Richard Lewis argues that the research asking trusts to stay the use of management consultants has simplified a complex subject

Corporate meeting

Finding ways in which NHS organisations can improve their efficiency in times of financial constraint is clearly important. In their recent article in HSJ, Andrew Sturdy and colleagues suggested that the use of management consultancy by NHS hospitals, usually seen as an intervention to improve performance, apparently leads to a drop in efficiency.

Drawing on their published research in Policy and Politics, the researchers found a correlation between spending by hospitals on management consultancy and a worsening of those hospitals’ Reference Cost Index and an increase in their spend per bed. It was not clear from the research what might have caused these findings.  

Any research that explores NHS efficiency should be welcomed. The NHS spends a significant amount of money on management consultants and it is a legitimate area of study to understand the impact of this. However, while the methods used appear sound in terms of the statistical approach used, there is a danger that this complex subject is over simplified.

Limitations

The authors themselves point out a significant limitation – using total expenditure on consultants from trust accounts is a convenient but crude (their words) proxy. Management consultants might be hired to focus on strategy, quality improvement, estates advice or IT support which are all valid uses of consultancy but may not lead to improved efficiency as measured.

Also, the expenditure figure may include the hiring of interims. So, the proxy measure that underpins the research is extremely heterogeneous to say the least.

The main outcome measure, the Reference Cost Index, of course is also known to be of highly variable accuracy

The main outcome measure, the RCI, of course is also known to be of highly variable accuracy. Indeed, an external review commissioned by Monitor in 2014 (and therefore highly relevant to the study period) showed that one in three trusts’ reference cost submissions were materially inaccurate and half of trusts submitted poor quality data in at least one of three activity areas (only 12 per cent of trusts had good reference cost data across all areas).

Moreover, reference costs, the underlying dataset from which the RCI is calculated, underwent a major revision during the study period. Trusts that were considered efficient one day appeared inefficient the next and vice versa. So, a correlation between these two variables needs to be treated with caution.

Impact on efficiency

A key question is whether consultants negatively impact efficiency (as is claimed) or whether consultants are brought in precisely because finances have begun to deteriorate. The researchers find it unlikely that hospitals that are in distress or not performing well would disproportionately hire consultants. Yet in my experience, this is exactly the time when external support is called on – either by the trust itself or by regulators.

But why would things apparently get worse following the introduction of consultants, surely they should get better? Well certainly not all the time. Often it is the introduction of external support that enables the accounts to accurately reflect existing difficulties, often surfacing issues that have hitherto been either not recognised or not fully accounted for.

Now, any spend over £50,000 needs justification to and approval by NHS Improvement, as a result, far greater control over the use of consultants is exercised

Clients rightly demand to see a return on their investment and are well able to judge the quality of the service they receive and are not blind to any medium term effects on their organisations. If our advice relates to improved efficiency then this is measured and we are held to account for our performance.

In HSJ, the authors argue that there should be a moratorium on the use of consultants and a review of the use of management consultancy. But such a conclusion is disproportionate.

The data on which this study is based is more than five years old and the world looks very different now. Spending on management consultancy in the NHS has fallen dramatically in recent years.

Now, any spend over £50,000 needs justification to and approval by NHS Improvement – so in effect there is a review process in place to ensure it is required. As a result, far greater control over the use of consultants is exercised which should, in theory at least, mean that ill-conceived or unnecessary projects are unlikely to go ahead.

Maximising value

How can the value from management consultants be maximised?

Being very clear about the scope of the project and the measures of success is a good starting point. So, too is a realistic appraisal of the ability in the client team to work with consultants and, importantly, to implement findings.

Not infrequently, clients struggle to find the necessary additional bandwidth to deliver identified changes. So, jointly working through what change management capacity is required is essential for success. Lastly, both clients and consultants need to recognise that the environment is fluid and that consultancy projects need to adapt as circumstances change. What is agreed at the beginning may not hold true throughout the engagement.

So, while the researchers have found some interesting correlations in historic data, the case against management consultants is far from proven and certainly not as a general proposition.

Are all consultants equally skilled and directed to worthwhile projects with a decent chance of success? Of course not. But to tar all management consultants with the same brush simply cannot be supported.