Management consultants: a waste of money or a valuable resource?

Management consultants from commercial and not for profit agencies are an ever growing part of the delivery of public services in the UK, and the NHS is no exception.

The often controversial use of the private sector in the delivery of frontline NHS services is well documented. However, they are also used extensively by healthcare commissioning organisations.

For years, initiatives such as world class commissioning and now the lead provider framework have enabled, promoted and encouraged the use of management consultants by commissioning organisations.

Indeed, a key goal of the Health and Social Care Act 2012 has been to introduce more external providers into the NHS to increase competition.

Expected improvements

The assumption has been that the use of external providers and consultancies will lead to better quality commissioning.

‘Commercial and not for profit management consultants appear to only be partly successful’

Yet, despite large and growing expenditure by healthcare commissioners on consultants, there is continued scepticism and concern about their impact.

The University of Bristol’s Centre for Academic Primary Care and the University of Southampton has carried out a study – the largest of its kind in the UK – into the perceived impact commercial providers had on commissioning decisions, through the services offered.

We found that commercial and not for profit management consultants appear to only be partly successful in improving the perceived quality of commissioning.

So a large number of existing contracts between NHS commissioners and commercial providers, despite costing vast sums of money, may not necessarily be producing the benefits NHS commissioners expect.

Skills gap

Our research showed overwhelmingly that the reason for this is the promised knowledge and skills gained by the NHS clients were limited.

This was just as much because NHS clients did not want to pay the extra costs in time and money to upskill their staff, or did not have the capacity or interest, as it was the responsibility of the management consultancies.

Where contracts with commercial and not for profit providers had the most impact and value there were effective strategies in place to actively engage commissioners in learning, embedding and applying new skills, rather than just a wholesale outsourcing of work to a consultancy.

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Cycle of dependency

Without explicit knowledge exchange strategies, the engagement of external expertise in the commissioning process can put the contracting organisation in a vulnerable position, as they become increasingly dependent on the external provider – a situation that is likely to worsen over time.

Although this may suit some consultancies’ business models and their busy, cash strapped clients in the short term, it has important implications for commissioning organisations, and the wider NHS.

It can ultimately lead to a perpetual cycle of dependence on external provider organisations, and a monopoly relationship that may actually be more expensive to the NHS in the long run. This could impact on the amount of funding available to commission local services.

Three keys

From our research it appears that there are three key aspects commissioners for commissioners contracting with external providers.

First, commissioners need to be intelligent buyers.

‘Contracts must cover the transfer of skills and upskilling of local staff to maximise value and reduce dependency’

When seeking to procure external software or solutions, including technology based tools, to help inform commissioning decisions, commissioners need to be clear on the problem they are trying to solve and their expectations.

This requires the involvement of frontline operational staff in the procurement process at every step of the way.

Second, commissioners have to be able to interpret and apply the information supplied.

For example, it is not enough to deploy a software tool and provide training on that tool.

Contracts need explicitly require external providers to provide interpreters who can help commissioners to understand information outputs and apply them to local strategies, problems and issues.

Third, commissioners need to think about the long term. Contracts with commercial and not for profit agencies must cover the transfer of skills and upskilling of local staff to maximise value and reduce dependency.

If this is not done, commissioners are in danger of developing a monopoly relationship that may be more expensive in the long run. Explicit knowledge transfer mechanisms are needed to guard against this.

Watertight contracts

The commercial and not for profit sector is playing an ever bigger role within the NHS, so we need to ensure that healthcare commissioning receives maximum benefit from the expertise these organisations can provide and ensure the contracts represent value for money.

It is not enough to simply procure an external provider and outsource problems in the hope of resolution.

Instead, there needs to be a mutual relationship in which the external provider and their clients enshrine explicit mechanisms within their contracts to ensure local staff are empowered to learn new skills, interpret information effectively and understand how to use the tools they are being given.

Lesley Wye is research fellow and James Rooney is NHS management fellow for the University of Bristol’s Centre for Academic Primary Care