Driving digital transformation by defining who pays for what

Malcolm Ace, chief financial officer at Hampshire Hospitals NHS Foundation Trust, describes how NHSX’s recently-published Who Pays for What identifies current barriers faced by the system when it comes to investment in digital technology and proposes actions to overcome them.

As a trust chief financial officer, I always want to use the buying power of the NHS in the most commercially advantageous way for the NHS.

How is Who Pays for What going to help?

For me, Who Pays for What sets out a pragmatic direction of travel by firstly consolidating national funding for transformational tech projects into a single unified tech fund.

An allocation for digital investment at the start of the year, with indicative allocations for future years, would be enormously helpful for planning and decision-making. The 40-plus ICSs are not homogeneous entities - they differ in scale, complexity and maturity. In some cases, ICSs may need to work collaboratively with providers for digital and procurement support; forums to discuss good practice and the development of the ICS digital strategy and digital delivery will be valuable to all.

The Unified Tech Fund is a good first step towards system allocations for digital and should help to reduce bureaucracy and improve prioritisation decision-making and transparency around digital funding. But we recognise that we must work towards realising economies of scale and economies of knowledge and expertise and interoperability for the benefit of our patients, and so the ICS should be the predominant route for allocation.

Undoubtedly, there are services which should continue to be procured nationally. The Microsoft Office 365 procurement was a great success and I can see cloud-based solutions going the same way. The New Hospitals Programme (which we are part of) also presents opportunities for procurement efficiencies and national sharing of learning on digital projects and advancements.

Who Pays For What also recognises the issues created by capital and revenue allocations that don’t reflect the current reality of IT development, where the boundary between these is blurred, and capital developments will almost inevitably bring a future revenue requirement in staff support. The revenue ‘tail’ can be very substantial - and more flexibility between capital and revenue definitions will allow more accurate whole life costing decisions.

Sometimes, cashable efficiencies will flow and these will more than fund the revenue consequences. But there will also be digital improvements and innovations based on the non-monetizable and qualitative benefits they will deliver, so the revenue tail becomes an issue.

We are in a world where the best commercial deal could be a capital deal or it could be a revenue deal. Having strictly delineated capital or revenue allocations push you inevitably down one procurement route or another and don’t let us explore all the options.

So in summary, I very much welcome the proposals in the Who Pays For What framework. If implemented, these would produce significant efficiencies. However, there is the issue of the scale of the funding. I would obviously welcome greater ambition as we feel we are on the cusp of very significant gains from digital improvements. But the scale of investment will ultimately be a large determining factor in the improvements we can make.

Who Pays For What is a strong start in the journey towards better digital investment, and I encourage other provider and system leaders to take a look and share your views with NHSX.

Read Who Pays For What on the NHSX website, and share your thoughts using feedback.wpfw@nhsx.nhs.uk.