John Warrington, Director of Policy and Innovation, NHS Purchasing and Supply Agency (NHS PASA), discusses how the changing commercial landscape affects the challenge of getting new medical technologies into the NHS.

It is nearly two years since Lord Warner and Sir Christopher O’Donnell launched Better health through partnership: a programme for action, the final report of the Healthcare Industries Taskforce (HITF).

HITF was established to explore common interests and identify opportunities for cooperation that would bring benefits for patients and service users, health and social care services and the industry.

So what has changed since then? The answer is: much. And getting an innovative project into the NHS has gone from being an uphill struggle to being a demanding, but potentially rewarding, challenge of engagement with new structures and new customers.

NHS a “slow adopter”

At that time there was a growing list of companies, mainly SMEs, who were finding it increasingly difficult to get their innovative medical technologies into routine use in the NHS. Two years earlier, Sir Derek Wanless had published his report Securing our future health: taking a long-term view for HM Treasury, stating that the NHS was a “late and slow adopter of medical technology”.

Issues of particular concern to the HITF team were how to facilitate the introduction into the NHS of beneficial new technologies and how our health and social care system could present a more attractive best discerning market for companies operating in the UK. The Government recognised the added value of supporting more timely adoption of innovative medical technologies – a modern health and social care service, better outcomes for patients and service users, and a vibrant, competitive industrial environment. The HITF team knew that to deliver this, some difficult barriers needed to be overcome. In summary, it was felt that the NHS customer often failed to appreciate the ‘value’ of technology – and this was compounded by the attitude of a procurement function that:

•appeared to work in isolation, with targets interpreted as price savings
•sought to commoditise technologies
•was risk-averse
•was rigid in its interpretation of and adherence to EU public procurement legislation
•struggled to bring best procurement practice into the NHS.

John Warrington

When you overlay this with a lack of clarity on access points and on who makes decisions in the NHS, allied to a perverse budgeting finance framework which creates a silo structure and mentality, it’s little wonder that industry – and SMEs in particular – were finding it hard to get the NHS to adopt their technologies.

The underlying purpose is that, in future, suppliers of new and innovative medical technologies will have a much clearer and faster route into the NHS.

A blueprint for change

Following the publication of the report, an HITF Strategic Implementation Group (SIG), cochaired by Sir Chris O’Donnell and Lord Warner, was set up to ensure that the report’s programme for action was implemented. A report on implementation is expected in November. The key areas of the SIG’s activity are:

•Creation of a new Centre for Evidencebased Purchasing within the NHS Purchasing and Supply Agency (NHS PASA) that will assess medical technologies to gain a better understanding of their value.
•Creation of a new National Innovation Centre (NIC) within the NHS Institute for Innovation and Improvement to accelerate the development and dissemination of medical innovation and build the supporting networks. The NIC will also contain a new adoption hub and training hub to build learning and knowledge around the introduction of new technologies. It will also co-ordinate the activity of the nine NHS innovation hubs.
•Ensuring that medical technologies and industry are embedded in the creation of the UK Clinical Research Collaboration (UK CRC).
•Piloting Healthcare Technology Co-operatives (HTCs), clinician-led collaborations between clinicians, patients, academia and industry, to act as sources of technologypull into the NHS in order to address areas of unmet clinical need.
•Developing a strategy for training and education on the safe use of medical products and technologies for all staff who use them in the NHS.
•Procurement — in collaboration with industry, significant work has been undertaken to develop a model for NHS procurement that creates the right environment (structure and processes) to ensure that ‘value’ is clearly defined, widely understood and taken into account in decision-making at all levels throughout the NHS.

Modernising procurement

One source of difficulty in implementing the HITF’s output has been the industry’s interpretation of the Supply Chain Excellence Programme (SCEP), also launched in 2004, by the Commercial Directorate of the Department of Health (DH). SCEP sought to modernise and improve NHS procurement through four streams of activity:

•doing national contracting better
•delivering new regional collaborative procurement hubs (CPHs)

•market-testing the NHS consumables supply chain (NHS Logistics and associated procurement within NHS PASA) to see whether the private sector could do this any better
•restructuring NHS PASA to fulfil the above criteria.

The difficulty for the industry has been that, by its very nature ‘doing national contracting better’ has inevitably meant a strong focus on ensuring that the NHS pays better prices for certain commodities, but not to the detriment of quality. Large suppliers to the NHS have interpreted this as an attack on their margins, and have therefore been unhappy with this activity; but it is inevitable that NHS procurement will challenge industry – hopefully in positive ways! Ironically, the ethos of EU public procurement legislation is that challenging customers drives competition, which in turn encourages innovation.

It is unfortunate that the national contracting stream has received the most attention and, in the industry’s eyes, has been the very essence of SCEP, when in fact the CPH stream has always been about modernising procurement throughout the fabric of the NHS in order to ensure that more professional, intelligent and ‘value-based’ decisions are made.

What’s around the corner

The CPH work stream, which commenced in early 2005 with three pathfinders, has implemented a generic model designed by the Commercial Directorate. Eighteen months later, implementation is moving at a rapid pace. The acting Chief Executive of the NHS, Sir Ian Carruthers, recently wrote to the new chief executives of the 10 strategic health authorities (SHAs) to urge them to implement the DH’s vision of one hub per SHA by the end of 2007/8, and to make collaborative procurement a priority.

The HITF team has been working closely with the new leaders of CPHs to ensure that the recommendations are firmly embedded in the hub model. The hubs are busy creating governance and decision-making networks to constitute the government’s ‘intelligent customer’. There is no doubt that the industry will see the benefit in the coming years, and that the relationship between the two parties will improve and lead to “better health through partnership”. A major overhaul of NHS procurement was never going to be a short-term project. It is unfortunate that SCEP has been seen as a price-cutting strategy when, in fact, it has always been about building the capacity and capability for world-class procurement in the NHS.

The third strand of SCEP has received a lot of attention from industry and the media in recent months. The introduction of the private sector to manage the NHS consumables supply chain is not without its critics, but there is no doubt that the outsourcing of NHS procurement and logistics on this scale will provide an interesting and informative model for wider government procurement.

Tomorrow’s world

All of the above represents a significant shift in the commercial landscape of the NHS. The roles of HITF and SCEP are complementary, but it will take time to build the capacity and capability needed to turn the new landscape of NHS procurement from a vision to a reality. The underlying purpose is that, in future, suppliers of new and innovative medical technologies will have a much clearer and faster route into the NHS – and that the NHS customer will not only understand the value of technology, but will also able to challenge the industry to innovate.

John Warrington is Director of Policy and Innovation at the NHS Purchasing and Supply Agency (NHS PASA).