The NHS needs more money, but not all money is created equally. The current context may offer opportunities for innovation in funding the health and care service. By Axel Heitmueller

Axel Heitmueller

Axel Heitmueller

Axel Heitmueller

The political narrative on public spending has shifted from a debate only about the amount of spending to the type of spending. Most prominently in the Industrial Strategy, but across other areas of public policy we make a distinction between money we spend to meet current needs and the money we can invest to make things better in the future. This is a cross party trend and set apart from the debates on the appropriate level of public spending.

Perhaps surprisingly, we see much less of this distinction in the health service. What little new money there is has appropriately been focussed on meeting the immediate, urgent pressures of maintaining the quality of care we wish to see today.

A strained service

But even if such a response is entirely rational and appropriate we also know that the pressures on the NHS are only likely to get worse and that economising on long term investment now will exacerbate this trend. Must we, therefore, accept that our future selves should expect an ever more strained service?

Why wouldn’t we provide more money for projects that will pay back the original funding plus a return?

Last week, the prime minister indicated a £10bn capital injection on the back of Sir Robert Naylor’s review. If forthcoming, this is welcome news to address some of the most pressing infrastructure issues in the NHS.

But while more capital funding is undoubtedly necessary, achieving change also requires investment in the time of clinicians and managers to make it happen. These costs are just as much an “investment” in the future as spending on new assets.

Across the country, sustainability and transformation plans have identified schemes that increase the quality of care and lower costs but without substantially more investment, many of these will never see the light of day.

Even in the unlikely event that colleagues can research, develop and implement new ideas in the moments of spare time between hectic jobs and seeing patients, most innovations take months or years to deliver the improvements in patient care that ultimately feed through into financial savings.

In the meantime, the existing provision must be maintained and paid for.

Stated as such, the case seems obvious: why wouldn’t we provide more money for projects that will pay back the original funding plus a return?

To advance our case we need to acknowledge and address the legitimate concerns of those who will worry about signing a blank cheque to the NHS… won’t more of the same just pay for more of the same?

We suggest that one option would be to ring fence some additional new money much more clearly as an investment fund to support STPs.

Investment fund

The fund, at its most basic, would provide money for robust STP business cases to be realised, and importantly would require health economies to pay all, or part of, the savings back to the fund once realised so they could be reallocated to new projects in the future.

If we genuinely have schemes that can pay back within a few years then organisations should have no concerns in signing an agreement to do so

The fund could be overseen in each STP region by a board that was distinct from any existing NHS organisation, and would have appropriate duties on its independent trustees to invest prudently and in the public interest.

We believe developing such an investment fund would address a number of issues. Most obviously, it would overcome the immediate lack of investment to kick start virtuous cycles of improvements. Equally importantly, it would provide for a disciplined and transparent process to assess the true potential of the investment opportunities and the degree of transformation possible.

At present, the pressure on local STPs is to ensure that business cases collectively add up to the requisite savings total. There is little attention on whether they are realistically likely to deliver this. Furthermore, currently there is a perceived penalty for honesty about delivery risk.

By treating these choices as investment decisions, which will ultimately have to be repaid, we may be able to cut through the theatre and move towards more robust and realistic views of what is possible.

In return the system, and most importantly patients, gets what is desperately needed – more money to fund the change we need and want to undertake.

The fund’s success would depend on a number of factors of course.

First, the Treasury has traditionally been highly sceptical that invest to save schemes ever release cash. We believe this is unfair and that many schemes could work if given the chance, but either way this risk exists whatever the form of funding.

By providing money as an investment fund, HMT would put the ball squarely in the NHS court. If we genuinely have schemes that can pay back within a few years then organisations should have no concerns in signing an agreement to do so. If they do not, then at least we have run a process that reveals this before the money was spent.

Second, a working capital fund would require investment in infrastructure and people somewhere in government. This would take time and effort and would add an additional administrative overhead. Social investment organisations have been running similar arrangements for a number of years and learning from CDC, the Department for International Development Impact Fund may be a good starting point.

We do not pretend that establishing such a fund would be straightforward. Many issues are left unanswered here – are the investment agreements binding on organisations like a loan, or only if the scheme works? Should the fund aim to get all its money back or accept a small loss to incentivise risk taking? But none of these are insurmountable.

Our observation is that government rhetoric is consistently of the view that system transformation can and will avoid the need for cuts in service quality in the future. Post election, will it put its money where its mouth is?

Axel Heitmueller, Managing Director, Imperial College Health Partners; Ross Gribbin, Director of Strategy, Imperial College Health Partners