Deals, Data, and the NHS: Healthcare Investment in 2026

Last week CF’s Health Investing leadership team attended LaingBuisson’s Investing in Healthcare conference, one of the sector’s most established gatherings of health investors, operators and advisors. The day was rich in insight and debate, while also surfacing some considerable headwinds facing investors, operators and innovators in the sector.

It also provided a valuable opportunity to reflect on the strong levels of activity the health investing sector has seen in Q1, and what lies ahead for the remainder of 2026, amid an increasingly volatile macroeconomic backdrop.

The Macro economic environment

The investing industry has been waiting for interest rates to fall to make deal-making more attractive, with at least two cuts projected at the start of the year. Recent geopolitical developments have since introduced fresh uncertainty, however, the wider economic impact has so far been more contained than during previous shocks. The economy has demonstrated greater resilience, and the British consumer has increased their savings rate rather than spending, providing more of a buffer. The hope is that conditions stabilise from here, but the macro backdrop remains a factor extending deal timelines and weighing on investor sentiment.

M&A timelines are shifting to the right and the buyer pool evolving

One of the strongest messages from the day: getting deals done has become materially harder. Transaction processes are stretching out as sellers invest more time in pre-marketing and bidder education, trying to ensure that prospective buyers arrive at the table with enough conviction to make credible offers.

At the same time, many executives and advisors perceive due diligence requirements as increasingly onerous. In healthcare, the diligence bar is higher than in almost any other sector. Regulatory complexity, workforce risk, NHS contractual dependencies and the political sensitivity of the sector all demand a depth of analysis that goes well beyond standard commercial work. The consequence is that quality of diligence is increasingly what separates credible buyers from those who stall or withdraw. For management teams and their PE sponsors, the implication is clear: getting ahead of that scrutiny is now a prerequisite for a successful process, not an optional extra. Vendors who arrive at market with rigorous commercial and operational preparation, a clear-eyed view of NHS dependencies, and a well-evidenced strategic plan for the next owner are not just more likely to transact. They are more likely to transact at the valuation they are seeking, with a buyer who has the conviction to close.

Overlay the macroeconomic picture (global conflict continuing to weigh on sentiment and push up the cost of capital) and it is not difficult to see why deal activity remains muted. This is not a market in crisis, but it is one where patience and conviction are being tested. A panel discussion underscored a related point: when deal horizons are extending, the importance of long-term planning only increases. Investors focused solely on near-term cash generation risk finding themselves without a compelling narrative for long-term value. Clear exit planning and a credible thesis for the next buyer are becoming non-negotiables, not differentiators.

Several speakers noted that healthcare assets which would have attracted five or six serious bidders three years ago are now seeing two or three. The consequence is not just slower execution but a widening gap between seller expectations and buyer pricing. In some cases, processes are being pulled or restructured mid-stream because indicative offers have not met reserve levels. For sponsors approaching the end of a fund life, this creates a particular tension: the pressure to return capital has not diminished, but the routes to exit have narrowed.

The message from advisors on the day was blunt: assets that lack a clear strategic rationale for the next owner, or that depend on assumptions about NHS pricing that may no longer hold, will struggle to transact in this environment. The corollary, however, is that for well-prepared sellers with genuinely differentiated assets, the reduced competition can actually simplify execution. The buyers still active in the market tend to be better capitalised, more operationally engaged, and more willing to pay for quality.

Community and out-of-hospital care: The £16 billion opportunity

If there was a single theme that cut across almost every session, it was the shift of care out of acute hospital settings and into the community. Sessions featuring GenesisCare and Affidea explored contrasting delivery and funding models in the out-of-hospital space. But it was our panel discussion with HCRG, the UK’s largest independent provider of community healthcare, that put hard numbers behind the narrative and illustrated what it actually takes to deliver at scale.

The economic case is now undeniable

The starting point is stark. Healthcare has received a disproportionate share of public spending for years, yet the most visible part of the system, the hospital, has absorbed the bulk of it. The share of the health budget flowing into hospital care has increased by ten percentage points, equating to roughly £18 billion a year more on a total NHS budget of around £180 billion. The output from that additional spending has been flat and productivity has declined.

While occupied hospital beds have been essentially flat for a decade, outpatient activity has grown by around 4% every single year and an outpatient appointment costs roughly ten times as much as a primary care consultation. Furthermore, 70% of emergency department attendances and approximately 50% of outpatients, whether they are first or follow-ups, don’t have any further follow-up. This indicates that needs could have been met in a different way. The mismatch between spending and outcomes is difficult to overstate.

Community healthcare exists to address that imbalance. It is, in essence, the fourth pillar of the NHS system, everything that sits outside acute care, primary care and mental health. District nursing, physiotherapy, occupational therapy, speech and language therapy, podiatry, health visiting, school nursing, and sexual health services require a complex and varied set of disciplines, most of which are delivered in people’s homes or in community settings. Despite its breadth, community healthcare has no universal service standard equivalent to A&E’s four-hour target or primary care’s same-day access. Data capture is patchy and inconsistent: activity rates per thousand population for services like community nursing, MSK and health visiting vary so wildly between areas that the numbers cannot plausibly reflect what is actually being delivered. That poses a fundamental challenge for anyone trying to manage, commission or invest in these services.

The data tells a compelling story

Where good data does exist, the case for investment is powerful. CF’s analysis examined the relationship between community nursing provision and hospital utilisation in the over 65 population. The findings were striking, areas with the lowest levels of community nursing provision had roughly 4x fewer elective care occupied bed days per 1,000 population than those with the highest.

For non-elective admissions, those with the lowest level of community nurses had double the number of admissions is those with the highest levels in community nurses. Occupied bed days are arguably the single best metric for measuring total hospital usage, and it works in any health system globally. By that measure, community services are not a nice-to-have. They are the mechanism through which hospital demand can be structurally reduced.

Analysing the variability in health care usage, controlling for age and condition, shows variability of at least 20%. The clinical evidence suggests 30 to 50% opportunity exists. Aggregating this analysis nationally, we estimated that there is at least a £16 billion opportunity from matching existing best practice across the system, before even factoring in digital, data, or AI.

To unlock this, our modelling suggests approximately £4 billion of additional investment is needed in community and primary care over the coming years, delivering a return on investment of around 4x (CF Pathway to Prevention). That is the economic logic at the heart of the government’s Left Shift agenda, a central pillar of the current government’s health strategy which aims to rebalance the NHS away from reactive, hospital-based treatment and towards prevention, early intervention and community-based care.

The premise is straightforward: if conditions can be managed earlier and closer to home, the system reduces both human cost and financial burden. In practice, the Left Shift requires sustained investment in primary and community infrastructure, workforce expansion, and better use of data and digital tools, all while maintaining hospital services during the transition. The question is whether the system can translate the policy intent into action at the pace and scale required.

What a scaled community provider looks like

Our panel discussion with HCRG offered a useful lens through which to examine what delivery at scale looks like. With approximately 8,000 clinicians and turnover of around half a billion pounds, HCRG described itself as the largest independent provider of community healthcare in the country, spanning adult community healthcare, children’s services and sexual health.

The contract model in community healthcare is fundamentally different from the acute sector. Rather than competing for patient volume on an ongoing basis, providers tender for long-term contracts, typically five to ten years with extension options that can take the total relationship well beyond a decade.

HCRG reported that its major contracts have all been either won or renewed in the past four years, with average operating margins of around 10% and scope to improve as transformation programmes mature.

Three contracting models coexist: block contracts, tariff-based arrangements and outcomes-based contracts. For investors, the key takeaway is that this is an asset class with contracted, long-term revenue, strong incumbency advantages and limited exposure to the volatility of waiting list dynamics or tariff fluctuations.

From aspiration to action: Early signs of the shift

The most encouraging signal from our discussion was evidence that the Left Shift is beginning to translate into concrete commissioning decisions. In one system where HCRG operates, the ICB has committed to redirecting 10% of acute funding into community services, with an explicit requirement that every pound invested must save two in acute care. That kind of commitment generates friction, acute providers are understandably resistant to budget reductions while managing current demand, and community capacity needs to be stood up before hospital demand falls. But the intent is clear and the economic logic is sound.

It is not yet the norm. Many commissioners remain cautious, and the gap between policy aspiration and local action is real. The clearest message from our panel was that commissioner selection matters as much as contract execution: those led by forward-looking leadership with a genuine appetite for transformation represent a fundamentally different investment proposition to those still commissioning what they have always commissioned.

The opportunity in community healthcare is vast, but it rewards operators who can navigate genuine complexity and investors who understand that patient capital and deep sector knowledge are prerequisites, not differentiators.

What does this mean for the healthcare sector?

Stepping back, a few implications stand out for investors and operators.

1. First, the deal environment rewards conviction. Extended timelines, thinner buyer pools and macro uncertainty mean that investors who can move decisively will have a structural advantage.
2. Second, community-based care is not just a growth opportunity, it is the single largest efficiency lever available to the NHS. The £16 billion prize from matching existing best practice is well-evidenced, the contract models are proven, and the experience of scaled providers like HCRG suggests that long-term, outcomes-based partnerships can deliver for patients, commissioners and investors alike. The challenge is execution, identifying the right systems, the right commissioning partners, and building the workforce to deliver. But for those who get it right, the combination of contracted long-term revenue, improving margins and structural demand tailwinds makes this one of the most compelling investment themes in UK healthcare.
3. Third, as we set out above, pricing pressure from the NHS is structural, not cyclical. Operators whose margins depend on current NHS tariff levels need to be building resilience now, whether through revenue diversification, genuine cost transformation, or both. Investors should be modelling downside scenarios in which NHS reimbursement rates tighten materially over the medium term.
4. Fourth, exit planning is not optional. With deal timelines lengthening and valuation uncertainty increasing, investors who cannot articulate a compelling thesis for the next buyer will find exits increasingly difficult. The investors who will define the next chapter of UK healthcare are those who understand that this is a market which rewards depth over speed, conviction over consensus, and operators who can deliver system-level change over those content simply to ride the volume.