Friday 31 March 2017

Otago researchers scrutinise DHBs’ spend on outside consultants

The amount of money spent on external consultants by New Zealand’s 20 District Health Boards (DHBs) is substantial and poorly monitored, University of Otago research suggests.

In research published in the international journal Health Policy, Research Fellow Dr Erin Penno and Professor Robin Gauld of the Otago Business School estimated that each year DHBs pay external consultants anywhere between $10m and $60m.

The pair also found many boards were unable to easily identify the extent or purpose of this consultancy activity, or distinguish it from other contracting. Only six said they had formalised policies in place regarding engaging such consultants.

Professor Gauld and Dr Penno point out that as health budgets become more stretched, there is a pressing need to better understand the impact and effectiveness of external consultants. Consultants have been estimated to cost twice as much as equivalent permanent staff, they note.

They say that while the figures spent by each DHB represent only a small proportion of their overall funding, within a tight financial environment the overall spending across the sector is significant, representing the equivalent of funding thousands of additional elective surgical services, such as hip replacements.

The study found that many DHBs were unable to easily identify the extent of consultancy activity within their organisation. A large number could not readily identify the purpose of each consultancy and the researchers found that processes in place to ensure value for money were limited.

Dr Penno says that overall, many DHBs appeared not to have a good grasp of the extent of consultancy activity within their organisations.

“The process of obtaining information was also convoluted, with information difficult to obtain and often patchy, suggesting limited accountability throughout the DHB sector. Our findings reflect international experiences and lend support to calls for strengthening monitoring and accountability of health sector spending on external consultants,” she says.

The study found that beyond the amounts spent on consultants a major underlying concern was the limited evidence on the value for money DHBs saw from their consultancy spending.
The researchers note that DHBs will at times have a legitimate need to engage external consultants. Based on the information they provided for the study though, there is a lack of clarity around ensuring they can adequately account for these instances.

Professor Gauld says few DHBs had policies in place governing when consultants should be engaged, with most appearing to contract consultants on an ad hoc basis, though managerial approval was still required.

“In cases where DHB policies about value for money did exist they focused almost exclusively on competitive processes, in particular the use of tendering. However, our findings suggest that these policies were not routinely applied, raising concern that there were few checks and balances in place,” the pair write.

One approach to gauging value for money would be to subject outputs supplied by external consultants, such as reports and recommendations, to a rigorous peer review process, they say.

Other solutions include creating an independent institution to provide intelligence and support for health sector policymakers. Another would be to ensure that in-house capacity in DHBs is maintained and built-upon, they conclude.

ends

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