30 November 2006
Procurement in the NHS has been using a high proportion of external consultants and interims. But is this reliance stacking up problems? Antony Barton reports
Big changes look likely in health procurement. Ken Anderson, head of the Commercial Directorate (CD), is leaving - that's for sure. And despite an absence (so far) of official confirmation regarding a merger, Whitehall insiders expect the CD and Pasa to become one.
One of the first challenges for the new head will be addressing what Sir Peter Gershon calls the "enormous and dangerous dependence on external consultants".
As we reported, fewer than 10 of the 230 staff in the CD are permanent civil servants. This means a considerable knowledge base and understanding of NHS procurement rests with these outsiders.
Without sufficient knowledge transfer to full-time staff, the accumulated expertise would disappear if their contracts were not renewed for whatever reason. That would mean a sizeable chunk of the £171.6 million invested by the NHS in external management consultants for 2006-07 - according to a Conservative report last September - would be lost.
A Whitehall source told SM: "It seems the whole public sector has decided it needs consultancy. The public sector should be intellectualising by itself and merely checking its conclusions with external sources. It should be paying for strategic advice, not resources, then you wouldn't need to worry about knowledge transfer."
A spokesman for the Department of Health took a different view: "Robust data capture and contractual mechanisms are in place to ensure skills and knowledge stay within the department when consultants' contracts expire."
The details of this data capture are not revealed, however, and the cost of consulting neither confirmed nor justified.
Sir Peter Gershon, author of the Efficiency Review, addressed the Efficiency Matters Conference this month on the matter. He said: "There continues to be the challenge of insufficient skills in the public sector, particularly in areas such as procurement and commercial skills. And there is still, in some parts of the sector, an enormous and dangerous dependence on external consultants."
Duncan Eaton, former chief executive of NHS Pasa, supports the use of consultants in the CD. In his view, a lot of the department's work includes short-term projects, such as the Independent Treatment Centre programme, for which temporary consultants are ideally suited.
The work requirements change between projects, so consultants can be chosen for specific credentials, and it is cheaper to pay for more expensive short-term contracts than to employ extra full-time staff and issue redundancies, says Eaton.
He adds, however, that the creation of this combined agency should mark a time for change. "It may be wise for the new agency to employ people on a full-time basis and to end the transitory phase.
"Work is now being outsourced, and it's clear from the functions left what is required of the new agency. We've had consultants to advise us on financial management, so their time should have run its course."