WORKFORCE PLANNING: Expenditure on agency nurses is at an all-time high, and increasing numbers of nurses are working exclusively for agencies.Andrew Cole asks whether the trend will continue

The health of agency nursing has always been a pretty reliable barometer of the state of nurse recruitment.When nurses are flowing into the health service there is little call for agency staff, but times of acute shortage usually mean a boom in business.

And business is certainly booming at the moment. Last year's bill for agency nursing in England was£360m - an increase of 32 per cent over the previous year and nearly three times the amount being spent just four years ago (see box, right).

Although for most trusts, agency nursing still makes up only 4-5 per cent of their total nursing bill, that is twice what it was in the mid-1990s.

And in London - which accounts for more than half the total agency expenditure - agency staff have now become an integral part of the workforce, responsible for 11 per cent of the total pay bill (and rising in one instance to nearly 25 per cent).

1And there are indications that working exclusively for an agency is becoming more popular among nurses. The number of nurses whose sole remuneration comes from agency nursing has risen sharply. In 1992, 3,235 whole-time equivalent agency nurses were working in the NHS, making up just 1 per cent of the total workforce. By 1999, the figure had risen to 10,350 - or 3.3 per cent of the workforce, according to a report on flexible staffing published by Laing and Buisson in May.

Philip Blackburn, author of the report, believes this can be attributed to the state of the employment market. In times of high employment, agency work can offer higher rates of pay plus reasonable security. And changes in employment legislation improving the position of temporary staff have also played a part.

He cites in particular the new entitlements to paid holiday and sick leave for all agency staff working more than a certain number of hours, which is particularly attractive for 'career temps'. 'It is just an added bonus for flexible nurses.'

Another factor, suggests Professor James Buchan, of Queen Margaret University College, Edinburgh, is that the upheavals of the NHS in the past 10 years may have undermined nurses' commitment and made them more receptive to new ways of working.

'There has been enormous growth in employment opportunities outside the NHS.

Compared to 15 years ago, It is much more likely that many nurses at some point in their career will work outside the traditional realms of permanent NHS employment.'

The major reason for agency nursing's huge growth is, of course, the nurse recruitment crisis - fuelled by plans to expand the service and so take on more staff.

Agency nursing offers a flexibility of hours and opportunity that the health service cannot match combined with reduced stress and very good rates of pay - agency nurses are, on average, paid 20 per cent more than bank staff, for instance.

According to an Audit Commission survey, four out of 10 agency nurses give 'flexible hours' as their main reason for working this way.

Though a growing number of trusts are offering greater contract flexibility, few take up these options compared to the numbers turning to bank or agency work.

Joyce van der Heyden has worked as an agency nurse with the British Nursing Association in Winchester for the past four years - and for her, the big attraction is flexibility. 'I like the fact I can choose the hours I work - I like to have alternate weeks free, for example, and I do not think the NHS could accommodate that.'

She also appreciates perks such as holiday and pension entitlement - and the back-up of her agency. 'It has given me great support, both administratively and managerially, and that allows me to do what I do best. I am not sure it'd be so easy within NHS boundaries.'

Many others will keep a foot in both camps, retaining an NHS contract for security and career progression but taking on agency work to supplement their income. Around a sixth of the estimated 45,000 nursing staff on agency books also work for the NHS, an arrangement which can be a staging post to leaving the health service altogether.

The NHS has been to some extent the author of its own misfortunes.Marie Grant, executive director of nursing and clinical governance at St George's Healthcare trust, London, says: 'If hospitals are not moving towards flexible working and allowing nurses to do the hours they want, then nurses will simply take their bat and ball and go to the agency.

They know There is a huge shortage and they'll get the work on their terms somewhere.'

And, of course, in leaving the NHS for agency work, nurses are creating the gaps in the service that trusts then have to approach the agencies to fill. It is a classic vicious circle.

Managers are now starting to address the spiralling agency bill head-on. The London Agency project, for instance, which went live in September, is setting up a single framework contract between London trusts and a group of larger agencies, initially for the hiring of critical care, accident and emergency, and theatre staff.

The aim of the scheme, which could eventually be rolled out to all English regions, is to achieve greater consistency across the capital, to improve quality and obtain better value for money through block contracts. London region nursing director Christine Beasley anticipates savings of around£1.6m a year.

But she insists that the main purpose is not to save money but to raise standards - for instance, under the new arrangements all agency nurses will be guaranteed access to continuing professional development. But she also hopes that getting a grip on this issue now will eventually lead to a reduction in agency nursing.

There is also growing recognition of the need to manage the booking process more effectively. In one hospital visited by the Audit Commission, the directorate nurse and an H-grade nurse were each spending 10-12 hours a week arranging cover because of the complexity of negotiations.

In the trust as a whole, these indirect costs were reckoned to be£170,000 a year - that is£60m if replicated across the country. Some suggest these costs could be virtually eliminated (see box, left top).

Perhaps the most significant move, though, has been the launch of NHS Professionals, a new NHSrun agency that seeks to offer nurses the flexibility of agency nursing combined with the security and development opportunities offered by the NHS (see box, left below).

Many in the profession have welcomed it. 'It is going to provide so many of the working benefits that nurses get from the NHS, but it will also be more cost-effective because trusts will use it rather than going to different agencies, which can exploit them because of the workforce shortages, ' says Unison head of nursing Karen Jennings. 'If It is successful I think we'll see a fading away of agencies, though whether they'll disappear completely I am not so sure.'

Initial reaction from commercial agencies has been hostile.Nestor Healthcare director of corporate affairs Bill McClimont, told a conference in July that far from saving money, NHS Professionals could increase temporary staffing costs by 'at least£450m'.

'Good agencies are better at this job than you are now, ' he told managers, ' because we already have the experience.'

However, as the scale of the project has become clearer, attitudes have softened. 'I think It is a very good thing that offers a nurse another option and the patient the possibility of improved availability, ' says Christa Echtle, managing director of one of the biggest recruiting agencies, Reed Health Group.

Part of the reason for her enthusiasm is the new emphasis on partnership between NHS Professionals and the commercial sector. Indeed, in the early stages it is likely to be relying quite heavily on agency expertise. But it is also evident that, whatever happens, nursing agencies will remain big players in the market.

Ms Echtle is confident that Reed's growth (up 18 per cent in the last year) will continue, regardless of the NHS recruitment situation, because agency nursing offers the freedoms that more and more nurses are seeking.

'People want to take control of their working lives and determine when and where they'll work.You see the same thing in other professions and nurses are influenced by the same trends as anyone else.'

Moreover, she believes the NHS can only meet the growing demands on its services by embracing a 'mixed economy' of staffing. 'There are so many different requirements in the NHS, it can't be that one size fits all, ' she says. 'Any complex situation needs a variety of approaches.'

One example is Reed's involvement with a west London trust, where it manages the trust's bank as well as providing it with agency nurses. 'The trust is non-restrictive, which means nurses get the choice of where they want to work, and because they have a good experience the word gets around, which helps recruitment. It is a win-win situation.'

Even some within the health service are now accepting that, like the poor, agency nursing may always be with us. 'I do not think It is a case of saying:

'NHS nurses good, agency nurses bad', ' says Royal College of Nursing senior employment relations officer Josie Irwin. 'There are clearly areas where the mix can work very well - what the Audit Commission report showed was that the key was good management.

'Clearly, more time has to be dedicated to ensuring all temporary staff are up to speed, but It is much more complex than simply saying the money would be better spent on permanent staff. In fact, accepting and encouraging agency staff as part of the overall equation could be a way of increasing the pool of staff available to us.'

One-stop shop: the electric avenue

Booking an agency nurse can involve hours on the phone going from one agency to another in search of the appropriate candidate.

And even then, as the Audit Commission report makes clear, the result may be a nurse who is not up to the task.

Now a new electronic service, being piloted in 20 private hospitals in the South East and Manchester, aims to provide a one-stop shop for hospitals and agencies.And it will be free to all health providers.

Nurselink is a software package that enables nurse managers to input their requirements for a shift and then to view in a single sweep all the potential candidates from a range of agencies.They can compare at a glance costs, skills and availability.

Managing director Chris Carter says the scheme has the potential to save the health service a huge amount of time and give a much better fit between the needs of the hospital and the agencies.'Basically, it will be a bit like a health supermarket where you can view all the products at the same time and then make an informed choice.'

Home-spun solutions: NHS Professionals

NHS Professionals - the new health service-run staffing agency - has been hailed as the service's answer to the commercial agencies.

But its nursing director, Jane Barnes, is more circumspect.'This is really about the NHS getting its own house in order, ' she emphasises.The organisation's main task will be to help trusts run their banking arrangements more efficiently, while ensuring greater consistency of approach around the country.

At the same time, it aims to raise standards by ensuring all who sign on have access to training and professional development as well as retaining NHS benefits such as pensions.

But, Ms Barnes insists, NHS Professionals is not in direct competition with nursing agencies.'We do not see ourselves as rivals.We will be working with the commercial agencies - I am very clear about that.'

Administered in most regions by the West Yorkshire Metropolitan Ambulance Service trust, the initiative is currently being piloted in 15 trusts and will be rolled out to a further 50. It is envisaged all trusts will be in the scheme by 2003.

Early indications suggest it is already having an impact.Pinderfields and Pontefract Hospitals trust, which was one of the first to use the scheme, achieved a 20 per cent cut in agency staff between October 1999 and March 2000.However, between February 1999 and February 2000, the overall bill for temporary staff actually rose by 28 per cent.Ms Barnes accepts there will be teething problems but believes that better management will eventually reduce the demand.