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The Telegraph How nursing agencies making billions are bleeding the NHS dry

A Telegraph investigation reveals the boom underway at agencies supplying doctors and nurses to the NHS amid a rapidly deepening budget deficit in the service.

The extraordinary boom in agencies supplying doctors and nurses to the NHS amid a rapidly deepening deficit in the health service is revealed today.

An investigation by The Telegraph shows how total revenue at 10 of Britain’s biggest medical recruiters rose by almost 40 per cent over three years, with the companies posting overall takings of £7.7 billion since 2009.

The businessmen running the agencies are earning up to £950,000 a year and living expensive lifestyles in properties worth millions of pounds, prompting warnings last night that the NHS needed “to get a grip”.

The chairman of one firm, which supplies both the NHS and the private sector, lives in a £9.5 million house in central London and drives an Aston Martin DB9 sports car.

Official figures show that NHS spending on temporary workers has reached a record £3.3 billion high, and “catastrophic” levels of debt are being blamed on last year’s rise in agency bills.

Simon Stevens, the NHS England chief executive, has promised to tackle the high cost of agency spending. He told the Andrew Marr Show on BBC One: “We will have to clamp down on some of these staffing agencies, who are frankly ripping off the NHS.”

The Telegraph's investigation shows how revenue at one of the NHS’s largest outsourced recruitment firms, Independent Clinical Services (ICS), increased by 60 per cent in just two years, to £314 million.

Meanwhile, spending on agency staff by NHS foundation trusts – two-thirds of hospitals – rose by 64 per cent over a two-year period, pushing the health service into debt.

Figures obtained by The Telegraph show that Barts Health NHS Trust in London spent most heavily on agency staff, with an £81 million bill in 2014-15.

It was followed by King’s College Hospital foundation trust and Royal Free London NHS trust, which each spent more than £60 million.

The trusts blame their reliance on temporary staff on a lack of qualified nurses. Many have tried to employ more nurses in the wake of the Mid Staffs scandal, but struggled to find permanent workers, causing the agency bill to spiral.

Critics say the problem has been caused by underinvestment in training, a lack of any effective cap on the rates that agencies charge and a failure to recruit enough staff.

NHS reports last month revealed an £822 million deficit across the health service, blamed entirely on spiralling agency spending.

Some trusts have spent up to £3,200 a shift for doctors.

Dr Sarah Wollaston, the former Commons health select committee chairman, said: “I am really concerned about what we are seeing – there is a domino effect here. The rates being paid make it harder and harder for the NHS to fill permanent jobs. These agencies are leeching away permanent staff from the NHS, and the sums being spent on them are frankly eye-watering.

“We absolutely need to get a grip. When you’ve got senior figures at agencies earning far more than the head of the NHS — this is public money and we cannot go on like this, we cannot afford to keep paying these sums.”

Dr Peter Carter, chief executive of the Royal College of Nursing, said: “It is simply not sustainable for so much public money to be spent in this way.

“The NHS needs to wean itself off its over-reliance on short-term staffing solutions by translating agency staff into permanent staff and holding on to the staff it already has.”

• Agencies make millions from £120-an-hour doctors

• The NHS must maintain standards, or be held to account

Analysis of the accounts of 10 of the biggest agencies profiting from the NHS show that their collective turnover rose 39 per cent between 2010 and 2013, to £1.93 billion. All of the firms supply both the health service and private sector.

Overall, companies involved in sourcing short-term doctors and nurses for the NHS posted revenues of £7.7 billion between 2009 and 2013, with recorded profits amounting to £84.5 million.

Accounts filed over the past four years by ICS, the biggest supplier of temporary medical staff, show revenue grew from £196 million in 2011 to £314  million in 2013.

Richard MacMillan, ICS’s chief executive, owns a home worth £1 million in Ringwood, Hampshire.

The firm is chaired by Paul Pindar, who previously ran Capita Health and Wellbeing Limited, leaving last year. As chief executive of Capita plc, the firm’s parent company, he earned £14,500 a week. His cars have included a Mercedes S500 and an Aston Martin and he lives in a £9.5 million house in London.

Capita’s UK health-care arm had underlying operating profits of £21.8 million in 2013, up 38pc from 2010.

A Capita subsidiary, Team 24, which provides doctors and nursing staff, reported profits of £4.7 million in 2013 on turnover of £42.2 million. Thomas Richards, the director, owns a house worth £1.3 million in Seal, in Sevenoaks, Kent.

Medacs, another firm, which claims to place more locum doctors in the NHS than any other organisation, has posted profits of £37 million since 2009, paying one of its directors £492,000 in 2013. The company also provides health care services to the police and prison service.

Another company, DRC Locums, owned by James Caan, the Dragons’ Den tycoon, has made profits of £4 million in six years. It supplies more than 90 trusts.

Healthcare Locums (HCL), another firm, reported gross profits amounting to £17.1 million in 2013. Stephen Burke, its chief executive, owns a £2.4  million home in Hampshire.

HCL left the stock market in 2013 when it was taken over by Toscafund and Ares Capital Europe, following “serious accounting irregularities” by its previous management.

Mayday Healthcare, which promises locums “the best rates”, reported pre-tax profits of £9.2 million in 2014, a rise from £6 million in 2010. One director received £957,000 in 2013-14, and Charles Safapour, its co-founder, owns a £1.3 million property near Caterham.

• Surge in cancelled NHS operations

• NHS spending: how temporary staff keep the health service going

The firm is majority-owned by Kevin Coyle, who lives in a £3 million, seven-bed room property in Hertfordshire.

A24 Group, founded by Penny Streeter, reported pre-tax profits of £54 million in the past four years.

The success of Ms Streeter’s recruitment firm propelled her on to the Sunday Times Rich List in 2007, and she is now said to be worth more than £60  million.

Julia Manning, chief executive of the think tank 2020 Health, said: “It will be absolutely galling for NHS staff and patients to see the kind of luxurious lifestyles that the health service is funding.

“These companies are able to exploit the difficulties the NHS is going though because there simply hasn’t been enough attention paid to forward planning and making sure we train enough staff.

“The NHS is guilty of a serious false economy in cutting back on staff only to pay so much more to these agencies.”

Katherine Murphy, head of the Patients Association, said: “We continue to bleed the NHS of scant resources in order to fund the lavish lifestyles of owners of nursing agencies.”

A Capita spokesman said it provided support services to numerous NHS organisations, the Department of Health and other public bodies. “The provision of health and care staffing services to the NHS represents a very small proportion of our total health related work,” he said.

• Letters: Free up junior doctors to reform wasteful NHS spending on agency staff

• A&E departments so short-staffed four in 10 doctors are locums, warns report

• Patients waiting longer for help amid nursing shortage

A Department of Health spokesman said: “As the Health Secretary said in November, the NHS needs to cut the amount of money it spends on agency staff and use money more efficiently – and this damning investigation by The Telegraph shows exactly why.

“Since May 2010, we already have more than 23,000 extra clinical permanent staff working in the NHS, including more than 9,100 extra doctors and more than 8,200 extra nurses.”

A spokesman for ICS said: “Flexibility to increase numbers of doctors, allied health professionals and nurses, often at extremely short notice, is critical to the NHS maintaining high standards of patient care around the clock.

“ICS helps hospitals and NHS trusts to match highly specialist medical professionals to the needs of patients at times when care demands are at their highest.

“Pay is agreed with individual trusts and varies according to their work requirements and the length of notice provided to us.”

Healthcare Locums, Medacs, Mayday Healthcare, DRC Locums and A24 did not respond to requests for comment.