Meet the new players
With new healthcare providers ready to enter the market, the NHS hospital will not be the only game in town. On Target takes a look at the new service providers and the opportunities they represent.
NHS healthcare service provision has always been a game of solitaire, with the local hospital the only card table. Now competition is being introduced to the market, and the emergence of new players is very much on the cards.
The Government has made the provision of choice for patients a central plank in its radical reform of the NHS. Patients will, according to the DH, be afforded greater choice in how and where they receive their healthcare. In addition, through practicebased commissioning, patients are being encouraged to play a leading role in identifying the types of healthcare services that local communities need.
The Government is building a ‘patient-led’ NHS, driven by choice and responding to demand. These demand-side reforms, which were explored in June’s On Target, are indeed radical. Their playing partners, the supply-side reforms, are revolutionary.
The Government’s reform programme sets out to build a market economy from the wreckage of the old NHS. Traditional supply and demand-style economics are being introduced, with the aim of bringing competition to a market that has previously provided only one option – the NHS hospital. The old model is a busted flush, so supply-side reforms are promising a new twist: the NHS service provision of the future will no longer be a single-player game. New players are in town to deliver services that were previously the sole preserve of local hospitals. In the process, services will be moved closer to patients’ homes and waiting times for treatment will (it is claimed) plummet.
What are supply-side reforms? For a start, they are controversial: communities the length and breadth of the land are currently fighting a wave of plans to shut down hospitals and A&E departments. These anticipated closures are a natural product of the supply-side agenda, which has been founded on the principle that the continued reliance on the NHS as a ‘National Hospital Service’ is not sustainable. Radical restructuring and ‘modernisation’ of local health services are currently in vogue, and the creation of a ‘plurality of providers’ is already taking place.
The White Paper Our health, our care, our say earmarks supply-side reform as an essential component in the aim to create more flexible and responsive service providers. It will give providers more freedom to be innovative and to deliver improved services that respond to patient need. It is the mechanism through which the Government can deliver the promise of demand-side reform: choice.
In reality, supply-side reform is even more than that. It is designed to introduce the language of market economics to the NHS, and thus to:
• eradicate the perception of the ‘National Hospital Service’
• encourage new healthcare providers
• increase competition
• stimulate innovation
• improve the quality of healthcare delivery
• drive down costs.
Shuffling the pack
Who are the new service providers? The new reforms are encouraging service provision from a wide range of players. National retailers such as Boots, Lloyds and Capio are natural entrants to the market, while private healthcare providers such as BUPA and BMI Healthcare are obvious candidates. Beyond these, the Government has already introduced two key supply-side initiatives – Foundation Trusts and Independent Sector Treatment Centres (ISTCs) – to underpin the strategy.
NHS Foundation Trusts are independent, not-for-profit organisations that are accountable to local communities rather than the Department of Health. Despite this, they remain part of the NHS and follow its core principle of being free at the point of need. Foundation Trusts are set up to be more responsive and innovative than traditional NHS hospitals. Due to their autonomy from central control, they enjoy greater freedom to respond to local needs. They are able to decide what capital investment is required to improve their services, and are free to retain any surpluses they generate in order to support this investment. 65 NHS Foundation Trusts have so far been established since 2004. Monitor, a statutory body set up to regulate Foundation Trusts, says that they generated a £12 million surplus for reinvestment in patient care in 2005/6.
ISTCs are generally private sector companies that provide contracted clinical services for the NHS. They receive ‘National Tariff’ payments from the DH and/or NHS Commissioners, depending on the specific services they provide. The Government encourages ISTCs to make cost savings in the delivery of their services:
they will receive a percentage for these savings. Outside of Foundation Hospitals, it is anticipated that ISTCs will provide the lion’s share of the new patient choice. In addition, it is hoped that these providers will help to reduce waiting times and encourage innovation.
The Government claims that ISTCs, which have been operating in the NHS since 2003, have had a positive impact on healthcare delivery.
Stick, twist or bust for medtech?
What does all this mean for the healthcare industry? Supply-side reforms promise to end the long-standing era of the NHS monolith, so medtech needs to find a new approach to its sales and marketing. As the delivery of healthcare changes, the industry’s customer base changes with it. This provides a huge opportunity for proactive healthcare companies to partner (at last) with the NHS. Moreover, it could enable companies to offer value for the NHS beyond the simple provision of products.
The question remains: how? The key is first to develop an understanding of the role of NHS Commissioners, and then to build relationships with them.
The widespread encouragement of new service providers means that (in theory at least) healthcare companies could become providers and bid for NHS contracts. This appears unlikely at present; however, healthcare companies do possess many of the qualities that attract NHS Commissioners. Medtech will be able to offer support and skills to the less experienced organisations that are gearing up to become NHS providers.
For example, GP-led groups are forming companies to deliver services in their communities. Such companies are familiar with their local health economies and have a wealth of knowledge regarding patient bases and local needs, as well as clinical expertise. However, they lack some of the essential skills and resources required to develop and deliver new services.
This provides a powerful opportunity for healthcare companies to add value to their longstanding relationships with clinicians by partnering with them to provide support. This represents a shift from the traditional relationships that medtech has cultivated with clinicans, moving beyond clinical messaging and product marketing to offer management skills, resources and innovation.
In the process, medtech companies will be well positioned to help redesign services in tandem with the new providers. This will unlock opportunities to place individual products within a package of care to deliver the health outcomes NHS Commissioners are seeking. The new wave of businessfocused Commissioners are looking for services that deliver quality, improve care and provide demonstrable health outcomes.
In many cases, they will not be looking at the product alone but at the patient benefits the whole service will bring.
A strong hand
It’s important to note that while NHS Commissioners may be able to award ‘provider status’ to companies, that will not guarantee them a volume of business.
In the era of patient choice, service providers are competing for patients and trying to persuade Commissioners that their service is worth considering as an option. This leads to two challenges: what are Commissioners looking for, and how will patients know that different service options exist?
First and foremost, Commissioners will be looking for services that are patient-centred. Providers will need to demonstrate that their services are easy to access and provide true benefits for patients. Commissioners will also want to be assured that a service is clinically efficient and delivers measurable health outcomes. Finally, they will need convincing that the provider shares their desire to improve quality. The most attractive services will offer all of these benefits while achieving cost savings.
Ensuring that patients are aware of available services is crucial: it is self-defeating to build a premier service that addresses a major local health need if the community is oblivious to it. If patients do not use a new service, the objective of reducing waiting lists and improving efficiency will not be achieved and the reliance on the ‘National Hospital Service’ will continue.
This provides a great opportunity for healthcare companies to help inexperienced providers market their services to patients.
The healthcare industry has strong marketing prowess, whereas the NHS has never needed to market its services to patients. In the new environment, the local hospital will be competing for patients. After decades of trying to sell products to the local hospital, medtech can now support it through partnership.
What’s the deal?
How can medtech sales professionals adapt to the new NHS culture? In tandem with the marketing function, medtech will need to develop wide-reaching and varied messages to take to the new enlarged market. With a potential array of new service providers in town, companies will need to tailor their messages. They will need to identify where their products sit on the patient pathway – i.e.
where they are used and how they are administered – and determine whether these products can fit within any prospective new service to help deliver healthcare. Furthermore, they will need to identify all the service providers in their locality and develop a business case for each one.
Whether it’s a Foundation Trust, an ISTC, a GP-led consortium or even an NHS hospital, each provider will require a different approach. Sales professionals will need to be flexible with their messages.
The key to success will be to understand your local health economy and all its stakeholders. Clinicians will remain a significant part of your customer base, and traditional clinical messages will still form an essential promotional ingredient. But the growing influence of NHS Commissioners, responding to the needs of local communities, means that understanding how your product can fit into a wider service, and the means of delivering that service, is fast becoming a vital skill for sales and marketing professionals.
|CARD SCHOOL: |
|TOP TIPS FOR SUPPLY-SIDE SUCCESS |
• Understand how your product is currently used, and how it could be used differently to help meet local and national objectives in the future.
• Identify the main stakeholders in your local health economy and talk to them about how your product can help them meet their objectives.
• Understand the role of NHS Commissioners and build relationships with them.
• Identify new and potential service providers.
• Understand each service provider. What are the threats? Where are the opportunities?
• Prepare a business case for each service provider.
• Remember that when you communicate with providers you are discussing a model of care, not pushing a product.