At the end of last month the Health Service Journal revealed that the Department of Health and Social Care has been paying a management consultancy since last year to help it “create and drive the right target culture” – and to advise on “pay strategy” – as it absorbs NHS England with a net loss of half the jobs.
The consultancy, Korn Ferry, might sound like a South West holiday resort, but is in fact a $2.8 billion US-based global organisation with thousands of employees in 50 countries.
Whether that means the advice they have been giving to the DHSC is worth the £1.8m forked out so far in fees is open to serious doubt. As Roy Lilley’s e-letter from nhsmanagers.net pointed out on May 8, despite (or maybe partly because of) Korn Ferry’s involvement, the merger process with NHS England has been chaotic and “Stressful for people and their families”. as the clock ticks down towards the planned merger date of March next year.
There is no sign of a plan on exactly what the merged body will do or look like, what functions it will drop as a result of the axing of 50% of its workforce, or how the necessary legislation to complete the changes can be drawn up and passed in time through Parliament.
There is an implicit warning in the various statements that Korn Ferry makes about itself. The company claims its strengths are in:
“synchronising strategy, operations, and talent to accelerate performance, fuel growth, and inspire a legacy of change.”
In an advert for a Senior Consultant/Associate Principal it states:
“We work with organizations to design their structures, roles, and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop, and motivate their people.”
The same advert goes on later to explain that the company:
“supports clients to translate strategy into effective structures, roles, governance, and operating models. Our work helps organisations align people, accountability, and decision-making to deliver strategy and improve performance.”
This suggests the DHSC may be hoping for more for its £1.8 million than Korn Ferry can deliver: KF consultants expect to arrive and help companies and organisations implement an already adopted strategy, and in particular recruit the right people to play leadership roles.
DHSC/NHS England on the other hand still don’t have a clear strategy, and are mainly preoccupied with getting rid of thousands of staff, many of them in senior, leading roles.
It seems that this latest consultancy is doomed to failure: but KF has been such a minor player in the ongoing omnishambles that the company can’t even be blamed and thrown publicly under the bus when it all goes wrong.
This state of affairs should be no surprise: the NHS has been an extremely slow and dull-witted learner on the shortcomings of management consultants.
Costly management consultancy (or wrongheaded advice from so-called think tanks) in the NHS has more often been the accompaniment rather the antidote to bureaucratic failure. Examples include
- the 1992 Tomlinson Report – (advised by the King’s Fund) – which planned to axe ten major London hospitals (without even noticing its map left off key outer London hospitals, not least the whole of Barking Havering and Brentwood District Health Authority.) Much of the plan proved impossible to implement.
- The 2007 Darzi report (with technical data compiled by McKinsey), which proposed to establish 150 ‘polyclinics’ across London, combining GP services with elements of hospital care, each serving a catchment population of around 50,000, at a combined cost of over £3 billion (plus a huge annual bill for staffing.) The plan met huge resistance from GPs and found little public support. Only a handful of scaled-down projects ever opened, and they did not last long.
- The largely impractical and evidence-free 2009 McKinsey proposals, seeking £20 billion in cost-savings in England’s NHS in the aftermath of the banking crash, which were furtively commissioned by Gordon Brown’s government. The ‘report’ was adopted, warts and all, by NHS boss Sir David Nicholson, and some of the proposals (not least drawing up growing lists of treatments and services that would no longer be provided by the NHS) were implemented under the Cameron government from 2010. However many of the ideas in it were wildly impractical. A London version was also published, again deeply flawed.
- The disastrous Health and Social Care Bill, drawn up in 2010-11 by Tory Health Secretary Andrew Lansley, again advised by McKinsey, set out further to entrench the costly and wasteful division of the NHS into ‘providers’ and ‘commissioners’, expand the private sector and establish a competitive market for health care.
- In 2019, Health Secretary Matt Hancock finally killed off the disastrous ‘Shaping a Healthier Future’ (SaHF) plan to close Ealing and Charing Cross hospitals and cut back A&E services in North West London. Campaigners, including Hammersmith & Fulham and Ealing councils, had campaigned for the plan to be scrapped for the previous seven years. But the scheme was put out of its misery too late to prevent tens of millions being squandered on useless management consultancy. By 2017, when SaHF stopped publishing information on consultancy spending, local experts had already totted up official figures revealing a staggering total of £72 million had been squandered in five years on management consultants, including McKinsey.
The pandemic brought numerous, notorious, lucrative NHS commissions for management consultants, especially Deloitte. The Lowdown noted that from August 2020 even more contracts were opened up:
“consultancy.uk reported that 16 consulting firms had been awarded coronavirus contracts worth £56m. But this was the tip of the iceberg.
“In January Health Minister Helen Whately admitted that 2,300 management consultants from 73 different companies were currently working on the lamentable Test and Trace system, with £375m spent on consultancy for this project alone.”
Reports revealed that the management consultants were being paid an average of £1,000 per day, and that Deloitte alone had 900 employees at work in test and trace. The Daily Mail estimated the total of consultants and contractors at 2,959.
Sky News in October 2020 that a 5-person team from Boston Consulting had been paid £25,000 per day helping to “mastermind the creation of the contract tracing systems.”
And with Test and Trace “barely functional” in the face of a resurgence of the pandemic, reports indicated that hundreds of consultants from KPMG, EY and other firms were being lined up to reinforce the numbers who were already failing so badly.
There has been no let-up in the consultancy boom, despite occasional government statements calling for reduced reliance on consultants, and evidence published by The Conversation in 2021 that suggested use of consultancies in health care had ‘done more harm than good.’
A Lowdown article that autumn pointed out (with numerous more examples) that
“Consultancy firms have played a key – and lucrative – role in most of the big reorganisations of the NHS going back at least to 1974.”
In 2022 it was revealed that seven companies – Bramble Hub, Deloitte, EY, KPMG, McKinsey & Co, Newton Europe and PwC – were being paid up to £42m for an initial two-month data contract, amid growing concern over the increasing role played by management consultancies within the health service.
Since 2023 McKinsey have been amongst the most enthusiastic promoters of investment in digital systems for the NHS, especially controversial the Federated Data Platform.
In 2024 The Lowdown noted that despite having been “plunged into yet another winter crisis with no extra funding, the NHS had “signed yet another 4-year, £40m contract for management consultants to give commercial advice.”
Nine of the 42 Integrated Care Boards facing the biggest financial problems for 2024/25 were required to bring in management consultants to find ways to make immediate cuts in spending.
Now, with millions still leeching out of the NHS, a detailed research study in the US has once more cast doubt on the value for money of management consultants.
The researchers analysed data over a decade comparing 306 US non-profit hospitals that used a management consulting firm for the first time with 513 matched hospitals that did not use a management consulting firm during the study period.
They found little evidence of substantial, statistically significant, or systematic changes attributable to management consultancy, despite a staggering combined outlay of more than $7.8 billion on management consulting services from 2009 to 2023.
The researchers note: “Such large outlays have real opportunity costs—for example, among nonprofit hospitals that hired management consulting firms, the average expenditure of $15.7 million could alternatively fund the annual salaries of approximately 46 hospitalists, or 167 registered nurses.”
Even the possible explanations that might minimise the negative implications of this research serve to underline how irrelevant and useless most of the consultancy projects have been.
“It may be that changes induced by management consultants are simply too small to detect, that they affect dimensions of performance that we did not observe, or that the activities of these contracts are sufficiently varied as to make effects on any individual dimension difficult to discern. Alternatively, it may be that management consultants are primarily validating decisions or otherwise making recommendations that are very similar to what the hospital would have done without the contract.”
The report also questions the value of using other external consultants:
“this study examines only management consulting contracts, which represent just 31% of the nearly $2 billion that nonprofit hospitals spend on consultants each year.”
As 1500 ex-Labour councillors count the cost of failure to deliver the progressive change promised by the party back in 2024, Wes Streeting and his Department are proving that ministers have learned nothing and forgotten nothing of the costly failures in the past.
They would do well to take note of the new US research, and focus on spending scarce NHS cash where it is most needed and can make most impact rather than handing millions to consultants who know nothing and care less about the NHS.
Dear Reader,
If you like our content please support our campaigning journalism to protect health care for all.
Our goal is to inform people, hold our politicians to account and help to build change through evidence based ideas.
Everyone should have access to comprehensive healthcare, but our NHS needs support. You can help us to continue to counter bad policy, battle neglect of the NHS and correct dangerous mis-infomation.
Supporters of the NHS are crucial in sustaining our health service and with your help we will be able to engage more people in securing its future.
Please donate to help support our campaigning NHS research and journalism.
At the end of last month the Health Service Journal revealed that the Department of Health and Social Care has been paying a management consultancy since last year to help it “create and drive the right target culture” – and to advise on “pay strategy” – as it absorbs NHS England with a net loss of half the jobs.
The consultancy, Korn Ferry, might sound like a South West holiday resort, but is in fact a $2.8 billion US-based global organisation with thousands of employees in 50 countries.
Whether that means the advice they have been giving to the DHSC is worth the £1.8m forked out so far in fees is open to serious doubt. As Roy Lilley’s e-letter from nhsmanagers.net pointed out on May 8, despite (or maybe partly because of) Korn Ferry’s involvement, the merger process with NHS England has been chaotic and “Stressful for people and their families”. as the clock ticks down towards the planned merger date of March next year.
There is no sign of a plan on exactly what the merged body will do or look like, what functions it will drop as a result of the axing of 50% of its workforce, or how the necessary legislation to complete the changes can be drawn up and passed in time through Parliament.
There is an implicit warning in the various statements that Korn Ferry makes about itself. The company claims its strengths are in:
“synchronising strategy, operations, and talent to accelerate performance, fuel growth, and inspire a legacy of change.”
In an advert for a Senior Consultant/Associate Principal it states:
“We work with organizations to design their structures, roles, and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop, and motivate their people.”
The same advert goes on later to explain that the company:
“supports clients to translate strategy into effective structures, roles, governance, and operating models. Our work helps organisations align people, accountability, and decision-making to deliver strategy and improve performance.”
This suggests the DHSC may be hoping for more for its £1.8 million than Korn Ferry can deliver: KF consultants expect to arrive and help companies and organisations implement an already adopted strategy, and in particular recruit the right people to play leadership roles.
DHSC/NHS England on the other hand still don’t have a clear strategy, and are mainly preoccupied with getting rid of thousands of staff, many of them in senior, leading roles.
It seems that this latest consultancy is doomed to failure: but KF has been such a minor player in the ongoing omnishambles that the company can’t even be blamed and thrown publicly under the bus when it all goes wrong.
This state of affairs should be no surprise: the NHS has been an extremely slow and dull-witted learner on the shortcomings of management consultants.
Costly management consultancy (or wrongheaded advice from so-called think tanks) in the NHS has more often been the accompaniment rather the antidote to bureaucratic failure. Examples include
The pandemic brought numerous, notorious, lucrative NHS commissions for management consultants, especially Deloitte. The Lowdown noted that from August 2020 even more contracts were opened up:
“consultancy.uk reported that 16 consulting firms had been awarded coronavirus contracts worth £56m. But this was the tip of the iceberg.
“In January Health Minister Helen Whately admitted that 2,300 management consultants from 73 different companies were currently working on the lamentable Test and Trace system, with £375m spent on consultancy for this project alone.”
Reports revealed that the management consultants were being paid an average of £1,000 per day, and that Deloitte alone had 900 employees at work in test and trace. The Daily Mail estimated the total of consultants and contractors at 2,959.
Sky News in October 2020 that a 5-person team from Boston Consulting had been paid £25,000 per day helping to “mastermind the creation of the contract tracing systems.”
And with Test and Trace “barely functional” in the face of a resurgence of the pandemic, reports indicated that hundreds of consultants from KPMG, EY and other firms were being lined up to reinforce the numbers who were already failing so badly.
There has been no let-up in the consultancy boom, despite occasional government statements calling for reduced reliance on consultants, and evidence published by The Conversation in 2021 that suggested use of consultancies in health care had ‘done more harm than good.’
A Lowdown article that autumn pointed out (with numerous more examples) that
“Consultancy firms have played a key – and lucrative – role in most of the big reorganisations of the NHS going back at least to 1974.”
In 2022 it was revealed that seven companies – Bramble Hub, Deloitte, EY, KPMG, McKinsey & Co, Newton Europe and PwC – were being paid up to £42m for an initial two-month data contract, amid growing concern over the increasing role played by management consultancies within the health service.
Since 2023 McKinsey have been amongst the most enthusiastic promoters of investment in digital systems for the NHS, especially controversial the Federated Data Platform.
In 2024 The Lowdown noted that despite having been “plunged into yet another winter crisis with no extra funding, the NHS had “signed yet another 4-year, £40m contract for management consultants to give commercial advice.”
Nine of the 42 Integrated Care Boards facing the biggest financial problems for 2024/25 were required to bring in management consultants to find ways to make immediate cuts in spending.
Now, with millions still leeching out of the NHS, a detailed research study in the US has once more cast doubt on the value for money of management consultants.
The researchers analysed data over a decade comparing 306 US non-profit hospitals that used a management consulting firm for the first time with 513 matched hospitals that did not use a management consulting firm during the study period.
They found little evidence of substantial, statistically significant, or systematic changes attributable to management consultancy, despite a staggering combined outlay of more than $7.8 billion on management consulting services from 2009 to 2023.
The researchers note: “Such large outlays have real opportunity costs—for example, among nonprofit hospitals that hired management consulting firms, the average expenditure of $15.7 million could alternatively fund the annual salaries of approximately 46 hospitalists, or 167 registered nurses.”
Even the possible explanations that might minimise the negative implications of this research serve to underline how irrelevant and useless most of the consultancy projects have been.
“It may be that changes induced by management consultants are simply too small to detect, that they affect dimensions of performance that we did not observe, or that the activities of these contracts are sufficiently varied as to make effects on any individual dimension difficult to discern. Alternatively, it may be that management consultants are primarily validating decisions or otherwise making recommendations that are very similar to what the hospital would have done without the contract.”
The report also questions the value of using other external consultants:
“this study examines only management consulting contracts, which represent just 31% of the nearly $2 billion that nonprofit hospitals spend on consultants each year.”
As 1500 ex-Labour councillors count the cost of failure to deliver the progressive change promised by the party back in 2024, Wes Streeting and his Department are proving that ministers have learned nothing and forgotten nothing of the costly failures in the past.
They would do well to take note of the new US research, and focus on spending scarce NHS cash where it is most needed and can make most impact rather than handing millions to consultants who know nothing and care less about the NHS.
Dear Reader,
If you like our content please support our campaigning journalism to protect health care for all.
Our goal is to inform people, hold our politicians to account and help to build change through evidence based ideas.
Everyone should have access to comprehensive healthcare, but our NHS needs support. You can help us to continue to counter bad policy, battle neglect of the NHS and correct dangerous mis-infomation.
Supporters of the NHS are crucial in sustaining our health service and with your help we will be able to engage more people in securing its future.
Please donate to help support our campaigning NHS research and journalism.
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