Healthcare labour market dynamics

 

Prior to the pandemic, the sector had been tackling challenges around workforce and skills shortages, cost pressures and rising demand. The NHS has a wide range of workforce expansion plans and estimated changes in workforce across different settings. These have been drawn up to deliver major programmes in the NHS Long Term Plan.

 

Key facts:

  • 1/3 nurses in the UK are aged over 50
  • 40,000 vacant nursing posts in the NHS England
  • c. 250,000 anticipated NHS staff shortage in England by 2030
  • Structural labour shortages are forecast to widen

 

Labour market structure

There has been a concerted effort in recent years to reduce reliance on agency workers and implement greater controls over and improve standards of agency providers. Success criteria has included the reduction in agency spend relative to bank and substantive workforce expenditure, as well as agency adherences to NHS Agency Rules. These objectives have been successful but have had some unintended, counterproductive consequences that need addressing.  

The use of agencies has always been controversial and there is a lack of acknowledgement regarding the important role agency providers play in the supply chain.

People in society increasingly want to work when and where they choose, a trend particularly prevalent in those new to the job market as well as those approaching retirement.

CIPD research suggests that staff working on flexible hours contracts are more satisfied with their job than their colleagues in permanent employment. Rather than something negative forced upon the UK working population, flexible work is a choice that more people are actively seeking. This is accentuated in the healthcare sector, where professionals are growing more confident finding work that suits their personal circumstances.

There are four cohorts that undertake work in the healthcare sector, each of which plays an important part today and will continue to do so as the workplace evolves. Each cohort is differentiated by their work preferences and level of flexibility. We explore this in more detail in the full report which you can download here.

There is a common misconception that agency supply is the most expensive option for meeting demand. However, since the introduction of agency fee caps, framework governance and the push for bank to convert agency workers, there is now little or no price differential between assignments fulfilled via bank or agency. In fact, there are instances where bank costs can be greater than agency costs for a specific job grade.

Price becomes prohibitive in the event of a requirement for escalated rates or where supply is sourced from ‘last minute’ or ‘off framework’ providers. Last minute staffing should be used as a last resort as it is significantly more expensive per shift, particularly if relied upon regularly or in volume.

 

Agency framework structure

The adoption of agency frameworks has delivered higher operating standards, preferred pricing and the removal of unsafe practices from some suppliers. NHS Agency Rule caps and standardised supplier terms and conditions have been observed across the industry and incorporated in the frameworks. However, an unintended consequence has seen agency supplier relationships become increasingly transactional with hiring habits placing less focus on the value gained from partnerships with key suppliers. 

Investing in more collaborative partnerships delivers further efficiencies for all parties. This type of supplier rationalisation has developed in most other UK staffing sectors over the past decade with supply chains working with considerably fewer suppliers. In this respect, the healthcare staffing sector is somewhat behind the level of maturity of other staffing sectors.

The case for supplier list rationalisation is increasingly emphasised by a recruiter’s reliance on digital channels in the resourcing process. Almost all job searches in the UK begin with a search engine and their algorithms are increasingly presenting job seekers with the most credible source of each vacancy.

Now, more than ever, recruiters are all fishing in the same candidate pool.

Having fewer, larger fishing nets will catch at least the same number of candidates as the many hundreds that are in operation today and will also portray the NHS in a more positive and professional light. Evidence from other sectors shows that candidate behaviour is quick to adapt; job seekers soon learn which suppliers are on the ‘select’ list of preferred supply partners and migrate to them. This evolution in supply chain management provides the end hirer with greater control and a range of other benefits from working with a small list of strategic partners.

 

COVID-19: impact on agency workers and supply

Agency workers have been greatly affected by the impact of the pandemic on the health service. Other than critical care workers, most healthcare specialists have been underemployed. They have been ineligible for furlough through the Government’s Job Retention Scheme as those working for public bodies are requested to follow Cabinet Office guidance (PPN02 and PPN04) but this guidance has not been adopted by the NHS and neither the Cabinet Office nor HMRC has been able to provide assurance about which, if either, route should be followed. Agencies have not had a mechanism to furlough people through reduced availability of work meaning that many candidates have suffered financial hardship. 

PPE availability challenges have been felt across the workforce, with agency staff experiencing particular difficulties. Bank and agency workers have played a critical role staffing intensive care units, including the mobilisation of supply to the Nightingale hospitals. These factors are likely to have a lasting impact on the perception of the NHS as an employer.

The disruption to the NHS and the decline in demand for bank and agency workers during the pandemic presents the NHS with an unprecedented opportunity to rebuild the supply chain in a more controlled and strategic way. The risks associated with rationalising the number of partners in the supply chain are best mitigated by acting during this period of reduced demand. Preferred suppliers can build their capability and, as news spreads of services returning, candidates will quickly migrate to the new preferred suppliers.

 

Further insight

This is the third in a series of seven articles from our ‘NHS workforce provision in a new world’ report. To access part four, where we look at STP collaboration, keep an eye on our LinkedIn.

Alternatively, you can download the full report by clicking here.