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No cash, no staff: can the NHS afford to digitise?

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12 February 2018

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The NHS cashflow crisis has continued to appear in the media in recent weeks, despite the Government’s funding pledges in November’s budget. 

Although the new capital and revenue commitments from the chancellor were better than many expected, the funding was less than the NHS had asked for.

The King’s Fund and the Health Foundation have warned that cuts to capital funding have slowed transformation and left staff reliant on outdated technology. There are concerns that the new funding will take time to put things right.

So, when trusts face continued challenges to become paperless and invest millions in digital, how can they find the money?

It’s a question I have faced almost daily from trusts as a commercial director of an NHS supplier. The level of deficit has been so great, that even a solid business case that demonstrates long-term savings of hundreds of millions of pounds can be rejected because of a lack of available cash and the need to balance the books.

Budgetary increases alone are not the answer. Suppliers, trusts and the Government must each approach finance differently to defeat obstacles and make crucial long-term investments - such as digital - feasible.

The real problems: why finance directors say no

In the conversations I have, four common hurdles typically prevent finance directors approving projects that could fulfil the urgent digital agenda.

Paying two suppliers at once is the first obstacle. Many trusts have legacy IT systems, and in the time it typically takes to implement a new electronic patient record system, existing suppliers still demand maintenance fees as high as £1m per year. Meanwhile, the new supplier wants its payment too. Realistically, trusts won’t pay a multi-million pound bill up front, but they will still face fees of that magnitude over incremental implementation milestones. And for those systems that aren’t open source, licence costs add to the early financial headache.

Then comes the human resource hurdle. Implementing an electronic patient record system requires a team of IT staff, project leads, clinicians and experts from across the hospital. In most cases, people perform their job of looking after patients while providing input to the digital programme, meaning deployment takes longer – and that means cost. An alternative is to create a dedicated team for the project – but then the cost of back-filling positions starts to mount.

All the while, the trust is not realising any efficiencies. And, that is the next stumbling block – cash-releasing benefits don’t kick in until the system goes live, when staff use the system in anger, and until the hospital actually starts getting rid of paper. 

Then there is an ongoing cost with implementation. After the system goes live, we find that staff are using paper where they shouldn’t. They need to be reminded to use their new system to stop paper building up again. There is a cost associated with transformational change.

Costs are typically high and returns are very low during the initial phases of a paperless project – creating real challenges for balancing the books. This is often why digitisation isn’t happening despite longer-term positive financial and clinical impact.

Common hurdles, common answers

It’s not all doom and gloom. We have engaged with hospitals to think about new financial models to address these issues.

There is no one-size-fits-all approach. But understanding recurring financial hurdles also presents common answers requiring action from trusts, suppliers and the centre.

Suppliers and financial risk

Strong finances are the life-blood of any project and flexibility from suppliers for payment is essential. Suppliers need to be able to offer the NHS a range of options that will allow them to fund projects in a way that best suits its budget and financial circumstances.

This means taking a shared risk to make digitisation affordable. We are a supplier, and there is a cost to implement the system, but we can factor that into a 10-year programme. This can take the payment off the balance sheet, so that an electronic patient record is not a capital asset on the books.

We can provide trusts with options to structure payments to take account of their capital or revenue constraints. Payments can be made as a percentage of cash-releasing rewards, or trusts can fund suppliers from the resulting enhanced performance of the hospital.

Bolder government action?

The Government needs to consider how it can grant more flexibility to trusts to invest. Businesses with robust business cases often borrow money to finance their advancement, using returns to pay it back. Allowing the NHS to do the same could allow trusts to invest in important initiatives like digital, that will deliver financial and clinical outcomes in the longer term.

Slash implementation times

Implementation can take as long as two years. Trusts and suppliers need to reduce this to as little as six months, so that trusts can switch off unsuitable systems more quickly and stop paying for them, and staff don’t have to be tied up. Arranging the implementation teams with the clinical, workstream and change leads is a big challenge for any trust – but here lies the next action.

Activating the role of global digital exemplars (GDEs) beyond technology

GDEs must become more than a blueprint for technology; instead they should be a blueprint for change. In an age of regionalisation, sustainability and transformation footprints, and digital exemplars, trusts have a strong opportunity to collaborate, and share implementation expertise and resources. GDEs could be made responsible for supporting accelerated deployment with their fast follower trusts and others, to navigate through costly implementation phases more quickly.

Suppliers too can embed implementation teams where needed, the cost of which could be spread across the term of the contract, and the centre could also create teams dedicated to speeding up the implementation cycle.

Real progress

If suppliers, trusts and the government are open to new mechanisms then the answers are achievable.

Leesa Ewing is the commercial director of IMS MAXIMS

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