The Department of Health (DH) is the Government Department with duties overseeing the NHS and it’s funding, as well as implementing policy and change. Previously NHS England featured 10 Strategic Healthcare Authorities (SHAs) with regional jurisdiction devolved from
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the DH, this includes local control of budgets and procurement and responsibility for ensuring DH policy and change is delivered within that locale.
These SHAs were set up in order to implement strategy and ensure delivery of the commitment to quality of care in hospital trusts (i.e. Royal Liverpool Hospital NHS Trust Website, 2009). In April 2013 the Department of Health announced the introduction of a new policy and structure within the NHS (see Figure 5). This primarily saw SHAs and the Primary Care Trusts (PCTs) within their umbrellas being replaced. Instead a whole new structure for the NHS was announced, with regional Clinical Commissioning Groups taking responsibility for local budget, strategy implementation and also quality of care provision and Trusts taking responsibility for regional hospital and longer-term care provision. A National body was also set up to take care of complaints and patient care procedures, analysing the national healthcare patterns and issues and holding legal power to ensure that once a problem has been reported to CCGs it is tackled; this is called Healthwatch England.
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Other nationwide organizations have been set up under this flatter, more devolved structure of the healthcare system. These bodies have also been given budgetary control to deliver particular policy agenda. Recent policy initiatives include building industrial relationships particularly with SMEs to support regional economic development, and the promotion of innovative procurement (Department of Health, 2012; NHS, 2009). These new bodies have also seen the closing and shuffling of existing organizations to ensure divisions between responsibilities over deliverables are as clear as possible. NICE (National Institute for Health and Care Excellence) has been restructured and has absorbed some other organizations. Overall NICE delivers clear practice guidance and regulation on an array of healthcare provision. AHSNs (Academic Health Science Networks) have been set up to enable academics and the NHS to work collaboratively with industry on innovation and research projects.
Lord Darzi’s “High Quality Care for All: NHS Next Stage Final Review” Report (2008) was highly influential, and positioned innovation as vital in order for healthcare to remain as a publicly funded provision. Darzi recommended that the NHS needed to work hard to change its reputation of being a late adopter, and that through NHS procurement “seek to foster a pioneering NHS” [pp. 13]. The report highlights the part innovation plays in an economically sustainable health service, and the responsibility that procurement practices have on facilitating innovation. The National Innovation and Procurement Plan (NHS, 2009) was a response to the warning that the NHS will hit an extreme budget shortfall by 2014 if procurement practices stagnate. The Chief Executive of the NHS announced that more innovative procurement would help to improve service quality and productivity, whilst averting the budgetary crisis (Surtees et al., 2014.
Throughout adoption and procurement processes, it is vital that suppliers demonstrate how cost-effective their medical device (MD) is and how it meets a direct clinical need (NIC Website, 2013). The National Institute for Health and Care Excellence (NICE) is an
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independent body providing guidance in four key areas: technology assessment, clinical, interventional procedure and public health. NICE is involved in establishing the clinical suitability of new devices and technologies. To ensure MDs are cost-effective, regulated and economical, there is a systematic review process for MDs in the UK often involving rigorous testing. MDs must go through this process in order to be considered for adoption even on a trial basis within a healthcare authority, prior to larger-scale NHS adoption. This process can be lengthy and difficult for all organizations particularly given that conforming to the regulations does not automatically lead to adoption and procurement (Secondment Diary, Appendix Two).
Healthcare purchasing strategies can unintentionally supress innovation (Phillips, Knight, Caldwell & Warrington, 2007). For example, guidance issued to improve healthcare can create a standard product specification is widely adopted, competition becomes based on cost, and innovation is stifled as potential new entrants are deterred from the market. Buying decisions may result in a consolidated market where a monopoly emerges. Monopoly suppliers have little reason to innovate. Furthermore, ‘good’ purchasing practices have the potential to create SME exclusion from the market, notably the consolidation of demand into fewer, larger contracts which can be too big for SMEs to cope with. With its publicly funded National Health Service that has highly distributed decision making and high costs of market entry for device manufacturers, these are likely risks in the UK medical device sector.
The Coalition Government SME agenda was a cross-government plan to engage SMEs in at least 25% of all public procurement by 2015. In making public procurement contracts and tenders visible to all, removing any unnecessary obstacles to SMEs and commitment to making more opportunities for SMEs (Her Majesty’s Government, 2010; Booth, 2013), the plan attempted to open up the market to SMEs. The DH has set out an SME Agenda Action Plan (2012) for the NHS which aims to achieve a level of 18% SME procurement.
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The high economic pressures on the NHS have continued to increase. The Public Spending Review (Her Majesty’s Government, 2010) set a target for the DH to cut procurement costs by £1.2 billion to be achieved by 2015. This, along with the recognition that the NHS is perceived to be extremely difficult to start selling to, and the lack of clarity over the remits of many DH/NHS organizations that contribute to innovation and procurement of medical devices and technologies, resulted in a conclusion – that procurement and adoption processes required extensive review and restructuring.
The findings of the Innovation, Health and Wealth Review (Department of Health, 2012) have led to extensive changes in how procurement and innovation practices are facilitated in the DH and NHS. “NHS England will lead further work on efficiency savings from 2015-16 to meet rising demand from an ageing population. As a first step, the Department of Health will publish plans in the summer for an overhaul of NHS procurement that could save up to £1 billion” (HM Treasury, 2013; pp. 28). The Innovation, Health and Wealth document (Department of Health, 2012) also presents 6 barriers to innovation within the NHS. The diagram below presents these barriers, and depicts the NHS level challenges facing interorganizational innovation projects between the NHS and SMEs. The changes made to the NHS, have been clearly targeted to combat some of these barriers, in particular two and six have been addressed through restructuring however the culture, financial and best practice elements require time to develop and change.
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Diffusion
1. Limited access to prior evidence, dataand metrics 2. Insufficient recognition and rewards for innovation and innovators 3. Financial arrangements can act
as deterrent and offer limited reward
for adoption and diffusion 4.
Commissioners do not possess the tools
or capabilities to drive innovation 5. No consistent or present leadership culture in support of innovation 6. Structures do not support systematic and effective innovation
Figure 6: Barriers to Innovation in the NHS Adapted from Innovation, Health and Wealth Report (Department of Health, 2012)
At the NHS Innovation Exposition 2013, many keynote speeches highlighted and increased appetite and need for the NHS to create more relationships with industry in order to achieve the innovation priorities in emerging strategies. Mike Farrar, Chief Executive of the NHS confederation presented a workshop in which he discussed the correlation between understanding need within the NHS and actively engaging with those (i.e. industry) who would be able to provide the answers to these problems. He also discussed the difficulties that this would present for the NHS: NHS employees needing to be convinced why change is necessary; implementing mechanisms to support and underpin change; and ensuring that leaders approach change with the right mind-set and are less suspicious of the agenda of industry as a whole. In addition he posited that the NHS needed to become more flexible financially in order to create relationships with industry but also for intellectual property rights to be made clear at the outset of any such projects.
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Lord Darzi suggested that in order to better facilitate the NHS engaging with industry, focus needed to be on comparing other countries’ innovation activities with those of the NHS. Darzi called for innovation to be accelerated in order to tackle the healthcare problems of the future and in doing so the NHS must look outwards to do so. He also presented the idea that the industry relationships with the NHS needed to be much more close, and that those that are the most adaptive to change are the most likely to survive.
The NHS is facing increasing demands: an ageing population; the cost of advances in science and technology; and rising public expectations. It must meet these demands with its current budget while at the same time improving quality of healthcare provision and increasing innovation. The Quality, Innovation, Productivity and Prevention (QIPP) challenge, which requires the NHS to make up to £20 billion of savings by 2014/15 to invest in meeting demand and improving quality, means that all parts of the health service will need to take bold, long- term steps to generate viable changes.
On top of the QIPP savings, outgoing NHS chief executive Sir David Nicholson called on Clinical Commissioning Groups (CCGs) to formulate 3-5 year plans to help address a further funding gap of £30 billion by 2020/21. Announcing the “Call to Action” in the summer of 2013, Nicholson said: “Our analysis shows that if we continue with the current model of care and expected funding levels, we could have a funding gap of £30bn between 2013/14 and 2020/21, which will continue to grow and grow quickly if action isn’t taken. This is on top of the £20bn of efficiency savings already being met. This gap cannot be solved from the public purse but by freeing up NHS services and staff from old style practices and buildings” (NHS England News, 2013). Commissioning and procurement will play a critical role in closing this gap, making the health service sustainable for the future.
3.1 Macro-Level Summary
A number of NHS calls and reports have highlighted the requirement for the NHS to focus on productivity and efficiency as well as reaching budget saving targets. This has now
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been implemented through the restructuring of the NHS and consequently strategic aims are beginning to be realized. In achieving these strategic aims it has been recommended that innovation and relationships with industry through innovation provide the answer, and recent restructuring reflects this. However, this change has only just been implemented and it remains to be seen whether this new structuring and positioning will have the desired effect. There is still a requirement for NHS leaders to understand better how to initiate, develop and maintain relationships with industry, and in particular SMEs. This imminent change has an impact for the study, particularly given that this is due to be introduced from 2012 during the aimed data collection period. These strategies will also have an impact on how important the findings could be to the NHS due to wanted to learn how to collaborate with industry more successfully and to ensure that all resources (time, financial, talent) can be deployed and a return on investment realised.