Temporary agency staffing has been a major area of focus for the NHS in England over the last five years. In the context of the financial challenges across the NHS provider sector, the spotlight fell on the sharp increase in agency expenditure, which by 2014/15 had reached over £3 billion. In addition, individual examples of expensive shifts attracted major news coverage.
In November 2015, NHS Improvement stepped in and introduced national price caps on the rates NHS providers could pay for individual agency shifts. This was a novel approach, not without controversy from an economics perspective given experiences from other sectors and uncertainty over what the implications on staffing would be.
At the same time, rules were introduced that required providers to procure agency staff through approved frameworks, which were retendered to align to the price caps, and financial targets were introduced on providers’ annual expenditure on agency staff. NHS Improvement also targeted dedicated improvement support on agency staffing and workforce management.
In this lecture, Chris Mullin, Chief Economist at the Department of Health, will consider the economics of the NHS agency market, the incentives facing the agents involved and how the design of these interventions sought to address market imperfections and minimise the risk of supply shortages. He will then reflect upon the impact to date of the measures and what lessons might be drawn for the future, both for health and other sectors facing similar issues.
Chris Mullin has been Chief Economist and Director of Analysis at the Department of Health since January 2017. He was previously Director of Policy and Economics at NHS Improvement and has held senior positions, implementing reforms in health and other public services, at HM Treasury and Cabinet Office.
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