The role, costs and value for money of external consultancies in the health sector: A study of New Zealand’s District Health Boards

Public spending on external consultancies, particularly within the health sector, is highly controversial in many countries. Yet, despite the apparently large sums of money involved, there is little international analysis surrounding the scope of activities of consultants, meaning there is little understanding of how much is spent, for what purpose and with what result. This paper examines spending on external consultancies in each of New Zealand's 20 District Health Boards (DHB). Using evidence obtained from DHBs, it provides an insight into the cost and activities of consultants within the New Zealand health sector, the policies behind their engagement and the processes in place to ensure value for money. It finds that DHB spending on external consultants is substantial, at $NZ10-60 million annually. However, few DHBs had policies governing when consultants should be engaged and many were unable to easily identify the extent or purpose of consultancies within their organisation, making it difficult to derive an accurate picture of consultant activity throughout the DHB sector. Policies surrounding value for money were uncommon and, where present, were rarely applied. Given the large sums being spent by New Zealand's DHBs, and assuming expenditure is similar in other health systems, our findings point to the need for greater accountability for expenditure and better evidence of value for money of consultancies within publicly funded health systems.