Step up for the NHS digital funding hokey-cokey

By Jo Makosinski | Published: 3-Jan-2023

Last year’s Budget set aside £2.1billion for NHS IT systems, and the Autumn Statement confirmed the capital is still there, but it looks like most of the money is headed for frontline digitisation. In this article, the Highland Marketing advisory board considers how this pattern of putting money into health tech, taking it out again, shaking up the badging, and starting over impacts the market

There was some anxiety ahead of the Autumn Statement about what Jeremy Hunt might have in store for health and social care.

In the event, the Chancellor found a headline £3.3billion for the NHS for the next two years, and £2.8billion for social care next year, with another £4.7billion the year after.

Perhaps as importantly, he didn’t axe some major capital projects.

The money allocated to the New Hospital Programme, diagnostics, and IT in last year’s Budget is still there.

However, that doesn’t mean the huge financial pressure on the NHS has been alleviated, or that there is lots of new central funding for digital technology.

As Andy Kinnear, a former NHS CIO who works for Ethical Healthcare Consulting, told the Highland Marketing advisory board: “The Autumn Statement was better than expected, but only because expectations were in the cellar.

“The NHS is getting more money, but that is coming on the top of a decade of contraction.

“What it needs is investment. What it got is a settlement that takes us back to where we were and stops funding falling in real-terms for the next two years.”

Budgets and priorities

Last year’s Budget identified £2.1billion for the ‘innovative use of digital technology, so hospitals and other care organisations are as connected and efficient as possible’.

Allocation has been on hold, pending the Autumn Statement, and now it has taken place, the expectation is that most of this funding will go on the frontline digitisation programme, which will try to get all acute trusts up to a basic level of digital capability (level 5 on the HIMSS EMRAM maturity model, or an English version known as minimum digital foundations).

What the NHS needs is investment. What it got is a settlement that takes us back to where we were and stops funding falling in real-terms for the next two years

Neil Perry, director of digital transformation at Dartford and Gravesham NHS Trust, said: “I am hearing that frontline digitisation will be pretty much everything.

“There will be some money for technology in pots set aside for other NHS England priorities, such as diagnostic hubs, digital outpatients, and perhaps virtual wards; but that’s the priority.”

Tough times for innovators  

This pattern of NHS IT funding being announced, then clawed back, or at least delayed, only to be re-announced, often with a new badge on it, is not unusual.

Perry described it as the ‘digital funding hokey-cokey’ and argued that it distorts the health tech market.

“Delay is ok for the big companies – the the big EPR-vendors – because they can just wait it out,” he said.

“But the small companies – the innovators – are living on credit, so any delay can push them under, or make them vulnerable to being bought out.”

Radiology expert, Rizwan Malik, said he, too, was very concerned about SMEs.

“I really worry that what we did during COVID to change mindsets is being undone,” he said.

“During the pandemic, we had all these small companies come in wanting to help the NHS, and we told them that if they could prove their ideas, we’d work with them.

“They set up pilot after pilot, and now we’re bringing down the shutters.”

Entrepreneur, Ravi Kumar, adds. “The current situation is causing a lot of disappointment among start-up companies.

“They go to CIOs and find that they are being asked to take money out of operational areas, never mind innovation budgets, and they just don’t buy.”

What next for big tech?  

However, even the big EPR vendors might not be all that happy.

Soon after Tim Ferris came to the UK to head up the NHS England transformation directorate, there were reports that he’d suggested buying Epic for all trusts.

During the pandemic, we had all these small companies come in wanting to help the NHS, and we told them that if they could prove their ideas, we’d work with them. They set up pilot after pilot, and now we’re bringing down the shutters

While this was never going to happen, Ferris and his chief information officer, Simon Bolton, indicated that they wanted frontline digitisation to both level-up acute sector IT and ‘converge’ the systems in use across hospital groups and, possibly, integrated care systems.

The market consensus was that this would suit the ‘megasuite’ or ‘single-supplier’ EPR vendors better than newer entrants with modular offers or data platforms to support ‘best-of-breed’ strategies.

But now the rumour is that NHS England is rowing back, because of the costs involved.

Perry said: “I wonder what is in it for the big, US vendors.

“The implication was that there would be a good level of money going into levelling up, and now it’s clear there won’t be as much as these companies were hoping, and trusts are being told there’s more than one way to HIMSS 5.”

The only certainty is uncertainty  

To add to the uncertainty about funding and policy, there is a general election due in two years. This means frontline digitisation money is only confirmed until 2024-25.

Yet big EPR contracts tend to run for a decade.

In these circumstances, it wouldn’t be surprising if some finance directors balk at signing up with a single supplier, which might provide another boost to the modular or best-of-breed approach.

If it does, the NHS will need both smaller suppliers and in-house expertise to deliver their strategies over an extended period of time.

Bu,t if SMEs are under pressure, trusts are being asked to make ‘efficiency savings’ that tend to fall on any departments not on the ‘frontline’.

And, as Kumar pointed out: “If trust people vanish, all the good work that was done during the pandemic to build NHS IT capacity will vanish.

“Even if you get the money to run projects, the ability to execute them will vanish.”

Be clear where the money is coming from

Almost every observer of the NHS and social care argues that they need a more-stable policy environment in which to operate, with cross-party agreement on what they should be looking to achieve for communities across the UK. 

This would make it easier for government to work with central and local organisations on long-term investment plans and for suppliers, including health tech companies, to draw up roadmaps that align with them.

If trust people vanish, all the good work that was done during the pandemic to build NHS IT capacity will vanish

As James Norman, a former NHS CIO who now works as EMEA health and life sciences solutions director at Pure Storage, noted, the digital hokey-cokey has real consequences.

“The NHS is living in an environment in which it is constantly promised and then denied funding, to the point where organisations are reluctant to spend strategically when funding does arrive, for fear it will vanish again in future years.

“Confidence needs to be reinstated from the Department of Health and Social Care and NHS England, so that when a commitment to funding technology is made, integrated care systems and trusts can be confident they won’t get left with the bill a year or two down the line.

“Not doing that will just create more pressure in the system to focus on keeping the lights on; and take resources away from planning for the future and implementing those plans.”

However, with the Treasury on its third Budget in a year, the DHSC on its third or fourth secretary of state (with Steve Barclay doing the job twice), and NHS IT leaders bailing out of the merger of NHS England and NHS Digital; stability feels a long way off.

If anything, it feels more likely that the digital funding hokey-cokey will pick up speed.

The NHS is living in an environment in which it is constantly promised and then denied funding, to the point where organisations are reluctant to spend strategically when funding does arrive, for fear it will vanish again in future years

And, in this environment, the advisory board suggested health tech vendors need to help potential customers by finding alternative sources of funding, such as research, or making use of the data in IT systems.

Or they need to find partners that can deliver change across care pathways and release genuine efficiency savings that can be reinvested despite the turmoil that surrounds them.

Darkest hour before the dawn?  

On the last point, Kinnear argued that if there is any upside to the current situation, it is that things are so bad that change is an absolute necessity.

“Perhaps services have to feel the pinch to make them work together and do things in a different way,” he said, suggesting that shared support organisations, infrastructure, and implementing the kind of self-serve technology that is common in retail and banking might be good places to start.

“The downside,” he continued, “is that if the financial pinch squeezes any harder it could start impacting on things that are mission critical.

“So, I’m torn between seeing positives for the long-term and negatives for this winter.

“And the big question is how we get from one to the other without putting lives at risk.”  

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