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Investment in IM&T in the NHS

  • Last modified date:
    8 February 2007

This part of the investment PFI and Investment section provides general information on IM&T investment policy, and it also includes several guidance documents to help NHS organisations that are developing IM&T schemes.

Introduction

The Treasury issued a report on 15 July 2003 on the use of the Private Finance Initiative. One of the report's conclusions was that PFI is not normally suitable for IM&T schemes. See the Treasury report "PFI: Meeting The Investment Challenge" on the Treasury website.

However, PFI in its fullest sense of procurements that involve third-party funding from banks, and the transfer of staff from the public sector to the private sector, is rarely used in IM&T schemes in the NHS. It is much more usual to find what are effectively "managed services" schemes, and "managed services" will continue to be an acceptable method of procurement for IM&T schemes. "Managed services" is in many ways very suitable for the procurement of IM&T schemes, given that they very often designed as a service, and one whichone that can also make use of broad PPP principles, for example around risk transfer.

Separately, there continues to be a role for public capital in funding IM&T schemes in the NHS.

Current guidance

The following paragraphs explain what guidance has now been issued on IM&T business cases. These documents are, in each case, the final version following public consultation. Links in the body of this page lead you to the relevant documents.

These documents have all been issued in Word or Excel format to enable them to be cut and pasted since their purpose is to act as tools as well as formal advisory documents.

IM&T business case guidance

This guidance consolidates and replaces the guidance given in the NHS Capital Investment Manual and in circular HSG(95)48. The major change made by this guidance is the move to the "five-case model" of business case. This sets out the business case under five main "cases" or sections - the strategic case, the economic case, the financial case, the commercial case and the management case. All of these are explained in detail in the guidance.

The contractual guidance (in the "Commercial case" section of this guidance) is mandatory for "Public/Private Partnership" (PFI/PPP) procurements- and this is likely to include a large number of "managed services" projects.. The model contracts of the NHS Purchasing And Supply Agency (PASA) should be used for procurements that are not PFI/PPP.

Two issues for readers to be aware of are:

  • Trusts whose projects require approval by the Private Finance Unit (PFU) of the Department of Health may not issue their Invitation To Negotiate (ITN) unless they can also include a fully compliant project agreement approved by the PFU. See guidance for more details; and
  • PFU also now require preferred bidder letters to be signed on all projects, following their very successful use in PFI build schemes. An example letter, adapted for IM&T, is attached.

Revised IM&T business case evaluation criteria

Revised criteria have been prepared for the evaluation of IM&T business cases.

These are designed to correspond with the structure of the five-case model of business case; the opportunity has also been taken to make other changes to structure the criteria more logically. The criteria are set out here so that business case writers can see what evaluators will expect to see in a business case. [Note: these criteria are also included in the IM&T business case guidance (see above) as Appendix C.]

Standard IM&T risk register

A standard risk register has been issued and should be used in all IM&T business cases- other project-specific risks can be added if necessary, and risks can be omitted if not relevant to a particular.

Important note for users: One purpose of the standard risk register is to ensure that NHS organisations have considered all risks at each stage of their investment. It may well be appropriate for the risk management section of the business case to set out all risks to show how they will be managed. However, the Department of Health does not expect every single risk to be weighted and scored, or valued, in the economic case of the business case. This should be done for risks with high probability or high impact-- low- impact, low-probability risks can be grouped together and scored or valued as groups.

Handling IM&T within build

Guidance has been issued on handling IM&T within major PFI hospital builds.

In the NHS, it has been unusual for the build and IM&T contracts to be combined.

This continues to be the case, unsurprisingly, given the work of the National IT Procurement, and it is particularly important for build schemes to ensure that whatever IT is planned is compliant with the national programme, and that necessary IT infrastructure is included with the build - "up to the socket".

Current responsibilities for approving business cases

Revised guidance on delegated limits for both IM&T and build schemes was issued on 19 June 2003. Please note that the delegated limits shown for IM&T schemes are expressed in whole life costs.

It will be noted that:

  • the Department of Health now has a delegated limit of £100 million from the Treasury;
  • the approval responsibility at "regional" level has been formally transferred from the Directorates of Health and Social Care (DHSCs) to Strategic Health Authorities (SHAs);
  • SHAs have a delegated limit of £25 million whole life costs when approving business cases from PCTs and NHS Trusts (increased from the £20 million limit granted to DHSCs);
  • SHAs also have a delegated limit of £5 million whole life costs when approving their own business cases;
  • Trust delegated limits have been significantly increased and are now based both on a Trust's turnover and on its "star" rating.

Links to other sites

The following sites are of particular interest:

Contact us

Any queries on IM&T investment, please

Additional links

Data quality

The NHS Information Quality Assurance Consultation began on 25 March 2004. The paper outlines a national strategy for improving the quality of information in the NHS. It is a focused consultation with key NHS health informatics and data quality leads.

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