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NHS trusts strip millions from management consultancy spending

The majority of PCTs have successfully slashed their management consultancy spend in the past twelve months in line with ministerial orders, although a third have not cut by the required 50%, a Pulse investigation reveals.

NHS managers were told last year to slash their spending on external consultants, with the Department of Health urging trusts to cut spending on consultancy by 50% as part of the previous Government's NHS Operating Framework for 2010/11 - although this was later dropped as a formal target by the new coalition Government.

Analysis of figures obtained under the Freedom of Information Act from 60 NHS organisations shows that most PCTs have cut their management consultancy costs after scaling back high-cost areas including World Class Commissioning, strategic planning, procurement, and access initiatives.

But a third have failed to reduce spending by 50% or more, and some trusts are still actively recruiting management consultants to tackle challenging financial targets and the QIPP efficiency drive.

Of 38 organisations analysed that provided comparative year on year data on their consultancy spend, 63% halved spending between 2009/10 and 2010/11, while 37% did not.

Overall, the figures show that the 38 trusts cut spending on management consultants by 53% last year, spending an average of £441,946 on management consultants in 2010/11, compared with £942,584 in 2009/10.

In the same period, figures from 30 trusts show that the average spend on legal and professional fees fell to £366,122 from £526,995.

Some trusts invested in consultancy support to assist with meeting challenging financial targets, including NHS Peterborough, which paid private firm McKinsey £881,000 for a ‘turnaround project' aimed at tackling a £12.9m deficit.

Elsewhere, NHS Wolverhampton City and NHS Worcestershire enlisted firms to support their QIPP project management and clustering programmes.

The DH reduced its own spend on management consultants from £99.6m in 2009/10 to a mere £8.8m in 2010/1, according to its own figures.

David Stout, director of the NHS Confederation's PCT Network, said future investment in management consultants to advise on QIPP might be appropriate if PCTs did not have the expertise in-house.

‘It's perfectly legitimate if in the long run it leads to significant savings that you wouldn't have achieved without it. If it's just an expensive add-on that doesn't deliver anything then it would be an unwise investment.'

Dr David Jenner, a GP in Cullompton, Devon – which has cut its spending on management consultants by 70% – said relations with his PCT were ‘much better' since they reduced their reliance on management consultants.

‘The realisation is that local colleagues working together are more likely to have the answers than some whizz-bang accountant.'

Health Minister Lord Howe said: ‘The coalition Government has cracked down on management consultant expenditure in the NHS.'

‘We are pleased that most PCTs and SHAs have significantly reduced their expenditure on consultancy. Every penny saved will be reinvested in improving patient care, meeting demand and driving up quality.