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Mergers and cost-cutting programmes in the NHS expected to drive public sector demand

Mergers and cost-cutting programmes in the NHS expected to drive public sector demand for interim managers

Rates for interim executives in the NHS up 6%

A wave of hospital mergers and the implementation of large scale cost-cutting programmes mean the NHS will create the most public sector job opportunities for interim managers this year, according to a poll by Interim Partners, the leading provider of interim managers.

The survey of 900 interim executives found that the Top Three users of interims in the public sector this year would be:

The NHS (42%)

Central Government (15%)

Local Government (15%)

(full results below)

Steve Melber, Head of Healthcare at Interim Partners, comments: “When the Government started implementing its austerity drive, there was a widespread expectation that the public sector’s use of interim managers would collapse but that hasn’t been the case.  Overall demand may be weaker, but there are areas of high demand.”

“The NHS and local government have continued to use a lot of interim managers and they expect that trend to accelerate.”

The average daily rate for an interim working in the public sector fell by 1% in the year to Q3 2011 from &pound675 to &pound666.  However, interims working in the health sector saw their rates grow by 6% over the same period, from &pound667 in Q3 2010 to &pound707 in Q3 2011.*

NHS cost-cutting driving demand

Steve Melber explains: “A lot of hospital trusts are implementing cost-cutting programmes to cope with a future of flat income growth, with a rising cost base.”

“Hospital trusts often try to set up their cost cutting programmes using internal staff.  That can create management gaps within the trust, which are filled by interim managers.” 

“Implementing a cost-cutting programme in a hospital trust is particularly demanding as patient safety will always be paramount, but can be put at risk if hospitals cut head count or reduce bed numbers too quickly.”

“A very specialist skillset is often needed, which is why there is a growing understanding across hospital trusts of the value brought by experienced interim managers who can demonstrate that they have delivered savings in similar organisations without compromising care standards.”

Spate of NHS mergers in rush to meet 2014 deadline for foundation trust status

Interim Partners says that another source of demand is the large number of mergers taking place between hospital trusts.  Over 40 mergers involving NHS trusts have been announced since the beginning of 2010, creating a lot of preparation and post-merger integration work.** 

Large mergers that were announced last year include:

Trafford Healthcare NHS Trust, which services the Borough of Trafford with just under 2,000 staff, merging with the Central Manchester University Hospitals NHS Foundation Trust, which includes six specialist hospitals.

The Winchester & Eastleigh Healthcare NHS Trust, which serves around 350,000 people in the mid Hampshire area, merging with the Basingstoke & North Hampshire NHS Foundation Trust, with over 5,000 staff.

Steve Melber explains: “There has been a rapid acceleration in mergers involving hospital trusts because many smaller hospitals are not financially viable in their current form.  Small trusts often provide a full range of services without having the patient numbers to run them profitably.  By merging with neighbouring trusts, hospitals can create the economies of scale needed.” 

Interim Partners points out that the Government is encouraging as many trusts as possible to apply for foundation trust status, which means more mergers are likely.

Says Steve Melber: “Demonstrating long term financial viability is a key requirement to become a self-governing foundation trust.  Hospitals applying for foundation status often use interim managers to help build up their business case, which involves developing a long term strategic plan around the services needed within a catchment area, and building a membership base to demonstrate support and involvement from local communities in trust decision making.”

Interim project directors for foundation trust applications can earn as much as &pound1,000 per day.

Steve Melber comments: “Another potential source of demand for interims is when hospital trusts set up private franchises, where an NHS or private health provider takes over the management of an NHS hospital on a long term contract.”

2011 saw the signing of a ground-breaking 10 year franchise deal worth &pound1billion for the private company Circle to take over the running of the Hinchingbrooke Hospital in Cambridgeshire, which will nevertheless remain in the NHS.

Steve Melber adds: “This new wave of merger and franchise activity is drawing in interim executives to address pre-merger due diligence issues or project-manage the integration and find post-merger efficiencies.  The mergers are major projects that can take over a year.  But they can provide a huge opportunity to cut costs and improve productivity if they are carried out effectively.”

“A successful merger is not easy to carry out without interruptions to service delivery, so interim managers who can point to past successes are able to command high daily rates despite wider public sector pay constraint.”

 

In which of the public sectors listed do you expect there to be the most job opportunities over the next 12 months?

NHS

42%

Central Government

15%

Local Government

15%

Education

11%

Housing

6%

Ministry of Defence

4%

Other

8%

 

*Ipsos MORI research for the Interim Management Association

** Co-operation & Competition Panel

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