Are Business Cases A Good Way to Fund Neighbourhood Health Through The NHS?

There has been much talk about how to fund the shift to Neighbourhood Health. With talk of ‘innovative funding models’, private investment, or cash releasing savings. This week Sir Jim Mackey suggested a different approach. “Neighbourhood Teams need to show us the business case” said in an interview on the  podcast  “Prevention is the new cure.” Hosted by Steve Brine and James Bethell. But is the business case process the best way to fund neighbourhood health?

A New Funding Pathway For Neighbourhood Health

The mention of funding neighbourhood health through the business cases process in the podcast with Sir Jim Mackey was the first time I’ve heard a definitive, clear policy on how neighbourhood teams would be funded. It is not public policy yet, but as Chief Executive Officer at NHS England. He is the person who is most likely to know the answer.

There have already been a number of suggested models for funding the new Neighbourhood Health Service. However, every proposal I’ve heard involves ‘magic money’, either additional funds conjured up through private investment. Or miraculously appearing from savings in hospitals. Despite a study of 5000 papers by the Health Economics Unit were unable to find any evidence of cash savings. Meaning we presumably have to pay the money back in IOUs or from some spare change behind all the NHS sofas.

All this money, of course, is to be found when the reality is that the NHS is struggling with rising costs and demand of about 4% a year (BMA).

The Proposed New Funding Process For Neighbourhood Health:

What is a Business Case?

A business case in the NHS is a formally structured, research based document that provides numerical evidence base, and a rationale for changes in spending, looking at options for a change in process or service, requiring investment or change in costs. It is presented to budgeting committees to agree on changes in budget allocations. 

It demonstrates that a proposed initiative is necessary, affordable, value adding, and deliverable, and that it aligns with strategic, clinical, and financial priorities.

In NHS terms, it is fundamentally about demonstrating public value and stewardship of taxpayer money, not simply financial return.

What is the Business Case Plan For Neighbourhood Health?

The idea, as described by Sir Jim Mackey, is that money is moved from hospitals to the community through separating out elements of hospital block contracts. So that certain aspects have known funding and costs. This allows Neighbourhood Health teams to create business cases to present the case that they would be able to provide the service more cost effectively than hospitals or with increased impact. In most cases (and as described by Sir Jim) the most cost effective option will win the budget (providing their is no significant risks to patients)

What Areas Are Being Looked At?

Sir Jim stated that neighbourhood health teams would be able to present a business case on any area they would like to improve. Although there will also be a requirement to submit a proposal in specific areas. The suggestion he mentioned was access to care, outpatients and managing frailty and older people. Although this is not an official or exhaustive list. None of this has yet to be formally announced, so details are thin and subject to change at this stage.

Are Business Cases For Neighbourhood Health a Good Idea?

In very many aspects, this is a solid practical proposal and works with the existing system as it is. The mechanism and decision making structures for considering business cases are well established in the NHS. It creates a financially literate and practical framework that could be used for gradually moving funds from hospitals to neighbourhoods.

There is a very strong cultural fit in the NHS between the ask of commissioners and providers. So it is very likely to be implemented, as it ties directly into existing processes, people and knowledge. So it means that this policy could be implemented quickly with little change. It is likely that this will not be the only way of funding neighbourhood health in future, but it is likely to be quickly implemented to ‘prime the pump’.

What Are The problems With Funding Neighbourhoods Through Business Cases?

Whilst there is an easy fit for current systems, it is not without disadvantages. The strong cultural fit itself is one of its biggest weaknesses. It is highly likely to result in cross cultural contamination. Pollution (and that is the appropriate word) of new ways of working with old processes and old thinking. There is a risk that the business cases that get approved are the ones that most closely match the existing systems. Simply turning neighbourhoods into mini-hospitals in the community.

Hospitals Are Much More Predictable Than Communities

There is also a big challenge for neighbourhoods, as it is relatively easy to create a business case in a hospital where patients and processes are highly controlled with known costs at every stage. It is much harder to do that in a community setting, where, by its very nature, people and processes are less controlled and are changing all the time, and therefore costs and outcomes are much harder to predict. So the irony is that the closer that the new model is to a traditional NHS service the more likely it will be in many cases to succeed.

A Bias Towards The Status Quo

The problem is that it creates an inherent bias in decision making towards the status quo. At every stage, the resources, decision making, and power default to the original hospital system and the established NHS. In this model, Neighbourhood health teams can only win funding if they prove they are better at the existing system at doing what the existing system already does.

This means that rather than focus on the needs of communities and improving outcomes, it could become about replicating the model of providing NHS services to defined groups of the population with specific conditions on existing clinical pathways. This risks simply moving the waiting lists from one part of the system to another. Changing where we treat people, but not how we treat them.

The Budgeting Merry-Go-Around

It is important to be aware that hospitals will be desperate not to lose their funding and will be keen to rebrand their services. (It is a phenomenon so common it has a name, “rebadging”). We also have to be aware that in quite a few cases, neighbourhoods are being hosted by local hospitals. So in reality, it may simply be moving money from hospitals as ‘providers’, to hospitals as ‘hosts’ of services. The main difference is that whilst hospitals take money as providers they are accountable, but when they take money to host services, they are not.

The Scaling Problem

The business case approach also has a scaling problem. A typical hospital is likely to have around 10 neighbourhoods in its area. Whilst an ICB could have 50 neighbourhoods (these are ballpark figures). So whilst their maybe one business case for a hospital, suddenly we might need to process many more business cases. Whilst a decision making process at the ICB level considering 50 business cases is unlikely to be a nuanced process reflecting the strengths and weaknesses of different neighbourhoods.

Multiple Business Cases

Does each and every neighbourhood have to submit its own business case? If so, will some win and some lose? Then how is a hospital supposed to provide a service if it has lost 50% of its work to neighbourhoods? At some point, as the numbers diminish, the hospital service becomes unsustainable. So other neighbourhoods may have to take on the work, even if they did not bid or win it.

Standardised Business Cases?

Alternatively, do all the neighbourhoods have to produce a business case together? In which case, will they all be expected to provide the same services in the same way? So whilst we talk about neighbourhoods being different if they all have to provide the same standardised NHS service set out in a contract, regardless of their local skills, expertise, facilities and geography (eg rural vs urban) we may trample over the value of what makes local services unique.

The Infrastructure Problem

If we are producing services in 10 different places instead of one, all of this is likely to require a lot of infrastructure and organisation to manage all the contracts and services, staffing and patient flows across 10 different locations. GPs are not going to be doing this in their spare time. So that’s a lot of new infrastructure that needs to be developed at a neighbourhood level to manage these services. Whilst hospitals already have the advantage of having that infrastructure in place. Will staff simply move from hospitals to neighbourhoods if the contracts are lost? Where are they going to work?

The Costs Problem

It may be hard to make the numbers ‘work’ even if it improves patient experience and outcomes, as simply having things done in 10 different places is often more expensive than doing it in one place. Even if you can, what is financially viable for one neighbourhood may not be for another. (E.g. looking after an area of deprivation where patients are less likely to attend without additional support). It’s easy to see how what might appear cheaper may actually be more costly in reality.

Thinner Funding May Not Be Sustainable

There is also the risk that this simply spreads funds ever thinner. Hospitals had in recent years being using outpatients to bring in income to pay for other services (such as complex operations) that are being done at a loss. By allowing other services to ‘cherry pick’ the most profitable services from hospitals, some hospitals could easily become financially unviable. (I think this is extremely likely as so many hospitals are already on the brink.) Whilst neighbourhoods will also be competing to deliver the same services as cheaply as possible, meaning that they may not be on a firm financial footing either.

Cheapness vs Outcomes

The biggest weakness of this approach of transferring funds through business cases is that what is cheapest often does not align with what is best. Because the business case process is not new money but a way of better allocating existing funds.

The Case For Business Cases For Neighbourhood Health.

Having said all that, there is a strong case for business cases for Neighbourhood Health. Changes in funding need to happen quickly if neighbourhood health is to be established. Whilst the business case model is not without significant challenges, it is also the path of least resistance: It is not dependent on mythical savings plans, or the dream of private investment (with it’s numerous hidden strings), It gives local areas a practical approach to build a strong foundation of locally delivered services.

We Need A Smart Approach to Neighbourhood Health Business Cases

How successful the business case process for neighbourhood health will be, very much depend on how savvy and smart it is implemented. Neighbourhoods simply looking to replicate services at a local level may get funds, but then find themselves locked into rigid processes that are designed for hospitals and not communities. These new processes don’t take advantage of neighbourhood health benefits and end up with neighbourhoods trying to produce the same services at ever lower cost.

The Key To Whether The Business Case Process Will Work For Neighbourhood Health

The key is to make the business case process work for neighbourhood health take advantages of the strengths of local neighbourhood health provision of services, whilst providing the a reliable infrastructure and managing costs successfully.

How Can Neighbourhood Health Teams Take Advantage?

Whilst there are advantages to hospitals, there are different advantages to neighbourhood health that hospitals struggle to compete with. Repurposing NHS funds to deliver neighbourhood health can have a significant benefit in managing long term conditions, preventing deterioration of health, managing demand as well as building supportive communities that enable improve the maintenance of health. Whilst the power of building relationships with patients will get us a much better understanding of their problems and getting to grips with them. 

Getting Help With Neighbourhood Business Cases.

This is a vital opportunity for getting resources in the NHS where they can biggest make the biggest difference. This is going to be a subject we talk about and learn from each other in the Neighbourhood Health Academy sharing ideas and learning.

If you would like to join the Neighbourhood Health Academy apply 👉 HERE 👈. 

Or you can learn more here.

Alternatively I’ve got significant experience of creating and deciding business cases in the NHS, so if you want to give your work the best opportunity to get funding get in touch and see if there is an opportunity to get 121 help. After all this is a great opportunity to make a real difference to people’s lives.