In recent years, the UK’s public finances have faced unprecedented pressures, posing a significant challenge for both public projects and the required funding for such investments to persist. Nowhere is this truer than in the NHS. To make its financial position more sustainable, the NHS is looking to strategically ensure greater ‘efficiencies’. However, most trusts are not delivering on productivity and efficiency plans.
That’s where investments in new-generation technology can make a hugely positive contribution. The UK Government has committed additional capital sums to maintaining investment momentum, but there is wide recognition that the sheer scale of capital required to achieve these efficiency investment goals cannot be afforded out of the public purse alone, especially in the current economic and political climate.
One area of critical investment for the NHS to meet this challenge is diagnostics. In particular, the development of Community Diagnostic Centres (CDCs). CDCs are designed to improve access to diagnostics, and in so doing, identify morbidities earlier in the population, improving long-term patient health outcomes while at the same time reducing lifetime healthcare costs.
Developing CDCs, the investment challenge
However there remain some widely acknowledged challenges. The development of CDCs relies on them being sited in the community (and therefore more easily accessible by citizens). According to The Kings Fund, CDCs could “help to address access issues to diagnostics by reducing the time and cost associated with travelling to hospitals. However, of the 92 Centres that have been set-up so far, half (47) of these are on existing hospital sites raising questions how much impact they will have on reaching the people they need to.”
Alongside the challenge of siting, developing a CDC presents one further hurdle: how to source flexible capital to pay for the project. This requires structuring those diagnostics capital costs in a way that each NHS Trust can afford, and which best suits its cash flow profile.
Public sector capital budgets – especially with the recent impact of inflation on capital works – may prove insufficient for the full and ambitious goals of reforming, digitising, co-ordinating and managing the country’s diagnostic and testing infrastructure and protocols. Also, funds locked up in capital projects are not available for pressurised operating finances – and we have already covered just how pressurised those are at the moment. So lean cash-flow management is just as important as overall funds available.
The Government has made £2.3 billion (plus some supplementary grants) available to reform diagnostics in England and wants to create 160+ CDCs. 90 of these CDCs already operational, though some of the budget may need to be used to fund upgrades further down the line.
This sounds generous, as indeed it is. Yet it has many bases to cover. Principal among these is the creation of 160+ CDCs, along with 29 pathology networks (designed to improve pathology efficiency, effectiveness, speed and cost). Around 90 CDCs have already become operational, although upgrades may be required where they do not yet meet the ‘archetypes’ developed by NHS England that specify the services different types of CDC should deliver.
Modelling from data received through a Freedom of Information request reveals the typical median capital cost to develop a CDC to be around £15.2 million.[8] This development cost embraces every aspect of CDC creation, including equipment, software, buildings technologies, construction and site adaptation. On this basis, financing the remaining 70 CDCs will require over £1 billion in capital. With this figure in mind, developing the 2025 target volume of CDCs alone looks unlikely with the current capital budget allocation.
Financing the future of NHS diagnostics care
To make investment affordable, pioneering Trusts are therefore looking to sources of specialist private sector finance, either to supplement the capital that can be deployed, or to better manage their cash flow to cope with other pressing financial needs.
There are several key aspects of specialist private sector finance that are particularly useful in the rapid development of a reformed diagnostic infrastructure including flexible financing periods. These are aligned with the Trust’s cash flow to be affordable. Specialist solutions can also embrace all costs of ownership – acquisition, site/building works and adaptation, set-up, maintenance, service, training, and more. This delivers financial certainty without variables for the Trust.
Another solution increasingly deployed by healthcare organisations is outcomes-based finance. Specialist suppliers will often be able to structure the financing agreement around specific outcomes or KPIs, such as technology uptime, scans/tests/reports throughput, staff trained, and more.
Conclusion
The benefit of a CDC is not simply to increase diagnostic delivery through more sites, more equipment and more service capacity. The opportunity is to re-think how diagnostics are delivered to make it more efficient and effective. In doing so healthcare providers can deliver better outcomes, to more people, faster and at lower cost.
Given that CDCs are designed to be a reforming initiative in their own right, it is even more critical that their establishment leverages imaginative and novel business models – in the form of strategic planning and process improvements, all backed by an intelligent application of private sector finance – to deliver greater efficiency alongside improved patient access and outcomes.
By Penny Pinnock, Business Development Manager, Siemens Financial Services in the UK
References
[1] https://www.grantthornton.co.uk/insights/nhs-finances-a-crisis-were-not-talking-about/
[2] https://www.gov.uk/government/news/innovation-and-new-technology-to-help-reduce-nhs-waiting-lists
[3] https://www.gov.uk/government/news/innovation-and-new-technology-to-help-reduce-nhs-waiting-lists
[4] https://www.carnallfarrar.com/why-should-we-be-worried-about-the-lack-of-capital-funding-for-the-nhs/; https://www.nhsconfed.org/news/lack-capital-funding-risking-patient-safety-and-impeding-waiting-list-recovery-new-poll-nhs
[5] https://www.kingsfund.org.uk/press/press-releases/community-diagnostic-centres-may-struggle-reduce-backlog
[6] https://www.bma.org.uk/what-we-do/working-with-uk-governments/budget/autumn-budget-and-spending-review-2021-what-you-need-to-know
[7] https://www.gov.uk/government/news/new-diagnostic-centres-deliver-nearly-three-quarters-of-a-million-tests
[8] Siemens Financial Services, Diagnostics in Transition (Autumn 2023)
