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DH is told 137,000 NHS posts must go in next five years

The Department of Health has been told the NHS in England will need to slash its workforce by 137,000 if it is to achieve its planned £20bn savings by 2014, HSJ can exclusively reveal.

This would mean the NHS losing 10 per cent of its workforce. The estimate was given to the DH in a confidential report commissioned from the consultancy firm McKinsey and Company, and seen by HSJ.

Although the DH has said the report was “purely advice and does not constitute government policy”, it bears the department’s logo and has been disseminated among senior NHS managers.

Proposed cuts

30,800 non-clinical posts, saving £600m

£3bn - saving potential of increasing staff productivity in NHS hospitals

£1.9bn - savings projected by cutting external contracts and supply costs such as waste and food

£1.3bn - saved by cutting unneeded appointments and procedures

£8.3bn - estimated value of hospital estates which could be freed up and sold

The McKinsey report makes clear the cuts will need to be felt as much among clinical staff as administrators.

Based on its analysis of different staff group efficiencies, it says the cut required to full time equivalents for an NHS hospital with a clinical staff of 300 would be: two consultants, one registrar, 10 nurses, 10 healthcare assistants, three allied health professionals and eight non-clinical staff.

The report recommends a range of “potential actions in the next six months” that should be considered. These include: a recruitment freeze starting in the next two years; a reduction in medical school places starting in October, to avoid oversupply in five years; and an early retirement programme “to be implemented in the next two years” to encourage older GPs and community nurses to make way for “new blood/talent”.

The consultants also recommend that plans to increase staffing levels and investment, such as those set out in the national stroke strategy and the children’s service strategy, should be “reviewed”.

It says up to £600m could be saved by acute providers if those with above average ratios of non-clinical to clinical staff cut their administrators down to nearer the average level. Their £600m calculation was based on losing 30,800 non-clinical staff on an average salary of £20,000.

The analysis was presented to the DH in March this year and was shared with senior managers at strategic health authority level - several weeks before NHS chief executive David Nicholson said publicly the NHS should be planning to make up to £20bn in savings by 2013-14. Although some of the findings have been cited outside senior management circles the full analysis has been on restricted access.

The analysis sets out how up to £8.8bn of new recurrent annual spending could be cut from the NHS by 2013-14. It says the biggest chunk - up to £3bn - could be saved by increasing staff productivity in NHS hospitals. The second biggest saving is in non-acute staff productivity (up to £1.9bn) and in driving down costs of external supplies and contractors such as waste and food (up to a total of £1.9bn in savings).

McKinsey’s breakdown of the types of NHS organisation the savings are likely to come from reveals that acute providers will be hardest hit, with cuts equivalent to up to 38 per cent of their 2008-09 spending by 2013-14.

The smallest savings would fall on primary care, where spending would reduce by up to 13 per cent. Community care budgets could be cut by up to 28 per cent.

HSJ asked the DH whether the report - which earlier this year McKinsey won a competitive contract to write - concurred with the department’s own analysis and policy.

In response health minister Mike O’Brien played down its significance. He said: “Advisers advise but minsters will decide after taking a range of advice.”

He added: “The McKinsey work… is not in any sense an NHS plan of action. They are just making some suggestions which will be looked at with many other ideas.”

NHS Confederation policy director Nigel Edwards said some proposals looked at odds with current policy: “We’ve just spent a fortune on stopping GPs retiring. Isn’t the rest of the strategy to shift care out of hospitals and into primary care?”

He added that early retirement plans would take a long time to yield any savings, unless McKinsey was recommending the DH “reneges” on the NHS pension scheme.

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Readers' comments (40)

  • It's just as well someone has started a public discussion. "Efficiency" just won't do it in terms of the £20 billion. Some things are going to have to be shut, stopped or reduced.

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  • I think that you have to first ask who wrote the report? The accountancy consultancy McKinsey.

    Accountants always abstract performance and actually are very poor at understanding where and how improvements in service can quickly equal a reduction in cost.

    Accountants always go for the option that says we will have to lose x number of jobs. This sort of tick-box mentality is the thinking that got us into the financial crisis in the first place. Isn't it time for a spot of new thinking to solve new problems instead of old thinking to solve the old problems?

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  • It would be interesting to know how much we have spent with McKinsey and other such consultants. Are there not people within the DOH and SHA's who can do this sort of work (now that would be efficient)?
    I think all NHS people should get an input into where these savings can be made.
    Being Finance person the places to save are really quite easy:-
    Consolidate London PCTs Commissioners / Public Health / Boards. After consolidation you would be able to do away with the SHA(who are basically are glorified bankers who hold the money and not very well!). Probably by the end of this we actually might be able to keep front line services, instead of CEO's in their comfy chairs.
    Here's another:-
    Why do we need different HR policies and procedures for each PCT / Trust across the country. Can't we have one set for the NHS with appendix's for Local agreements. How much time / man power would that save.
    I think the problem with the NHS is that no one is prepared to make the big decision of this swathe management within the DOH and SHA.
    I am becoming tired of Politics and tick boxes within the NHS, can't we just get this NHS re-centered to patients.
    If there is an MP reading this, I can show you how to save £20b across the Public sector. I would stake my life on it but not sure I would go to acute hospital in the near future!
    I think it maybe time to fill my private health forms in. Now how funny is that!

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  • How much did this report cost? Can HSJ find out? Not only will it be, no doubt, a horrendous amount, but now the Government has said that it's not going to implement its findings! So - we pay for a report that states the bleedin' obvious, nothing happens and it's shelved. Meanwhile the taxpayer picks up the tab for yet another huge McKinsey tome.

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  • Before getting rid of staff how about each organisation look at where horrendous amounts of waste is in terms of duplication - each organisation tries to reinvent the wheel and people who are in their comfort zones continue to do what they feel comfortable with. This is a great opportunity to rethink the way things are done.

    Getting better at performance managing people would be a good starting point too and it would certainly help when getting rid of incompetent people (there are plenty of those around).

    Getting rid of highly paid firms who tell you what you already know whould be the first on my list - just ban the lot. Perfectly capable staff are ignored and these 'consultants' pick their brains and put it in a nice report and it's left to the staff to deliver it anyway.

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  • Which MPs have links with McKinsey in a "consultative" or non executive manner? Why else would the government commission a team of expensive accountants to state the obviuos....although not that obviuos. Many of the Governmements "initiatives" e.g. Access, NHS direct, Walk in Centres, the comissioning/provider divide, sure start, perverse incentives, frequent and contrary changes in directives are responsible for the waste of so much money.
    Management in the NHS seems unable to manage and certainly rarely engages with clinicians leading to expensive and inefficient planning and spending, coupled with the added expense of rectifying harms done.

    We neeed a new Government who hopefully will have the balls to fire the flotsam and jetsam that passes for management within the NHS, from DoH down through SHA's PCTs and acute trusts

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  • In any event, the way the payment by results regime is being handled nationally, the Trusts will be able to mitigate any efficiency targets by improving their coding and counting, generating more internal referrals, etc, and using PBR and tariff changes to best effect, and effectively pass the problem back to PCTs.

    So if I were a consultant I wouldn't worry too much.

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  • Please , please, lets have early retirement for GPs. I would suggest 55 and above. On the same sort of terms as are normally handed out to failing chief executives of course.
    I would grab it with both hands. I am absolutely fed up with the constant political interference and magaerail incopetence which prevents me from being an efficient and effective doctor.

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  • Sorry. I got so excited that my typos are even worse than usual!!

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  • McKinsey realy makes sense doesn't it? Lets get rid of the senior clinicianns in the NHS. The ones who really understand the patients and the medicine, but who are not so easy to push around. The ones who are generaly the most cost effective and efficient; the ones who still have a sense of ding a professional job; the ones who have survived the machinations of those who constantly strive to deprofessionalise by constantly dumbing down the service with their tick box approach and forms in triplicate.

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