A trust's experiment with annual-hours working has reduced reliance on agency staff, saved thousands of pounds and proved popular with staff. Ed Rennie and Hazel Allanach explain

There is growing emphasis throughout the NHS on the need to improve utilisation and deployment of staff while ensuring flexibility and cost- effectiveness. Annual-hours working, which has been used in commercial organisations for some time, has not been adopted to any extent in the NHS despite the need to provide a service 24 hours a day, 365 days a year. We have found it to be effective.

Annual-hours working is where staff are contracted to work a set number of hours over a year - in our case, 1,955 hours inclusive of annual leave and public holidays. When the hours are actually worked is dependent on the demand created by patient workload. This is measured using patient dependency scoring, which is time-weighted to predict the amount of nursing time required per shift. This means that nurses can work normal hours if that is required, or a proportion if demand is low. Annual-hours contracts also involve on-call duties and require staff to be prepared to go off duty, or 'stand down', at short notice if they are not needed. In return for offering the trust greater flexibility, staff receive more pay than those on conventional contracts. And when asked to stand down, they receive an hour's pay, whether or not they have worked that time.

Annual-hours working can be applied to almost any type of employment in the public and private sector, provided work activity is subject to peaks and troughs on a daily, weekly or seasonal basis.

Our trust comprises five hospitals, with 1,400 beds and 5,300 staff, and has a budget of pounds134m. Several problems led us to consider annual- hours working: staffing levels did not always match the level of patient activity and dependency, there were unforeseen peaks in workload, absence due to sickness had to be covered at short notice, staff were asked to work extra shifts or hours at short notice, bank and agency nurses were brought in to provide cover, and staff from other wards had to be brought in to help out.

This led to uncertainty among staff, informal flexible working, increased staff costs, and, at times, poorer quality patient care.

These issues were discussed with nurses and their representatives, and we agreed to establish a project management group to research, plan and implement annual-hours working on a pilot basis. The group comprised nurse managers, senior human resources staff, a management accountant and staff- side representatives from the Royal College of Nursing and Unison. An experienced nurse, dedicated to the project, was recruited internally, and initial support obtained from an outside consultant.

We discovered that the system had been implemented at Northallerton Health Services trust in Yorkshire, so managers and staff-side representatives visited the hospital on a fact-finding mission. The opportunity to see annual-hours working in a health service setting proved invaluable.

After further discussion we agreed to staged implementation. A surgical, medical and paediatric ward were identified as possible pilot areas. Data on patients and staff was gathered for those wards for the previous year. A patient dependency study was implemented using criteria which enabled us to measure staff deployed against workload.

The data was then analysed to ascertain if annual-hours working would be appropriate. We were hoping for confirmation that peaks and troughs of activity occurred on a regular basis and that annual-hours working would improve the deployment and utilisation of staff.

The next stage involved working out with staff and their representatives how this system could be implemented. New contracts of employment were developed, which included a minimum/maximum number of hours that could be worked per week, guidelines for on call, stand down and recording of hours, and consolidation of enhancements into salary, which was paid as a flexibility payment in addition to basic pay.

For the purposes of the pilot, the flexibility payment was agreed at 16 per cent of salary, subject to review at the end of the pilot, in return for full participation in flexible working. This has since been reduced to 15 per cent. Staff in the three pilot wards were invited to participate in the scheme, with a right to revert to their original contract at the end. Seventeen nurses and auxiliaries volunteered.

The pilot scheme was introduced in the three wards in December 1995 for one year. Financial benefits and staff perceptions were evaluated by an independent research company. Staff were kept abreast of progress by seminars, individual discussions and a question-and-answer leaflet.

There were difficulties, particularly during the settling-in period, but the project nurse helped resolve these at an early stage. Initially, staff regarded the patient dependency study as yet another piece of paper for statistical purposes, and there was a feeling that nothing would be done with it. But this perception soon changed when staff received the read-out for their ward with an explanation on how to interpret it.

At the beginning, almost all staff under-scored dependency, but this was overcome with training. Staff are now consistent in scoring. This is important because, if the scoring is wrong, the calculation for staff cover will be inaccurate and lead to the very problem we are trying to solve - ineffective use of valuable nursing resources.

Stand down

This is where, because of an unexpected downturn in workload, staff agree to leave work earlier than anticipated. Initially, this caused bad feeling among other staff - not only in that ward, but from other wards, where they could have helped out.

This was overcome once information explaining the reasoning behind the stand-down arrangements was made available. Early on, there was a reluctance to stand down trained staff in case they were needed. So it was mostly used for unqualified staff, which increased the hours they owed to the trust. This new experience of staff owing the trust hours caused concern; they were used to it being the other way around.

The on-call system was viewed with considerable reservation because there was a feeling that the ward would call staff into work at any time. Staff use a 'pager' system whereby they are paged and then, when they ring in, they are informed when they are required within the times agreed on the on-duty rotas. The system requires staff to be on call for up to 12 hours at a time and, if they are not required to work, they receive an hour's pay for this time.

Day/night rotation

Some annual-hours staff who had never worked nights were used to cover sickness and annual leave. But this has not caused problems and has helped staff to understand their night-duty colleagues' work and assist integration of day and night staff. Staff have commented favourably on several aspects of the scheme:

'Good when busy, you have your staff either staying on to help, manage to get your breaks, or staff are called in.'

'No more wasting time looking for bank staff and supporting them when they come in.'

'Good to go off duty when quiet - no more looking for things to do.'

'Worked well when you have your time all accounted for and have some say in when you are available.'

'Found that when holidays came around I wasn't so tired that I couldn't enjoy them.'

'No more being shifted from ward to ward, it is unfriendly and disheartening to go into another ward where you are unknown.'

But they have also raised concerns. Some have said the system would work more efficiently if there were more staff involved. And there was anxiety about the dependency study being used to reduce staff. This did happen in one area, but the staff were redeployed in the same directorate. Some said the information about dependency ratings should be more readily available and more tailored to particular specialties.

Staff also commented that time off needed to be better planned. And they pointed out that the system would work better if consultants supplied the wards with their holiday plans, and details of any planned increase in activity.

The project was extensively explained and supported. There was no pressure on staff to participate, and links between managers, staff and their representatives were handled in a constructive, non-confrontational manner. The scheme provided a number of lessons for staff, particularly on implementing change.

Each ward showed a closer correlation between staff deployment and workload after annualised hours were implemented (see graphs), and staff became more keen to interpret data and adjust staffing levels and skill-mix to forecasted workload.

Financial evaluation

Several trust managers were concerned about the high level of flexibility payment and whether this would actually lead to increased staffing costs. In fact, the three wards saved pounds39,000 in 1996-97.

Of the 17 nurses and auxiliaries who volunteered to participate in the scheme, 14 now have permanent annual-hours contracts. The trust has a total of 24 staff on annualised hours and the system operates across six wards. This will increase as we advertise more such posts.

Staff working this way are now persuading colleagues to enter the system - a clear indication that staff see the benefits, not only for patients, but for themselves. Arrangements are being made to roll out the process to other areas.