Councils must show a business plan outlining a return of 1.5 to one to be eligible for funds from a new £240m pot to encourage health data sharing.

The government has opened bids for the Integrated Digital Health Fund, which is worth £240 million between 2014 and 2016 – down £10 million on the £250 million originally promised.

The fund is an extension of the Safer Hospital, Safer Wards Technology Fund, originally aimed at implementing electronic record keeping. Under the latest rounds, councils are being encouraged to submit joint bids with NHS bodies to encourage record sharing across the whole system.

The bid document said: “Proposals will be eligible only where  the applicants can evidence a value for  money return within a broader benefits  realisation framework of greater than 1:1 for e-prescribing solutions and greater than 1.5:1 for all other digital care record  or integrated digital care record solutions.”

Applicants for the cash will be required to match fund any award with their own capital or revenue investment of an equal amount.

The value of the capital fund is £240m in total with £160m available in 2014/15 and  £80m in 2015/16.

Assets created by the investment  from this fund must be capitalised and will remain the property of either the NHS Trust  or Foundation Trust or local authority.

The bid document also contains strong encouragement for solutions using open source software.

It said: “Our aim is to encourage  the creation of a community of developers,  implementers and users supported by vibrant market of commercial organisations using open source methods.

“The intention is plain; by taking an open source approach it will be possible to  gain better engagement from clinicians and other frontline users across multiple NHS organisations.

“An open source approach also helps  eliminate the supplier ‘lock-in’ associated  with proprietary offers and delivers benefit  to NHS organisations as a whole.”

The closing date for applications is 14 July.