A more efficient NHS means a smaller workforce

30 March 2015

At Reform’s commissioning conference last week, Simon Stevens described an efficiency challenge for the NHS that is “huge and inevitable.” He said that “Anyone who thinks we can spend our way to success needs to get their reading glasses on.” NHS England has warned that without a more efficient NHS, the next Government will need to find an additional £22 billion to spend on the NHS in the next Parliament.

With half the budget spent on staff, a more efficient NHS must mean a smaller workforce. At the beginning of the Parliament, the NHS White Paper acknowledged that “as a result of record debt”, a smaller workforce was “a hard truth which any government would have to recognise.” But while staff numbers fell in the first half of the Parliament (with headcount falling 2.1 per cent between 2010 and 2012), in 2012-13 this reversed. In the wake of high profile inquiries into failings of care, such as that by Sir Robert Francis QC, the number of staff has become increasingly synonymous with quality of care. New figures show the NHS workforce is now the largest it’s ever been, rising by 1.7 per cent in the last year alone. However, in any public service, what matters must not be the number of staff, but the quality of staff and how effectively they are deployed.

The workforce is also become more expensive, with growing reliance on agency staff placing considerable pressure on strained hospital finances. Expenditure on agency staff rose 19.5 per cent in 2011-13 – the largest source of increased expenditure for NHS trusts and foundation trusts. With the hospital sector predicting an £823 million deficit for 2014-15, this is a cause for concern.

The NHS needs the right staff in the right place. NHS England has warned recent increases in staff numbers do “not fully [reflect] changing patterns of demand.” Shifting care out of hospitals will require a rebalancing of the workforce as well as services, yet the vast majority of clinical professionals continue to work in acute hospitals, with hospital consultants increasing around three times faster than GPs. Across the workforce, while patients with multiple conditions require a generalist clinical approach, there is a growing trend towards a more specialised workforce. It is difficult to square this composition of staff with the new models of care outlined in the Forward View.

A cost-effective workforce will also require reform to pay, terms and conditions. Pay, terms and conditions continue to be comparatively generous, with the OECD recently concluded more could be done to address the “excessive remuneration” for staff such as general practitioners. There is also scope to better link pay to performance, with the Department itself recognising the need for “the modernisation of national pay frameworks” to ensure “there is a better balance between pay, performance and productivity, rather than time served.” Hospitals such as Salford Royal NHS Foundation Trust show what can be achieved when clinical and non-clinical staff are engaged and effectively performance managed. The shift towards seven day working should mean controversial changes to the consultant contract in the next Parliament.

The NHS White Paper stated that “pay decisions should be led by healthcare employers rather than imposed by government” yet the NHS continues to rely on national pay restraint and bargaining to control workforce costs. In 2010, a consortium of 20 employers from the South West announced plans to reform pay and conditions, but progress collapsed when the Chancellor announced regional pay would not proceed.

Workforce reform will be an unpopular prescription with the NHS and with much of the public. It will be tricky politics for a Government that has to take on the BMA. But the size of the efficiency challenge facing the health service means this is a tough pill the NHS will have to swallow.

Cathy Corrie, Senior Researcher at Reform and William Mosseri-Marlio, Researcher at Reform. This blog follows Reform’s report Progress on NHS reform.

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