Investors urged to cash in on health service
Jon Ungoed-Thomas Published: 19 February 2012 The Sunday Times
City investors are being offered the chance to make huge profits from a new fund, the first of its kind, that will invest in projects to cut the cost of patient care in the National Health Service.
In a move that critics will claim is a shift towards privatisation in the NHS, the fund is seeking £50m from investors, charitable foundations and financial groups.
Some of the projects could reduce the number of patients using acute care services such as accident and emergency. The savings would be returned to investors as profit with the scheme predicted to see annual returns of as much as 15%.
The plan will divide opinion at a time when the coalition’s healthcare reform bill has attracted the criticism of many healthcare professionals who believe it places too much emphasis on the private sector.
Andy Burnham, the shadow health secretary, said: “This is a further illustration of how the government is trying to put the profit motive at the heart of the NHS.”
Supporters argue that it will provide the NHS with a crucial stream of revenue at a time when it is facing substantial budget cuts and will improve the service offered to patients.
Sir William Wells, chairman of the new Health Impact Fund and a former chairman of the commercial advisory board to the Department of Health, said: “This would provide capital for NHS workers who might have an idea for a project that will deliver savings but cannot get it off the ground. The demand could be huge.”
Wells hopes to raise £10m in the first year with a target of £50m. He said Downing Street and the health department were both “supportive”.
Although investors could lose money if the projects fail, they could alternatively see returns of between 10% and 15% if significant savings are made for the NHS.
The fund is similar to social impact bonds which involve private investors funding government initiatives to help deprived families. Trials of such bonds are already under way in London, Birmingham and Leicestershire.
A document promoting a health fund from Integrated Health Partners, a London firm which works with GP groups to reduce emergency admissions to hospitals, says: “It is a way for socially conscious private investors to become involved with the NHS.”
One potential project has already been proposed by Central Surrey Health, a social enterprise which provides community nursing services. It believes investment in preventive care for the elderly will ultimately cut costs by reducing emergency admissions and bed occupancy.
Money saved by the primary care trust would be used for other NHS services with a proportion returned to the investment fund. A contract stipulating the returns would be agreed prior to the project.
Tricia McGregor, managing director of Central Surrey Health, said the fund could provide capital for innovative projects. “We believe this kind of financing can unlock a lot of potential in the NHS,” she said.
Ratna Singh, who sits on the board of the new fund and works at Integrated Health Partners, said: “We want people to come forward with projects that might be suitable. This can help deliver better care for patients because it brings the rigour of private enterprise into the NHS.”
A spokeswoman for Unison, which represents 1.3m public sector workers, condemned the idea of profit from healthcare. “We need to bust the myth that bringing the private sector in is the only way to run services efficiently. The health service has always evolved to develop new and more efficient ways to treat patients,” she said.