HOW TO...
KEEP AGENCY STAFF COSTS DOWN So, you’ve negotiated better agency rates – what now? Cutting agency hours is the real prize, says Christoph Marr, Managing Director at Marr Procurement Ltd. Over the last few years, care providers have seen their spending on temporary labour agencies skyrocket. From a rapid decline followed by a ‘low point’ during the first 12 months of the COVID-19 period, costs have risen steeply before starting to flatten out in the earlier part of this year. For many operators, this cost increase has placed significant pressure on the bottom line, as
well as challenging the delivery of continuity of care. Although we are now seeing costs stabilise and even flatten out, they remain at an unsustainable level. We work with more than 50 care providers and we have heard first-hand about the issues and risks associated with the reliance on agencies and, therefore, the impact on operations.
Temp Agency Spend Tracked Across 36 Social Care Providers COVID Year 1
May ‘21 and April ’22
Decline in spend
Spend increased significantly
Com Jan ‘22 to Feb ’23 Spend high & stabilising
Jan-20 Feb-20 Mar-20 April-20 May-20 June-20 July-20 Aug-20 Sept-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 April-21 May-21 June-21 July-21 Aug-21 Sept-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 April-22 May-22 June-22 July-22 Aug-22 Sept-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23
How ca
Temporary labour agency spend has stabilised but in many cases remains unsustainably high. Now is the right time to address both the cost per hour and the volume of hours.
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Care England
Fulfilm
Taking the hours down
Care Providers
Increased cost per hour Increased volume Compromising continuity of care and quality of care
Jan ‘22 to Feb ’23
nd high & stabilising
How can a reduction in costs be achieved without impacting on:
April-22 May-22 June-22 July-22 Aug-22 Sept-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23
Fulfilment, quality and continuity of care and staff pay?
Start by saving on hourly costs There are many components to the cost rate that is paid to an agency, which will be well over and above the actual pay rate the worker receives. Protecting continuity of care is always a first-order priority and so it is key that savings made on the cost per hour must not reduce what the care worker gets paid. Consistency of rates (and terms) between agencies is very helpful operationally – one way to do this is via either a master vendor or neutral vendor relationship, where the vendor will act to standardise rates by role and by shift. This removes the risk of last-minute rate hikes on difficult-to-fill shifts.
Vendor selection
When selecting a vendor to support your organisation, it is very important to understand the level of service they will provide. We would typically recommend our clients to go with a vendor who can deliver the online timesheet system, the fulfilment service and the managing of the temp agency supply base. multifactorial approach: The availability of rich reporting data is also critical to secure. However, this is only part of the solution. Creating a holistic resourcing strategy The real prize is to move from saving on agency rates (supply-side savings) to reducing the requirement for agency hours itself Perm. Recruit (demand-side savings).
Resourcing Strategy
Care England Bank
e. g
ro s t e ri n g Agency
Where to start?
We have worked with clients who have first implemented an agency vendor solution and then gone on to reduce their agency costs by between 40 and 50%. This sounds unachievable but it can be done through a systematically planned combination of: • Better permanent recruitment. • More effective resource planning. • Use of technology, particularly an online timesheet system. • The availability of a good and effective bank team. Creating or building a bank team can be an excellent next step after reducing agency hourly cost rates. Often if the care provider uses an online timesheet system (either their own or a vendor’s), the request for a temporary worker can be set up first to go to the client’s bank team to see if the shift can be filled there, before only then routing the request to an agency. This ensures that the organisation’s own teams are prioritised when shifts become available. If implemented, the online timesheet system can also support a more structured approach to the recruitment of permanent staff. Due to important continuity of care considerations, care providers will often have temporary workers who have worked for the organisation for many months. Typically, after a 12- or 13-week period, these workers can be converted to permanent staff members with no additional cost. Understanding this, and ensuring that a regular review of the tenure of agency workers is performed, is a key part of managing down your agency hours. We also work with some of our clients to create a fulfilment capability team to allow care home managers to source workers when they need them. Most of our clients decide to appoint a third party to provide the following: standardised rates, an online timesheet system (which links systematically to their bank staff) and a fulfilment capability. We work with them to find the right third party and we have done so now for more than 40 care providers. Once we have found the right partner, we then professionally manage them in such a way that the client’s values are closely reflected in how that agency operates. Continued
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→ A holistic response During the course of this work, we have identified a series of interconnecting issues that require a holistic approach (see schematic below). Our approach is to work through with our clients how they are currently performing
in each of these areas (the ‘as is’). We then workshop towards a solution or a ‘go to’ scenario. We might involve SME experts – from social care or other sectors – to determine the best course of action, mapping out the journey via a programme of actionable steps, milestones, a benefits case and return-oninvestment timelines.
Ultimately, the solution requries a multifactorial approach: Creating a holistic resourcing strategy Reducing staff costs
Perm. Recruit
Better use of bank Help recruit permanent staff
Resourcing Strategy
Increase retention of permanent staff Reduce reliance on temporary staff Technology to support resourcing A strategic solution tactical problems
Bank
e. g
Where to start?
ro s t e ri n g Agency
to
Cutting both the volume of temporary labour hours and the cost per hour requires a multifactorial approach. The benefits can be substantial; improved quality of care, continuity of care and lower costs.
For example, we might start by asking a series of questions such as: • How good and how efficient is your recruitment process at identifying and onboarding the right people for your organisation, including alumni recruitment and employee referral? • How quickly do you move from a successful interview to a job offer? • Are you happy with your staff turnover? How well do you retain staff and do you understand the drivers of this in your organisation? • How efficient is your shift planning in terms of process and use of rostering systems, and do you offer flexible shifts to attract candidates from new age demographics? • Do you have an effective bank staff in operation and is it being optimised? • Do you have the right data to understand where and why you are using agency hours? • Have you got long-standing agency workers who could be converted into permanent staff?
• Do you have the right accountability structure and appropriate forum meetings in place to address it systematically? The result is materially lower agency costs, reduced reliance on agency hours and a joined-up way of thinking about resourcing across the organisation.
Value of knowledge and experience These are critical programmes to get right – there is nothing more important in a care setting than having the right staff paid appropriately for the important work they do. We see agency cost savings being redirected to paying permanent care workers more money, improving retention rates and enhancing continuity of care and, ultimately, breaking the cycle of reliance on temporary labour agencies.
Christoph Marr, Managing Director at Marr Procurement Ltd. Email: christoph.marr@marrprocurement.com @Christoph_marr 30
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