Appoint Healthcare’s MD, Simon Berry, shares his thoughts on how to improve Nurse Pay in the NHS, with a very simple but possibly very effective idea…

What’s the current situation in the NHS?

Nurses need more pay to warrant their challenging roles and responsibilities. BUT… today’s government budgets can’t meet the demand.

Our Operations Director, Eve Downing, approached Simon for his thoughts on this very subject. The response she got revealed a fascinating (and possibly slightly controversial) concept on where huge sums of money could be saved and passed onto the workforce.

The discussion

Eve – Simon… I’ve heard snippets about your thoughts on this and wanted to pin you down for some further detail, so I can share this with our audience. Can you tell us more about your thoughts on the problems with pay in the NHS?

Simon – Hi Eve. Happy to. It just strikes me that the NHS is engaging with the recruitment industry from totally the wrong angle. From our experience, the NHS is disinterested in engaging with the recruitment industry for assistance with permanent recruitment, but only too happy to pay huge sums (we’re talking multiple billions) on temporary recruitment. And temporary recruitment is the far more expensive of the two.

The NHS absolutely needs a certain amount of temporary recruitment, to cover seasonal variances or outbreaks etc. without having to commit to permanent workers to sit around when things are less busy. But we know that this is not a reality in the NHS right now. The reality is quite the opposite and NHS staff are stretched far too thinly in many cases.

However, from what we can see, the NHS’s use of temp workers far exceeds the need to cover any variances. It is also using huge volumes of temporary workers to cover shortfalls in permanent staff… and this is where massive sums of money are being wasted.

Eve – Interesting… Can you help us understand this with any stats or numbers?

Simon – I can. It does involve some simple maths, and I do have to rely on a couple of guestimates so the maths won’t be perfect. However, it will be close enough to illustrate the point clearly.

As a very conservative figure, the average cost to the NHS of an agency nurse is around £8.50 per hour more than a permanently employed equivalent. This takes account for the extra pay to the agency nurse (as they usually receive higher pay than a permanent nurse) AND the fee to the agency. Of course, sometimes it is much higher than this, as we often hear in the press.

£8.50 x a 38 hour working week x 52 weeks in a year, is £16,796. That’s nearly £17k of extra cost for each unfilled permanent role being covered on a temporary basis. Now I’ll drop in our fee for the recruitment of a permanently employed nurse – it is in the region of around £4k (give or take). So, we are comparing the best part of £17k per annum with an approximate 75% saving on that figure.

Additionally, this maths assumes the perm nurse only stays in post for one year. The average tenure for a perm nurse in the NHS is obviously much higher than this.

The latest report on NHS staffing states that there is an 11.9% vacancy rate for nurses. That’s 47.5k vacancies that are unfilled, when compared with the planned workforce levels. Agency staff are covering a significant chunk of that. I don’t know how big that chunk is, but let’s just conservatively suppose that it’s 25%. I suspect it’s considerably higher.

25% of 47,500 is 11,825 nurses. Nurses who could be permanently employed but are working as agency nurses instead. 11,825 nurses costing an extra £16,796 each to the NHS… That equates to over £198m per year (minimum). I think that money can be redistributed to the workforce.

Eve – Wow, those are some big numbers! But what can the NHS do?

Simon – Collectively, the healthcare recruitment industry is a large, powerful and influential industry. However, the issue is that the NHS has been incentivising the recruitment industry to focus on temporary recruitment for decades.

If the NHS proactively engaged with, targeted, and incentivised its permanent recruitment suppliers via the approved frameworks, it could reduce that bill by over 75%, as I’ve explained, and end up with a completely game-changing, sustainable workforce who are paid well.

Unfortunately, the reality is the opposite. NHS trusts are lapping up agency staff, paying billions per year on temp margins and at the same time (from our experience) showing minimal interest in engaging agencies to fill posts on a permanent and much more cost-effective basis. It’s pushing the recruitment industry down the route of producing expensive, addictive agency staff provision and away from sustainable permanent recruitment.

Eve – I completely agree. That’s exactly what I see happening in our industry. But isn’t this why nurses are switching to agency work… because the pay is better?

Simon – It’s certainly the key reason, Eve, if not the only one. This is probably where people might jump in and say that nurses deserve the extra pay and that’s why they are switching to agency work. And I don’t disagree with them on this.

Eve – So you’re suggesting that these savings are passed onto the permanent workforce?

Simon – Exactly. The NHS needs to realise that it has control of this. If it redirects the efforts of the recruitment industry to focus on permanent recruitment solutions, and at the same time disincentivise it to work on temporary recruitment; that’s where it will realise these savings.

I’ll go back to the maths again to make the point. If we look purely at the agency fees, and take out the difference on nurse pay for a moment… Based on a £5 hourly charge paid to the agency, the average agency fee per temp per year is £9,880. A perm fee equivalent might be around £4k.

That’s a near £6k saving per nurse in their first year, and the full £9,880 per nurse for all subsequent years that the nurse stays in post. Multiply that by the 11,825 nurses we talked about earlier, and that is a saving of somewhere between £71m and £118m per year. The NHS could use that saving to increase nurse pay across the board. 

Eve – Temporary recruitment agencies might not thank you for pointing that out, Simon. But I would argue that the healthcare recruitment industry needs a healthy NHS, and if this is the direction change that needs to happen to contribute to a healthy NHS, then I think it would ultimately be the right direction for our industry too. Even if there were some growing pains along the way.

I really can see that it is an essential component to get right, for the NHS to prosper.

Simon – I totally agree. I want to be part of a recruitment industry that is providing the solutions for the NHS and in a cost efficient way. The temp route is a temporary fix. The clue is in the name, and I just can’t see how that’s a sustainable model.

And it’s no secret that permanent recruitment is more cost-efficient.  Almost any individual in the NHS would likely agree, and yet it just isn’t happening. The private sector is so far ahead of the NHS on this. Their total investment into recruitment agencies has a much greater percentage pushed towards perm recruitment, when compared to the NHS. It can be achieved and we see it happening within the private healthcare sector very successfully.

Eve – So Simon, it sounds like there are three key things that need to happen, for this to take positive effect.

1. The NHS reduces margins and incentives to supply NHS workers on a temporary or locum basis;
2. It proactively tasks its recruitment suppliers with supplying people for their permanent vacancies, removes as much red tape as possible for this to happen smoothly, and offers appropriate incentives for this to happen;
3. It must pass these savings, or at least a significant amount of it, onto the permanent, frontline staff.

Simon – That’s the recipe as I see it.

My maths might be rough and involve a couple of guestimates. But it is still fairly conclusive. At the moment, our perspective is that the NHS doesn’t want to engage with permanent recruitment agencies for their UK based workforce. I would love to see this start to turn on its head – I’ll try and take this to the decision makers wherever I can, to help influence things in that direction.

Did this ignite any thoughts or emotions? We’d love to hear your thoughts on this. Get in touch to share your views:

Email info@appointgroup.co.uk or call 01489 799959.