy had improved service quality, Sturdy said.
Fellow author Ian Kirkpatrick, from Warwick Business School, said organisations had to be “more circumspect” in deciding whether and how to use management consultants.
“It all comes down to politics, both in terms of the role of consultants in serving the agendas of politicians, and consultants’ own commercial interests in generating more business,” he said.
The Management Consultancies Association said much of the report was based on “speculation” and failed to distinguish between different types of spend. “The academics behind this research should look at real life case studies. Like Professor Sturdy, we urge clients to look carefully at how they buy consulting and the value that they derive. Unfortunately, his study won’t help them to do so,” said a spokesperson.
- Kirkpatrick I, Sturdy A, Reguera Alvarado N, et al. The impact of management consultants on public service efficiency. Policy & Politics 2018. [Link] .
Matthew Limb London