In a rapidly-changing healthcare market, medtech companies can offer continuity by providing solutions across the range of patient care. John Atwill, Managing Director of Philips Healthcare, talks to Medtech Business about the need for the industry to develop far-reaching commercial strategies.
As a supplier of advanced systems for medical diagnosis and treatment, how does Philips Healthcare view the Government’s new White Paper on the NHS? How does it impact on your commercial strategy for the UK?
Like everyone involved in the healthcare industry and business, we view the new White Paper with interest. There are some issues that could be seen as contentious by the interested parties, but I think the main issue around empowering general practitioners and general practice groups toward the commissioning of healthcare for their patients is a sound principle. The GP, after all, is the partner for life of all of us when we visit the healthcare area. I think the GPs will need some support, and I’m sure the Government have thought of that with the NHS commissioning groups that will spin out of this reform. So our view is that it’s a positive move towards empowering the people at the forefront of healthcare.
In terms of how it impacts on our commercial strategy in the UK – well, it doesn’t impact that much, because for some years now Philips (and especially Philips Healthcare) has been on a journey away from being a focused technology deliverer of diagnostic services almost exclusively for the acute sector, which was our particular niche of the healthcare continuum. Over the last ten years, with the leadership of Gerard Kleisterlee and the support of the Philips board of management and our shareholders, we have built a company that can look to left and right of the niche area that was our foundation, and look more widely around the healthcare continuum. So while technology is still important, and is a proud heritage that we still have, we’re looking to develop services around the technology that really can help care-givers and professionals to develop a more seamless healthcare service for their patients. And that’s ongoing, so it hasn’t changed and won’t change in the foreseeable future.
Over the last ten years we have built a formidable portfolio of technology and services. Our recent and most expensive acquisition on behalf of Philips Electronics has been that of Respironics, a global brand involved in managing long-term conditions through ventilation – including obstructive sleep apnoea, a relatively ‘invisible’ condition that seriously affects people’s lives. In doing that, we’re moving outside the traditional hospital environment where we’ve operated for so many years and moving into the homecare arena.
Indeed, if one looks at the demographics of the western world, people are living longer – and they are living with the result of excellent curative services in the acute sector, but having to live with long-term conditions such as heart failure and diabetes. It’s quite paradoxical that we’ve done so much to arrest the onset of tobacco-related diseases, but it seems that as a society we’re replacing them with obesity-related diseases. So the importance of homecare to patients, and to us as taxpayers, is going to be paramount in the next 15 to 20 years. We intend to offer added value in that space as well as in the hospital space – and even to move into the prevention and education side of healthcare.
More and more, people’s health will depend on them owning their condition, rather than just accepting treatment from professionals and expecting professionals to fix them when everything goes wrong. We look to be visible in all of those areas. Health and wellbeing is now the Philips mantra as well as the general healthcare mantra. So it’s a very rich portfolio that we’re bringing to the marketplace now.
One of the spin-offs that I think we’ll see from this White Paper is to release some entrepreneurial activity that currently exists in the acute treatment areas. I believe this will spin off into integrated care organisations (ICOs) that look across the whole healthcare continuum, rather than just the acute episode. Which is an interesting concept going forward – and has parallels with Kaiser Permanente (for instance) in the US, where the incentive is to keep people out of hospital, not to fix them when they get into hospital.
What new skills or expertise are your sales and marketing teams developing in response to the anticipated changes in the UK healthcare market?
With a history steeped in innovation and technology, we have a great competence in how that technology affects clinical practice. That has always been with us and is almost our DNA thread. But we are building onto that with quite simple skills in listening rather than talking. What makes Philips different, we suggest to our existing and future customers, is that we’re people-focused with an aim to simplify healthcare. We want to listen to everyone involved in the healthcare continuum: the caregivers, the administrators, the patients and the suppliers, and we want to understand what’s going on.
From a heritage of product knowledge, as product managers in the past, we’re now becoming knowledge managers. So the more we know about how a patient’s journey looks, what are the points of inefficiency, what are the areas where we can employ lean methodologies – the more, by listening and learning, we can add value to that process. So the skills of not just acquiring data, but acquiring knowledge from the data, are now more important.
What are the main commercial challenges of supplying electronic healthcare systems for use in hospitals or the community?
Technology is generally available for the NHS through a capital planning process. In the past, I think, having the most up-to-date and efficient technology has always lagged behind clinical service development. Up-to-date technology is generally an enabler to make the service more clinically viable, more efficacious in terms of care planning and patient pathway, and faster. In effect we can do more with less.
Managing the technology estate through a capital expenditure programme is never going to be optimal: there will always be a lag effect when, especially in the NHS, capital can tend to fluctuate from year to year. When you are dependent on services tracking the response needed from patients, there may be a two- or three-year delay before you get that capital to acquire the technology. And then some parts of the technology business move so quickly that, in ultrasound for instance, it could take three years and then the innovation could be superseded by something that Dell has developed rather than something the healthcare industry has developed.
Tracking that is extremely difficult, so I think we’ll see more healthcare service models where technology is refreshed as part of the service level, rather than everyone stopping what they’re doing and going to a trade fair (for instance) to buy hospital equipment. So I can see a change in procurement in that respect. And we shall see, certainly over the next two or three years, whether that comes to fruition.
Certainly some people are already sourcing medical technology in a much more planned way. For example, looking at the contract we have with the Belfast Trust in Northern Ireland: they don’t procure their technology through a capital equipment programme, they procure it through a revenue-based service level that remains in force for 15 years. That has taken all the angst out of Do we have the latest equipment? – which is the mantra from some of the clinicians, they always want the latest product, and they always want the bright shiny new stuff. There are alternatives to just putting a wedge of money on the table and saying: “I’ll have the pink one.”
We know that whatever the development in medical technology, the technology itself is never the silver bullet. There’s no technology in the 150 years of diagnostic history that has actually eradicated the need for care-givers and doctors. Technology is always the enabler. The healthcare systems are the things that present the challenges, not the technology. Fix the system and that’s really where the benefits will come from. And when one looks at spend in relation to the total NHS budget, the spend on medical technology is something like 0.05%. So it hits above its weight: it’s a bantamweight boxer, but when it hits you, you’re down.
‘Up-to-date technology is generally an enabler to make the service more clinically viable, more efficacious in terms of care planning and patient pathway, and faster. In effect we can do more with less.’