Are management consultants really making the NHS worse?

By Edward Haigh

Following the publication of a study, led by Bristol University, into the use of management consultants by the NHS, the British press is full of predictably lurid headlines: “Hospitals ‘waste more money’ after hiring management consultants,” affirms The Telegraph. “Consultancy firms make hospitals worse” declares The Times.

At the heart of the story is the finding, by the study, that NHS Trusts that hire management consultants in a bid to cut costs actually end up spending more than they save. That may be true, but I’ve got three questions:

What does the study consider a management consultant to be?

Consulting tends to be a bucket into which all sorts of otherwise tricky to categorise areas of expenditure get lumped. It will, no doubt, include the use of external advisors to reduce costs, but it may also include a fair amount of contingent labour. Firms like the Big Four are routinely used, by some organisations, to provide capacity where internal resources are scarce, and calling those resources “management consultants” somewhat misses the point. They’re not there to deliver value as a multiple of their fee: they’re there, like any permanent member of staff, to help the organisation get a job done. Our research routinely finds the end client telling us that they get no more in value than they pay in fees, and being completely comfortable with that.

Are consultants only being used to cut costs?

For many people, consultants have never quite managed to shed their Bud Fox image as hawkish and ruthless cost-cutters, prowling the corridors, looking for people to fire. In fact they do a whole lot else besides, helping organisations to grow, to change, to comply, or even to have a positive impact on the world. Can we be sure that all the “management consultants” covered by the study were there to reduce costs? Is it not possible that some were there to help the NHS address the big questions it faces about how to reinvent itself so that it’s ready for the future? To measure their impact against their fees at this point would be completely unfair, because that sort of work can take much longer to bear fruit.  

Over what time frame are the results being measured?

Unlike, say, strategy projects, cost-cutting work tends to be very easily measurable. But it isn’t always: What happens if the work you’re doing to create a more efficient system involves the gradual introduction of robotic process automation, or the equally gradual digitisation of analogue information and systems? Can the impact of that be measured the minute the consultant walks out the door? Private sector companies are investing serious amounts of money in digital transformation initiatives right now–some of which is being spent with “management consultants” (who, by the way, are doing a whole lot more than consulting), many of which won’t show a return for some time to come. If they took a blinkered view of the timeframe over which results were expected they simply wouldn’t undertake the initiatives in the first place. And then they’d probably be disrupted out of existence. Is there a danger that the rightful pressure under which the NHS is placed to demonstrate that it’s spending money well, blinds it (and everybody else) to the need to take a longer term view for the sake of its own survival?