The hole in NHS funding has been well publicised, and it was once again highlighted at the beginning of 2019 by new figures on hospital overspending.
King’s College healthcare trust, for example, ended the 2017-2018 financial year with a deficit of £141.4m – the biggest among England’s 232 trusts that provide healthcare services.
Ten trusts recorded a combined deficit of £758m in the same period.
But, despite these figures, many NHS trusts are successfully finding ways to do more with their money.
The creation of shared services, whereby trusts pool resources to share equipment, premises, and personnel continue to grow in popularity
The creation of shared services, for example, whereby trusts pool resources to share equipment, premises, and personnel continue to grow in popularity.
Shared services can range from back-office processes to treatment centres.
NHS Shared Business Services (SBS), for example, was formed in 2004 to deliver business support services including finance and accounting, employment, and procurement solutions for the NHS.
Through the use of shared resources and economies of scale NHS SBS is on course to achieve £1billion of cost savings to the NHS by 2020 and has delivered over £400m in savings to date.
On the clinical side, many trusts refer patients to neighbouring providers for specialist treatment. East Cheshire NHS Trust, for example, utilises the cancer services of The Christie NHS Foundation Trust, the urology services of Stockport Foundation Trust, and shares collaborative working arrangements with Mid Cheshire Hospitals Foundation Trust for pathology.
There are obvious cost benefits to this shared-service approach.
In 2016, Lord Carter published his latest NHS report looking at operational productivity in performance of NHS acute hospitals in England. It highlighted the benefits of trusts sharing pathology services and estimated the total cost of NHS pathology services (from the taking of the sample to the communication of the result) to be between £2.5billion and £3billion annually. He noted that consolidated pathology organisations are the most efficient in the NHS, pointing to examples such as the consolidation of Ashford and St Peter’s pathology service into the existing joint venture between Frimley Park and the Royal Surrey.
The report notes that by sharing these services the trusts could offer more training and development opportunities for staff, which enhanced recruitment and retention, and improve the quality of care through the sharing of clinical expertise.
By pooling resources, the trusts were able to introduce new technologies and take advantage of economies of scale.
This shared services approach directly resulted in an annual saving of £4m, and a reduction in posts of over 70 whole-time-equivalent staff members. And, of course, once made, these savings can be directed to other areas such as new equipment or more staff.
Some trusts are now taking this model a step further and creating an NHS company, enabling them to sell their services to other trusts.
By choosing to work with a specialist provider of asset finance for the installation or upgrade of their diagnostic technology, healthcare organisations can take important steps to providing appropriate healthcare for an ageing population in a sector facing tight budgets and staff shortages
This approach offers trusts the opportunity to develop new sources of income, work in partnership with the commercial sector, and increase efficiency while maintaining the same quality, values and ethos as the NHS.
A range of services can be provided by NHS companies including estates and property, GP services, respite care, medical services such as diagnostic care or pathology, pharmaceutical companies, and equipment management companies.
For example, Guy’s and St Thomas’ NHS Foundation Trust set up the pathology company, Viapath, as a joint venture in 2009 with SERCO and subsequently in 2010 King’s College Hospital NHS Foundation joined the venture. By 2017, Viapath had a turnover of around £100m and although it is majority owned by the NHS (66.6%); it has the commercial freedom to invest in growth and innovation.
Similarly, Birmingham and Solihull Mental Health NHS Foundation Trust set up Summerhill Supplies Ltd in December 2012 to provide estate management functions for the trust across its estate portfolio. By setting up a subsidiary company, the trust maintains control over where savings were made and can ensure profits are kept within the NHS.
In order to successfully invest in shared services or monetise their expertise, however, trusts must have access to the latest technology for that given area.
Clearly, other trusts will not look to purchase services that they could provide themselves. However, trusts looking to set up a subsidiary company will likely need to invest in new technology before the company has returned any profit.
Intelligent finance solutions are now coming to the fore which allow NHS trusts to sustainably invest in new technology without having to commit large sums of capital. Such financing solutions spread the cost of the technology over an agreed financing period, with finance payments arranged to align with the expected benefits of the use of the technology over time, such as improved operational efficiency.
Leasing arrangements remove the need for a large initial outlay and can help improve cash flow and working capital. Additionally, financing arrangements have the potential to incorporate other costs such as installation, as well as introduce the flexibility of future affordable technology upgrades, in line with technology developments.
Such tailored financing packages tend to be offered by specialist healthcare financiers that have an indepth understanding of medical technology and its applications. They understand the profound impact up-to-date technology can bring to the daily operation and can expertly evaluate any associated risks. They are also familiar with the changing operating models of the NHS and are, therefore, more inclined and more able to create customised financing packages that fit the specific requirements of each individual organisation – for instance, by flexing the financing period to suit the customer’s cash flow needs. This contrasts with the standard financing terms usually available from generalist financiers who often lack technical expertise or a thorough understanding of the healthcare sector.
Specialist financiers are continually adapting their financial arrangements to support the evolution of the NHS’s operating models. Such arrangements can ensure that trusts protect their capital and can link investment to patient outcomes
SFS, for example, provides financing solutions for a wide variety of medical equipment, enabling healthcare organisations to acquire the solutions they need without having to commit precious capital.
The collaborative work between SFS and Siemens Healthineers provides perhaps the best illustration of the sheer range of integrated financing solutions available from specialist providers in today’s marketplace.
These solutions include flexible leasing arrangements enabling the acquisition of particular equipment, through to enterprise-wide arrangements where Siemens Healthineers provides data-driven consultancy to drive sustainable improvement, enabling technology, training, maintenance and support, technical staff, even facility design and associated building works – all wrapped up into a single, transparent annual charge.
By choosing to work with a specialist provider of asset finance for the installation or upgrade of their diagnostic technology, healthcare organisations can take important steps to providing appropriate healthcare for an ageing population in a sector facing tight budgets and staff shortages.
Sharing services and/or setting up subsidiary companies offer NHS trusts significant opportunities to improve patient outcomes while making important cost savings.
However, delivering such ‘centres of excellence’ requires initial investment to access the most-up-to-date equipment and technology.
Specialist financiers are continually adapting their financial arrangements to support the evolution of the NHS’s operating models. Such arrangements can ensure that trusts protect their capital and can link investment to patient outcomes.
- Companies:
- Stockport NHS Foundation Trust
- Siemens
- Birmingham and Solihull Mental Health NHSFT
- Kings College Hospital
- The Christie NHS Foundation Trust
- NHS Shared Business Services
- Ashford and St Peter's Hospital NHS Foundation Trust
- Mid Cheshire Hospitals
