While the use of consultants can stir controversy, a cash-strapped National Health Service continues to invest in their solutions, as it seeks to boost productivity and make better use of resources to tackle the twin challenges of an ageing population and expensive new technologies. In early 2018, The Financial Times released its annual ranking of the top members of Britain’s management consulting scene. Along with traditional management consultancy firms, those considered relevant for the analysis included IT consultancies, advisory branches of auditing firms and consultancy branches of technology companies.
While the list provided a comprehensive overview of the top leading management consulting firms in the UK generally, the researchers also commissioned Statista to explore which firms led in 29 individual sectors; including the healthcare and life sciences arena, which received special analysis. Statista used two online surveys – one polling executives and partners of consulting firms, while the other
Top UK health and life sciences consultancies
Big Four firm Deloitte Consulting, which recently won corporate financier of the year at the 2017 HealthInvestor Awards, and global management consultancy McKinsey & Company both top the rankings, scoring the maximum six stars, while ten further firms follow with a five-star rating. These are a mixture of the management consulting wings of the remaining members of the Big Four; EY Advisory Services, KPMG Advisory and PwC Consulting; a number of large multifaceted consultancies, including Accenture, BCG and IBM Global Business Services; and understandably, a number of firms which specialise in the sector. These firms are Apex Healthcare Consulting, Ashfield Healthcare Communications, GE Healthcare Partners and recently approved Management Consultancies Association member Philips Healthcare Consulting.
These are followed by 13 firms who all scored a four-star rating overall. Candesic and CIL Management Consultants, who were also honoured at the 2017 HealthInvestor Awards, are joined by Able and How and Bain & Company. BDO Advisory, which recently purchased US health consultancy PBC Advisors, also made the list, alongside Carnall Farrar,
According to consultants involved in the sector, the type of work that professional services firms are undertaking for the NHS has changed over the years, reflecting changing needs and priorities. The health team at KPMG Advisory works across the whole of the Health Service, including community care, general practitioners, hospitals, commissioners of healthcare and the department of health.
KPMG’s health team, for example, was “frequently recommended” by clients and peers in Statista and the Financial Times’ poll. It is made up of clinicians, financial and tax experts, auditors and management consultants, led by Jason Parker, head of health. According to KPMG, a decade ago, the NHS was still tackling basic productivity problems and aged estates, so its advice tended to focus on the hospital building programme and basic performance improvement. The NHS of today faces more complex challenges, however, and KPMG’s work has changed accordingly. The company stated that its advice “now centres much more around helping systems to work together to plan entirely new ways to organise themselves,” as a means of finding new efficiency savings, beyond traditional cost-cutting measures which the institution has exhausted.
Nitin Chaturvedi, head of UK healthcare at Bain & Company, argued that as the needs of the service become more complex, NHS leaders will become ever more demanding and more focused on the quality of advisory services they receive “rather than on more of the same”. Bain, which ranked joint-12th, has strong ties to Bain Capital which was also founded by the late William Bain Junior. The private equity firm purchased the NHS’ blood plasma supply in 2013.
Regarding the future of UK healthcare, Chaturvedi also argued that two areas are especially important in making the NHS work better. By improving the performance of big UK hospitals called Foundation Trusts so they can act as catalysts to wider improvements in the health service, and getting the NHS working more closely with big pharmaceutical companies to develop innovative drug-pricing models that in turn can improve patients’ access to medicines, the Bain partner believes the NHS can see a brighter future. However, Chaturvedi also stated that he believes the need for increasingly innovative advise from consultants will put a premium on tailored and innovative approaches, something which may not sit well with public opinion.
While the work carried out by consultancies in health and life sciences goes beyond the National Health Service, firms’ involvement in the UK’s taxpayer-funded system understandably often attracts the most attention. As the National Health Service continues to face real terms budget reductions, following years of austerity cuts to public services across the UK in general, the essential institution is rapidly approaching breaking point, according to various reports. This means any expenditure on consulting is often perceived as taking vital funding away from front-line services which citizens have paid for through taxation.
In the first half of 2017, the perilous state of play for the NHS was summed up, when it was rocked by the global WannaCry cyberattack. As a matter of cost-cutting, reports made as early as December 2016 said that 90% of NHS trusts still used the obsolete Windows XP, for which Microsoft had stopped providing security updates in April 2014. This key weakness was exploited by the WannaCry ransomware, and led to the compromising of patient data, as well as the cancellation of operations, as the Health Service ground to a temporary halt.
The NHS is also seeing an increasing workload burdening its depleted workforce. As an ageing population has seen hospitalisation figures rocket in recent years, the cash-strapped organisation has been left creaking under the weight of the new workload. At the same time, while the true impact of Brexit remains an unknown quantity, the prospect of an unwelcoming post-EU Britain is reportedly already putting swathes of skilled migrants off of settling in the country. This has been a major factor in the recent net-fall in the number of nurses currently staffing the NHS, the first such fall since 2013, thanks to a “significant” reduction in EU nurses joining the UK register.
As is the case with any industry, management consultants have repeatedly been asked by NHS executives to help provide solutions to such crises, playing a significant role in the growth of the UK’s management consulting market in recent years, which is now estimated as being worth more than £7 billion. However, while the NHS does offer the consulting industry with a rich vein of business to tap into, firms have had to change their way of operating in order to maintain their most lucrative levels of access to it.
Sustainability and Transformation Partnerships
With increasing scrutiny being applied as a dissatisfied electorate demand value for money from consultants supposedly contracted to help cut costs and thus preserve keystone services, in recent years, tighter restrictions have been applied to the use of consultants within the NHS. The most financially troubled trusts have been required since 2015 to seek approval from NHS Improvement (NHSI), the institution’s financial regulator, for any consultancy contract worth more than £50,000. Other trusts are “strongly encouraged” to do the same, and according to data released in January by the NHSI, this has led to hospitals and other healthcare trusts reducing their spending on management consultants by more than £150 million since 2013. Spending fell by a third from £422 million in 2013-14, to £263 million in 2016-17.
An NHSI spokesperson recently told the Financial Times that this showed, “local support for trusts and a tough central approval process is helping the NHS save millions of pounds by reducing how much organisations spend on management consultants,” before adding, that when consultants were used, “it’s because it represents good value in improving clinical services, operational productivity or financial efficiency.”
However, management consultancies do seem to have found a way around this stricter climate; the creation of Sustainability and Transformation Partnerships (STPs). The area of NHS work, which is aimed at making all parts of the Health Service work together to ease demand and use money more efficiently, has proved a fertile ground for consultancies, with a 2017 report by leading London-based health think-tank, the King’s Fund, finding that management consultants were being used to support the development of STPs in three out of four areas.The report found that reasons for this varied, with some filling gaps in NHS capacity while others were used to fill “perceived gaps in NHS capability — for example, providing specialist expertise in financial modeling.” As with the short-staffing of the Civil Service, which recently hired McKinsey & Company to assist with the implementation of 792 Brexit related plans, while such skill shortages remain, the role of consultants within the UK health service seems set to continue.
In one localised example of just how lucrative this manner of operating with the NHS can be for management consultants, a freedom of information request sent by local campaigners to Maidstone and Tunbridge Wells NHS Trust revealed that one leading firm, four-star rated Carnall Farrar, was paid over £6 million between 2015/16 and 2017/18 “to contribute their expertise, capacity, skills and experience of delivering large-scale change programmes” to create the budget cutting plans. Meanwhile, a similar investigation revealed that nationally, healthcare bosses had paid management consultants £21 million to similarly draw up STPs.
The pattern is not exclusive to the UK, meanwhile. Australia's new National Disability Insurance Scheme (NDIS) recently drew public ire, following reports that the scheme splashes AU$180 million on consultants in 16 months. Leaked financial records revealed that executives in charge of running the governmental agency behind the scheme spent the huge sum on consultants and contractors between July 2016 and October 2017. Of that figure, as much as AU$41.5 million was spent on just two major consulting industry players who are also key contractors to the NHS, BCG and Deloitte, for “strategic advice”.
Sourced from Consultancy UK