Case Study: The unfair demonisation of agency staff

Research from The King’s Fund revealed that one in five hospital finance chiefs believe the incoming cap on agency staff will damage the quality of care provision. According to the directors, the cap could directly affect their ability to keep enough nurses and doctors on their wards to meet the needs of patients, something that is totally unacceptable.

From April this year, the NHS will be able to pay no more than a 55% premium on the salary of a permanent doctor or nurse for a shift. The government and policymakers hope that this will end what they see as agencies ‘ripping off’ the system, and help to plug the enormous holes in the NHS’ finances.  Recent figures suggest that the health service is on track to achieve a deficit of around £2.3bn over the year 2015/16 – and the current regime believes that it can save £1bn over three years by bringing down the cost of locum staff.

However, while this may seem like a sensible way to reduce costs in the short-term, in reality these measures are unpractical and potentially dangerous to patients. The press are quick to portray agencies as being out to milk the taxpayer for as much as possible, but high costs are a reflection of the limited availability of specialists and are not the norm. With so few locum specialists available at a given time, and the NHS and agencies working in a market-driven environment, it is natural that the cost of procuring these professionals will carry a premium.

Another principle reason why agency fees are greater than those permanent employees are the additional costs that  providers incur. When people compare the fees paid for agency staff with permanent staff they are often not comparing life for like; agency charges often include costs like National Insurance and pensions, whereas these are excluded when quoting pay rates for hospital staff. Furthermore, agencies also have to cover their operating costs – meaning that many may struggle to stay in the black with reduced revenues. The resultant unavailability of staff following agencies going out of business would have a huge and dangerous fallout, leading to gaps in care provision to the most vulnerable, and risk patient safety.

Worryingly, the suppression of agency fees could also produce a situation in which specialist staff are also not significantly incentivised enough to perform locum work – particularly in rural areas – which would again cause enormous problems. By putting a cap on agency fees, policymakers are taking a gamble on agencies being able to operate on lower revenues – and turning their backs on framework agreements with agencies that have served the NHS well for the past decade

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