The NHS’s push towards a more digital model of care is running into a familiar obstacle: money. Stephen McMillan, Philips’ strategic partnerships leader, argues that the service’s capital system was built for a different era, and that fixed budgets and short planning cycles now stand in the way of the longer-term investment needed to modernise care delivery.
That issue has become more acute since the 10 Year Health Plan for England, published by NHS England in July 2025, ...
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set out a shift from analogue to digital alongside wider changes from hospital to community and treatment to prevention. The plan makes clear that digital services are central to the future of the health service, but it also implies that the traditional capital funding model may not be flexible enough to support that ambition.
McMillan says that is precisely where Philips sees an opening. Speaking to Digital Health, he said the current policy climate appeared to be making room for more financial innovation, and that private financing was no longer viewed so negatively. For NHS trusts, he argued, the problem has never really been a lack of need, but a lack of available capital at the right moment.
Philips has spent more than 20 years offering managed equipment services and financing arrangements to NHS organisations. In the past, that typically meant familiar structures such as operating leases, finance leases and deferred payment terms, allowing hospitals to spread the cost of major equipment over time. But the landscape shifted in 2022 with the NHS adoption of IFRS 16, which brought many operating leases on to trust balance sheets and made them count against capital expenditure limits. That change, McMillan said, made it harder for trusts to sign deals that would once have been straightforward.
He pointed to the practical effect of those accounting rules: a managed service worth £10 million over a decade could require much of the capital element to be recognised up front, while a £4 million or £5 million equipment purchase might simply exceed the trust’s allowance. In response, Philips has developed financing structures it says are compliant with IFRS 16 while avoiding the immediate pressure on capital budgets.
Among those models is pay-per-use, which was recently used for a new interventional radiology suite at Mid and South Essex NHS Foundation Trust, according to Philips’ customer material. The approach is aimed at high-value equipment such as CT and MRI scanners, but McMillan said it can also work for fleets of lower-cost devices, including groups of ultrasound machines. Rather than charging each system individually, the company aggregates usage across the fleet and bills on an overall basis.
The attraction for trusts is that payments track real activity. If equipment is used less than expected, the trust pays less; if demand rises sharply, Philips says it caps the exposure so the customer does not face an unmanageable overspend. That usage-based structure also offers a clearer view of how assets are being deployed, which the company says can help improve productivity and operational decision-making.
Philips is also offering an “as a service” model for smaller items of equipment and software, using a different accounting treatment but pursuing the same objective: reducing upfront balance sheet exposure while allowing trusts to access newer technology. The company says both approaches have been reviewed by its own accounting specialists and external advisers, and it encourages trusts to seek their own internal audit assurance as well.
The wider pitch is not just financial but strategic. McMillan said the company now thinks in terms of whole-enterprise transformation rather than individual transactions. That includes maintenance, upgrades and longer equipment life, with managed services intended to extend use well beyond conventional replacement cycles. In an era of fast-moving medical technology and AI-enabled systems, Philips argues that a finance model able to adapt with the technology itself is increasingly important.
That idea of shared risk is central to the company’s case. Under a pay-per-use arrangement, Philips carries the downside if usage is lower than expected, while the NHS partner accepts that future policy changes could affect some of the benefits it is banking on. McMillan described that as a move away from a purely transactional relationship towards something more collaborative and durable.
Philips’ own customer example at Mid and South Essex NHS Foundation Trust reflects that direction. The trust was able to replace ageing kit and create a new interventional radiology suite without upfront capital, while also improving workflow, space use and sustainability, according to the company’s account.
For McMillan, that is the real prize: a financing model that brings investment discussions forward, rather than leaving them until the end of the budget process. In a health service under pressure to digitise, the argument goes, the conversation about transformation may now need to start with funding, not technology.
Source: Noah Wire Services
