‘Novel and contentious’
Slowly but surely the NHS is adapting to an environment in which large funding increases no longer roll through the door and in which previous sources of capital spending have all but dried up.
NHS trusts are increasingly seeking their own funding solutions or lobbying for special treatment. In short, they are acting like local authorities have had to do during the last few decades.
Indeed, it is to local authority funding sources that some have turned. Northumbria Healthcare Foundation Trust is waiting to hear from the Treasury whether its “novel, contentious and repercussive” proposal to use Public Works Loans Board funding to refinance its private finance initiative contract will be allowed. Meanwhile, Sandwell and West Birmingham Hospitals Trust is exploring using the same route to help unblock a stalled capital project.
Joint strategic needs assessments may mean the NHS and local authorities find greater common cause when it comes to funding the maintenance or development of health services.
The NHS would benefit from the expertise built up by councils. For example, city regions such as Greater Manchester have been successful in agreeing innovative funding deals with the Treasury. They and others also have more experience in launching “trading activities” which can bolster funding in the same way the Shelford Group of big teaching hospitals wants to earn more from working with the pharmaceutical sector.
But Treasury approved vehicles and direct revenue generation are only two parts of the developing funding picture.
It is significant that the Shelford Group’s latest bid for a top-up to their tariff payments hinges in part on the role they play in running clinical trials and, therefore, supporting the UK’s pharma businesses.
It remarks on the “alarming” decline in UK clinical trials and has called for a “full review of [the] funding system to bring it into line with international best practice”. The reference to the rest of world - rare in debates about NHS funding - is significant.
The prime minister used his keynote address at last week’s Global Health Policy Forum to pledge the UK would become the best place to develop new medical technologies.
There appears considerable scepticism among HSJ’s readers that Shelford Group members deserve increased funding to reflect their “complex” work.
But whatever the argument’s merit, perhaps the criticism misses the mark. The group’s appeal was made to the Treasury as well as the Department of Health - and Number 11’s main concern is the strength of the economy.
Just as the life sciences sector seems likely to have a greater influence on how the NHS is funded, so it seems will private sources of funding.
HSJ reveals North Tees and Hartlepool Foundation Trust has had offers from two pension funds to pay for a £300m new hospital. Should the deal go through, it may signal the service has finally found a new form of private funding which does not rely on hard-to-come-by government guarantees.
Finally, there are strong rumours of trusts exploring “bond-backed solutions” to financing challenges.
The increasing range of funding and revenue options which the NHS is moving towards with a mixture of enthusiasm and resignation presents both risks and opportunities for the service.
There was little need to think innovatively about funding during the times of plenty and opportunities for the NHS to use its buying power and intellectual capital were too often ignored.
However, as organisations and regions explore new ways to access funding they will find themselves exposed to different factors which will place the relatively uniform nature of NHS services under further pressure.
Again, the present divergent state of local authority services may contain clues to the future of the NHS.