NHS Pushes for Savings on Agency Fees Despite Increased Demand

Hourly pay rates across all levels of locum staff in the NHS have risen to new heights, driven by demand and a shortage of temporary staff, according to an authoritative new report.

The findings of Q3 2016/17 came in research by Liaison, the organisation which provides financial and workforce services to more than two thirds of the NHS.

It showed that pay levels in the period were the highest since price caps were introduced to help drive down the total annual cost of temporary staff that totalled £3.7 billion last year (2015-16).

Although overall average hourly pay rates for locums increased, the average commission rate paid for all grades of staff fell this quarter, suggesting that prices are being pushed up again in light of the need for agency staff to fill substantive vacancies and cope with the demand.

Vacancy continues to be the biggest reason for booking, accounting for 85.9% of bookings while rates being overridden due to the need for a specialist locum accounted for 51% of all escalated rates this quarter.

This suggests the NHS continues to suffer an acute shortage of specially-trained substantive workers and is having to rely on expensive locums in order to meet ever-increasing demand.

Of the hours worked by temporary staff in the quarter, 80% exceeded NHS Improvement’s capped rates, compared with 64% in Q2.

While trusts have found it difficult to lower pay rates for some of the most valuable agency staff, resulting in higher average rates, a decrease in total core and unsocial pay is reported, with commission paid decreasing both overall and as a percentage of the total bill.

The findings are in the quarterly ‘Taking the Temperature’ update produced by Liaison, which benchmarks the last quarter with the previous quarter.

The report analyses pay and commission by grade and specialty across the 60 trusts and boards that Liaison supports with its workforce management services, and compares results by size, type, region and agency.

Andrew Armitage, Managing Director of Liaison, suggested that locum pay remains a major issue for the health service and government to tackle.

“In Q3 we have continued to see encouraging signs of an overall reduction in agency commission rates. However, locums’ hourly pay rates have increased considerably and continue to do so quarter on quarter. Workers continue to command the rates they ask for as the shortfall in substantive staff and specialist skills means demand outstrips supply as the NHS struggles to cope with ever-increasing operational pressures.”

The key findings of the report were as follows:

– Average hourly pay rates for locums increased from £63.30 to £64.17 (1.4%) in Q3 due to average Consultant and ST3 rates rising by 1.8% and 2.4% respectively.

– Average hourly pay rates increased in eight of nine specialties in the third quarter, although rates decreased in Radiology, which remains the highest-paid specialty for consultants.

– The average pay for ST3 locums is more than double the Core Wage cap and the maximum rate of £120 paid this quarter was more than four and a half times the agreed cap.

– Maximum rates paid were greatest in General Medicine at £187.50 per hour, almost two and a half times the core price cap.

– Core total hourly rates decreased from 125% to 123% above substantive rates in the last quarter and unsocial total hourly rates decreased from 138% to 133%.

– Of the hours worked in the third quarter, 80% exceeded the NHSI capped rates in comparison to 64% in the second quarter.

– Commission rates fell by 0.9% to £6.90 overall and for the four main grades of staff, most notably for FY2 locums where rates fell by 2.9%.

– Commission as a % of the total bill (pay and commission) fell from 9.90% to 9.71% in the third quarter.


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