The NHS needs a dedicated transformation fund of at least £1.5bn a year to properly test and roll out new models of care, according to researchers.

  • Researchers call for dedicated transformation fund to be run by new national body
  • Ministers told extra resources above pledged £8bn will be required
  • NHS needs to realise “making change is quite expensive”, expert warns

A new national body should manage the fund from 2016-17, a joint report by the King’s Fund and the Health Foundation also says.

The report, shared exclusively with HSJ, says some of the funding could come from existing streams, such as the £200m “transformation fund” mainly allocated to NHS England’s vanguard sites. However, additional cash would also be required above the £8bn the government has already pledged to the NHS by 2020 to support the Five Year Forward View.

The authors recommend a fund of between £1.5bn and £2.1bn a year until 2020-21, with a second phase focused on rolling out the successful models beyond then.

Richard Murray, policy director at the King’s Fund, said there is currently a fragmented system for funding service changes, which is geared towards individual organisations and short term goals. Mechanisms include capital loans, public dividend capital, one-off investment funds and foundation trust surpluses.

Mr Murray added: “They don’t work well at looking at a whole health economy, or looking at ways to avoid costs in the future, or considering the quality of care.

“The system also doesn’t like paying for double running costs and struggles with things that are more innovative and might not work.

Richard Murray

Richard Murray: ‘The NHS needs to realise change can be quite expensive’

“We underinvest in change, and previous attempts… had almost no resource. The NHS needs to realise that making change can be quite expensive.”

The report considers six case studies of large scale transformation, including examples from Denmark and Canada, and warns the costs and timescales were underestimated in each case.

For a new fund to be successful, the authors argue, it should adopt an “active investor” approach, rather than being a “passive grant giver”.

It adds: “Now more than ever we need a new, systematic and comprehensive approach to supporting and implementing change to health services, from simple improvements to more radical transformation.”

The report splits the work into two strands. One to support organisations to improve efficiency, and another to develop new care models in selected areas. The strands could build on the work being carried out by Lord Carter on efficiency, and by the vanguards developing new models of care.

A crucial element of the funding would enable staff to spend time away from their day jobs, with resources also spent on programme infrastructure, IT and technology, and double running costs for the new models.

Adam Roberts, a senior economics fellow at the Health Foundation, told HSJ the summary findings have been submitted to regulators and the Department of Health, and have had a “positive reaction”.

He added: “We are still in conversations with national bodies about how this would work. The key issue is where do you find the money to do it? But the costs of not doing this are far higher.”

The report suggests that £700m could be made by selling parts of the NHS estate that are no longer needed, although retaining ownership and allowing commercial development of sites could potentially bring in larger recurrent income.

However, the authors stressed these income streams could take many years to yield a return, so would not deliver the necessary funding in the short term.

Both NHS Providers and NHS Confederation have both indicated their support for the report’s findings.