David Kerr questions whether the NHS should involve not-for-profit organisations in providing community services as in the US
“Reason has always existed but not in a reasonable form”
The NHS needs to do the unthinkable and start looking to the US for guidance on how to resolve its main problem – lack of money. The origins of the current winter NHS crisis are well rehearsed with most of the blame laid at the door of the current government – a perceived lack of investment in the health service.
In terms of a solution, the realpolitik is that UK governments are notoriously slow (and reluctant) to deliver more money and if they do so it is (a) usually less than required and (b) tied up with so-called “efficiency savings”.
Not for profit
In the United States, not-for-profit organisations provide public or community services without the purpose of making a profit and in turn receive favorable tax benefits. It is a highly competitive market and to survive individual all non-profits are dependent upon multiple sources for their income.
Traditionally these have included federal and foundation grants, workplace contributions and philanthropy such as donations or legacy gifts from individuals or families. Around one million US nonprofits employ 10 million paid staff and generate more than $500 billion in revenue annually.
The core concept underlying impact investing is that many of the problems faced by low income individuals or people living at the margins could be resolved by using a for-profit business approach
United Way — a network of more than 1,000 legally separate local units took in $3.54 billion in 2017 with most coming from paycheck deductions authorised by workers. Locally, here in Santa Barbara County, nonprofits generate 8.4 per cent of GDP and are one of the largest employers in the county. However, with increasing competition especially the use of social media to crowd-fund for single-issue organisations, non-profits have had to start to think about new ways of raising revenue.
Impact investing is the “conscious use of capitalism” to create positive social change while providing competitive returns for investors – in other words capital management providing financial return but with the simultaneous and intentional creation of measurable social and environmental benefits.
The core concept underlying impact investing is that many of the problems faced by low income individuals or people living at the margins could be resolved by using a for-profit business approach. This is in contrast to traditional philanthropic donor giving where there is no expectation of financial return, whereas impact investing does anticipate financial return (ie profit) but is considered successful when the non-profits produce demonstrable positive social change, become more self-supporting and can use the new capital to grow and develop.
Individual NHS organisations are well placed to benefit from social impact investing. A major attraction for an investor is that success in one organisation should lower the barrier for entry into others if measurable success and value is proven.
The idea would be to form legally binding collaborations with for-profit businesses – the latter providing the up-front capital with both parties agreeing (a) the target populations, (b) a priori metrics of success and (c) the return on investment for all stakeholders.
For example the benefit for a hospital might be fewer unscheduled admissions with the for-profit collaborator gaining from enhanced workplace productivity. In social care this type of agreement could allow technology companies to create and validate in-home medical technologies to allow older people to live more independently with the subsequent ROI from licensing the technologies across the NHS and elsewhere.
There would, however, be a political price as this social impact model will, inevitably create variation
With more up-front revenue from intellectual property partnerships and savings from fewer unscheduled admissions, an individual hospital would be able to offer enhanced services.
There would, however, be a political price as this social impact model will, inevitably create variation (and subsequently competition) – at present variation seems to be a dirty word when it comes to the NHS. The NHS has never been “free” and therefore, the alternative, continued total dependence on taxpayers, is probably no longer sustainable. Without more lateral economic thinking the NHS’s race to the bottom will continue.