FUNDING OPTIONS
A ‘flexible, cost-effective’ route to extra capacity
Alan Wilson, managing director of ModuleCo Healthcare (MCH), a provider of modular healthcare buildings in the UK, explains how – with budgets especially tight – modular construction, utilising a usage-based revenue agreement solution, enables NHS Trusts to ‘access state-of-the-art healthcare facilities without the huge capital investments typically required’.
The NHS currently faces a number of well-known and difficult pressures – including increasing patient demand, ageing infrastructure, budget constraints, maintenance backlogs, and staffing shortages, in addition to the lingering effects of the COVID-19 pandemic. The need to find innovative and flexible solutions to help the NHS navigate these challenges, while adding high-quality clinical estate to achieve current demand, has thus become increasingly important. The adoption of modular construction, while utilising a usage-based revenue agreement, allows NHS Trusts to access state-of-the-art healthcare facilities without the huge capital investments typically required. Modular offsite-constructed healthcare facilities delivered via a Pulse solution are not only designed to meet the latest Health Technical Memorandum (HTM) and Healthcare Building Note (HBN) regulatory standards, but are IFRS 16-compliant, providing a crucial lifeline for Trusts operating under tight financial conditions. By offering modern, high-quality, and rapidly deliverable healthcare facilities, this solution can help NHS healthcare providers deliver exceptional care despite the financial and operational pressures they face.
The IFRS 16 challenge and the need for flexibility The introduction of IFRS 16 has significantly altered how leases are accounted for on public sector balance sheets, which particularly affects NHS Trusts – by requiring most lease agreements to be recognised as liabilities. With this regulatory change, NHS Trusts no longer see a distinct difference between capital or hire/lease projects; therefore no matter whether the project requires capital allocation, or some form of funding solution, many NHS Trusts now allocate this from the one central Capital Departmental Expenditure Limit (CDEL). This shift has complicated matters further for Trusts that urgently need new infrastructure, but are unable to commit due to the restriction the accounting standard has had on investment decisions. The adoption of this accounting standard has increased
the strain on Trusts’ ability to procure new healthcare facilities through CDEL, which may have been previously supplied as a lease agreement. It limits their capacity to take on large leases or capital expenditures without negatively impacting their overall financial health. Consequently, the pressure on capital funds has intensified, often preventing Trusts from acquiring the essential infrastructure needed to meet rising patient demand. To address this issue, a more flexible solution that is IFRS
16-compliant has been created to allow NHS Trusts to access high-quality HTM and HBN-compliant facilities without drawing on their CDEL allocation or increasing their balance sheet liabilities. The usage-based revenue agreement model is a true revenue-based solution, enabling Trusts to pay only for the facilities they use, thus providing the flexibility and financial relief necessary to navigate the current economic landscape.
Capital and revenue budgets – what’s the difference? Both budgets are crucial for the effective functioning of the NHS, but they address different financial needs within the system. There are several differences in how these revenue streams are utilised within NHS Trusts. Capital expenditure is typically one-off spending on long-term assets that will provide benefits over multiple years. It is often used for investments in physical assets and infrastructure. This includes major projects such as building new hospitals, purchasing medical equipment, upgrading IT systems, or refurbishing existing facilities. Revenue expenditure is recurrent, and is used to cover ongoing expenses required to deliver effective healthcare services. This covers the day-to-day operational costs of running a hospital – including salaries, medications, supplies, and services needed for patient care and
The ModuleCo Healthcare team handing over a new operating theatre and recovery suite at Sulis Hospital, Bath, part of Royal United Hospitals Bath NHS Foundation Trust. Left to right are: Matt Jenkins – Maintenance manager, Hannah Hughes – Assistant Maintenance manager, Sam Scott – Marketing executive, Alan Wilson – managing director, and Jonathan Brindley – Sales and Marketing director.
June 2025 Health Estate Journal 39
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72
