Paying for consultancy by results in the NHS

Paying for consultancy is not a new subject, but it has raised its head again recently following concern about the amount spent on consultancy by the UK National Health Service (NHS). Alan Downey, former chair of the Institute of Business Consulting and KPMG’s global head of healthcare, wrote in Management Today that “Consultants are…increasingly expected to ‘put some skin in the game’ – to place part or all of their fee at risk, depending on a successful outcome.” A similar argument was put forward in Times Online by Alan Leaman, Chief Executive of the Management Consultancies Association (MCA) : “the NHS can get even better value from consultancy… by increasing the use of ‘payment by results’…”
We welcome the debate, and support the principle of payment by results, but feel it is important to challenge some of the assumptions that lie behind the story.
For example, as Downey points out in his article: “In January, a Conservative consultation document, It’s Your Money, complained of ‘a massive overuse of external consultants’ by government departments. Some commentators have been barely able to suppress their delight at the thought that the recession might hit consultants particularly hard.”
Certainly, as a consultant, you get used to a perception that as a profession we are overpaid, but are all the perceptions true? For example, the NHS experience doesn’t support the Conservative claim of massive overuse. The MCA research found that the NHS spent approximately £300 million on management consultancy in 2008, which is equivalent to less than a third of 1 per cent of its total budget.
As always, we support basing any discussion and decision on the evidence and the facts rather than perception and populist political propaganda.