News / Providers face renewed pressure for compliance with agency controls

Reducing agency staff costs – a major focus before the pandemic – is one of the issues that is back on the agenda.

The two-years of the pandemic to date have put extraordinary pressures on NHS staff. There were often heroic efforts from substantive staff taking extra shifts as the workforce was depleted by staff illness or absence due to self-isolation. But bank staff were not always available in sufficient numbers to meet demand and many trusts also had to make increased use of typically more expensive agency staff.

In 2019/20, agency costs amounted to £2.4bn – 4.1% of total employee costs. The 2020/21 NHS provider accounts do not specifically identify agency costs, although they provide a figure of £3.8bn for the more broadly defined temporary staff including agency (£3.5bn in 2019/20). NHS England and NHS Improvement would not provide a figure for the cost of agency staff in the first full year of the pandemic.

However, they have made it clear that this is an area where providers should be looking to reduce costs in the current year.

Financial guidance for the year calls for a reduction in agency staff bills, with workers encouraged back into substantive and bank roles and for moves back towards compliance with agency controls, including price cap compliance.

There have been further calls for trusts to increase options for staff to increase hours through bank shifts to reduce agency reliance. And complying with ‘established usage and rate limits’ has been made a formal condition for receipt of additional funding to cover inflation increases.

The key cause of the over-reliance on agencies is a shortage of healthcare staff across the country with 105,000 vacancies. And getting more out of the existing workforce is not necessarily viable.

NHS Providers deputy chief executive Saffron Cordery recently pointed to ‘high levels of burnout and worrying numbers of staff resigning’.

‘We can’t keep asking the workforce to simply do more,’ she said, repeating widely voiced calls for a long-term, fully funded workforce plan.

Su Rollason (pictured), chief finance officer at University Hospitals Coventry and Warwickshire NHS Trust, said Covid had pushed the organisation above its agency ceiling. ‘Prior to Covid, we had successfully reduced our agency spend over a number of years,’ she said.

In fact, agency spending had effectively been halved. In 2020/21, where elective services were suspended for a period and then operated below normal levels, the trust’s agency spend continued below the ceiling. But in the past year, with the recovery programme in full swing and a spike in Covid cases as a result of the Omicron variant, agency spending increased.

Compared with a ceiling of £21m, trust agency spend hit £25m – and this year the trust is targeting spend of £23m.

‘We have a vacancy rate of 8.5% and short-term sickness has been up to 8% from a previous level of around 5% - and within that Covid absence has been about 2%,’ said Ms Rollason.

‘The other issue we’ve had has been temporary capacity increases such as the need to increase critical care beds, which more than doubled at one point. We had to increase respiratory support unit capacity and we needed staff for diagnostics and testing, and to meet infection control requirements,’ she said.

Without complete certainty about what requirements would continue and for how long, it was not always possible to recruit substantively for these positions, even if staff were available. And being an elective recovery accelerator site also increased the use of temporary staffing solutions.

Vacancies differ across the trust – with nursing and midwifery and acute medicine exhibiting big gaps in establishment.

‘Vacancy rates are nearly up to 20% in some of those areas,’ added Ms Rollason – and this is despite a successful international recruitment campaign for nurses, medics and allied health professionals.

Reducing vacancies is a major priority and as clarity increases over future capacity requirements and funding, the trust will look to substantiate some of the posts it is currently filling with temporary staff.

This year, there is a big focus on reducing staff absence – concentrating on staff wellbeing and recognising that mental health is the second main contributor to sickness absence.

However, Ms Rollason raised concerns that current increases in the cost of living could create further pressure, with staff opting for higher paid agency roles and rates rising in general.

A finance director at another major acute trust said that higher rates were the inevitable consequence of demand outstripping supply. Squeezing agency spend just moved the spending from agency to bank or overtime, he said. And while there may be a short-term financial benefit, the long-term solution has to be extra staff.

He also voiced concerns that some consultants would leave the NHS in favour of working privately – or reduce their NHS hours. Private waiting lists were growing and, with waiting list initiatives likely to be around for a number of years, he suggested there was also the potential to lose consultants to insourcing contracts.

The move to system working opens up opportunities for organisations to work collaboratively on staffing shortages.

Lancashire and South Cumbria Integrated Care System is a big user of agency and locum staff. Some areas struggle to attract and retain sufficient staff, and Covid, as with many areas, has exacerbated problems with more staff absences needing to be covered.

According to integrated care board director of finance designate Sam Proffitt, the system is keen to move away from its over-reliance on temporary staff. ‘It’s an issue for quality and it’s a significant financial burden as well,’ she said.

Parts of the problem can only be addressed over time. The system needs to attract more education and training resource and that means working with universities and others.

But it will also involve ensuring Lancashire and South Cumbria is increasingly seen as a great place to work from professional and lifestyle points of view.

Other things can be addressed more quickly. As with different parts of the country, there will be a shorter-term focus on international recruitment and improving retention.

‘There are things we can do like setting agreed rate cards,’ says Ms Proffitt. ‘But they are not the full solution. We’ve got to take a single-system approach to our workforce.’

The system is already working more closely together through its provider collaborative and has a system-wide people board in place.

The pressure on organisations and systems to reduce agency spending is increasing. But although finance directors fully support the aim, not all the levers for reducing agency costs are within their control.