Innovative financing could transform preventative health efforts, report

As governments across the world shift their focus to preventative health, a new Milken Institute report explores ways to finance the reinvention of preventative healthcare in the UK, including attracting more capital from local government pension schemes.

The Milken Institute has unveiled a report proposing new financing strategies to boost investment in preventative healthcare, aiming to reduce pressure on the NHS, the UK’s public health system, and ensure its long-term sustainability.

The report was launched at the House of Lords, the second chamber of the UK parliament, earlier this week, during an event hosted by the Milken Institute and an all-party parliamentary health group.

The report’s recommendations are in line with the government’s goal of redirecting pension investments into domestic infrastructure while also tackling the public health system’s many challenges. By prioritising prevention, the proposals seek to lower long-term healthcare costs, ease pressure on social care, and enhance national productivity through improved health outcomes.

Blended finance fund

Key recommendations include establishing a prevention fund under a blended finance structure to leverage government resources and philanthropic capital to attract additional investment from local government pension schemes (LGPS) seeking both financial returns and positive social impact.

Speaking at the report launch, which was attended by Impact Investor, Simon Radford, director of policy and programming at the Milken Institute and one of the report authors, highlighted the important role LGPS can play.

Radford, who is also a local councillor in the London Borough of Barnet and has served as chair of its pension fund, talked about the big impact that preventing, stopping and delaying disease can have in reducing healthcare costs and improve productivity. He added: “Local government pension schemes are already investing in climate opportunities and affordable housing. It is time that we provide opportunities [for them] to invest in healthcare infrastructure.”

According to the report, the mobilisation of LGPS money could help solve several government’s ambitions in one go, including meeting the challenge outlined in a recent speech by chancellor Rachel Reeves calling for more pension capital to be invested in the UK and into infrastructure. It could also ease pressure on the NHS and potentially reduce the growing social care bill that is pushing local council finances to the brink, while providing returns for pension fund beneficiaries.

Another recommendation highlighted in the report is the need to encourage a greater use of tax incentives to attract additional capital from high-net-worth individuals for long-term investments in preventative health initiatives.

Social impact bond

In addition to the creation of a blended finance fund, the report also calls for the launch of a social impact bond to fund pilot programmes. This type of outcomes-based contracts between government and investors would allow to test new preventative interventions on a a smaller scale, and later refine strategies for broader implementation.

Tom Kibasi, chairman of NHS Mental Health and Community Providers in North West London, called the report’s ideas “fresh and creative” and urged policymakers to give them serious consideration.

While focused on the UK, the report’s recommendations have global relevance. Esther Krofah, executive vice president of health at the Milken Institute, highlighted that health systems worldwide face similar challenges of balancing immediate healthcare needs with long-term preventative investments.