In the second of our series of interviews on healthcare market access, Katy Draper of Marketing Medicine discusses how medtech companies can successfully negotiate the NHS procurement system.
Nothing divides the medtech industry like the question: Is the NHS a worthwhile market for UK companies?
The case against the NHS is well known: it’s a slow adopter, with approval and procurement processes that demand a lot from companies in terms of time and commitment. On the other hand, many UK medtech companies – and not just the larger ones – are building successful business relationships with the rapidly-changing NHS, which has declared itself open to partnership and eager to support innovation.
Katy Draper, a healthcare marketing consultant with experience of helping medtech SMEs to engage with the domestic market, discusses why the NHS is important for the UK medtech industry and what companies can do to break down the barriers. She argues that, like any relationship, the commercial understanding between medtech and the NHS requires give and take on both sides – and that as communication improves, both partners have everything to gain from working together.
Is the NHS an important market for UK medtech companies? If so, why?
It’s important to crack the NHS market if we can because it’s our home market. There are clear benefits to companies in selling to local customers. Also, it gives the UK public access to innovative new medical products developed here. The UK population will clearly benefit from having this extra high-quality product available to them – and it keeps money within the UK economy, providing employment. There are several high-profile cases of products and drugs not being made available within the NHS; the debate goes on, balancing scarce resources to the needs of an ever more demanding and ageing public.
However, it’s a balance: healthcare is a global business, but if you’re based in the UK, it’s a great shame not to do business with the NHS. I think the NHS could be higher on companies’ agendas, but I do understand the commercial pressure forcing companies into markets that can be penetrated more easily.
Because of ongoing developments in NHS procurement, and all the emerging Government agencies that companies have to deal with, it can appear a highly complex structure to have to navigate around – and that puts a lot of UK companies off. The level of complexity required also varies between products.
Procurement regulations for medical products and services are essentially the same across Europe, but for some reason the system is perceived to be more complicated in the UK. Of course, companies might think: If I export to other countries with less restrictive access and perhaps even larger market potential, then I can grow quicker and easier.
It’s critical for a new company to ensure positive cash flow, and if you’re managing a business that’s a major issue.
The NHS could be a more important market for many UK companies if they were able to devote more time to learning how to navigate its processes. I have come across a few organisations that gave up at the fi rst hurdle with NHS procurement – I don’t accept that defeatist view, but I do recognise that the NHS is quite hard to get into. Work is needed to break down the barriers on both sides.
“It’s important to crack the NHS market if we can because it’s our home market. There are clear benefi ts to companies in selling to local customers. Also, it gives the UK public access to innovative new medical products developed here.”
For example, we recently completed a project with a company where we needed to find information about products in a particular devices category to be included in a forthcoming tender, so we contacted the supplies agency – we got quite a frosty response, and were passed back and forth between agencies. It was time-consuming and frustrating simply trying to find the right people to speak with. If you’re in that situation and you need to get money in for the shareholders, I can see why companies would opt for an easier solution.
As a healthcare consumer it concerns me that other parts of the world are leaving us behind, with new technologies being more easily adopted overseas. But we need to be cracking this problem and working in closer partnership with the NHS. I know that industry bodies are working hard, but it tends to be the larger companies that are members of the main groups, and I don’t know how much of the support and information permeates to the SMEs. That won’t happen overnight.
How can medtech SMEs in the UK best gain access to the complex and elusive NHS procurement system?
They need to invest time and effort in finding out how it works. Businesses need to put resource into managing procurement: understanding how the tender processes work and developing appropriate relationships. You need people in your team who can navigate their way through the system: account managers with the skills and breadth to negotiate with different stakeholders.
European procurement legislation asks businesses to prove that they are safe, reliable and robust and that they can deliver the work required. Tenders have always been competitive, with commercial pressure to prove merit and value for money. In theory the processes should be easier now, as things are transparent and feedback should be offered as best practice. Companies need to improve the presentation of their tenders, putting all the information together in the way the NHS wants it.
As a marketer who believes that the customer is king, I was disappointed recently to learn that nobody from ‘industry’ had gone to the NHS Confederation – me included! To me, that’s potentially a poor reflection of the industry’s perspective of the NHS as a customer.
What are the most important contact points within the NHS structure for such companies to aim at?
The most crucial body to understand is the NHS Purchasing and Supply Agency. Companies need to know how NHS PaSA works and how it fits into the rest of the NHS, and understand its role as the overarching body that provides guidance and manages procurement.
“It’s a time of opportunity – and fortune will favour those companies that are brave and innovative and take the time to understand the NHS, work with it and help it through the development process.”
You have three different levels below that. The first is NHS Supply Chain, which manages national framework agreements and overseas procurement. It works closely with the procurement hubs and Trusts. It’s crucial to understand how the Supply Chain works, establish a relationship with the team managing your product group and know well in advance when tenders for your products are coming up. There’s a lot of helpful information on the NHS SC website, which is worth looking at.
There are also the massive regional procurement hubs that have been set up to buy products at a more local level. These have their own procurement and mini-tender agreements. They can purchase under the national framework agreements that have been made by NHS PaSA and the Supply Chain, or they can set up their own procurement systems. Examples of these hubs are Procurement North East and the Healthcare Purchasing Consortium (HPC) in the West Midlands.
Individual Trusts have their own supplies department and local contracts managers. They buy small quantities of product for local hospitals. If a surgeon wants to use a particular medical device that’s not on the national framework, they would go to the Trust to buy that. In primary care you have the Drug Tariff, which includes a supplies list for medical devices in the community – if you want to sell your products in the community, they ideally should be listed on this tariff. However, some PCTs are developing relationships with suppliers directly.
Another key thing to be aware of is that hospitals are becoming much more e-aware, so you may need to have an e-commerce strategy. Businesses need to be on SID, the Suppliers Information Database. You can place all your policy documents and procedures up there and keep them up to date. Getting on there doesn’t necessarily mean you’ll get business, but companies need to have a presence there. Then there’s the e-Catalogue, where the NHS puts things it has purchased through the framework agreements. If you have a contract, you need to make sure you are appropriately represented there.
There may be other potential ports of call such as the PCT Commissioners and the Centre for Evidence Based Purchasing. Then there are the clinical trials, ethics committees, local formularies… the list goes on and on!
So there are lots of different agencies and bodies you may need to be involved with, depending on your products – and that’s even without sending your team in to speak to the clinicians, nurses, physiotherapists or whoever the end user of your products may be. It’s all very well getting a product listed, but you also need people out there getting the products through the system at a local level.
How can these companies go on to build sustainable commercial relationships, or even partnerships, with the NHS?
That’s where it’s really becoming more exciting. The NHS is certainly facing up to more grown-up business relationships, and the secret is for companies to be in tune with that: to find out who the key NHS customers are and really work at communicating with them. It’s a time of opportunity – and fortune will favour those companies that are brave and innovative and take the time to understand the NHS, work with it and help it through the development process.
Companies need to buy into the NHS’s agenda of innovation and quality of care, of giving patients and clinicians more choice and more of a say. They need to take all of that on board and work with it, understand it, live it and breathe it. It’s no longer just a case of getting a product in there and pushing it through. It’s all about communication.
I don’t think the NHS will be able to deliver everything that the UK population demands over the next 20 years without partnership with industry. Truly sustainable partnerships only happen when both parties win. I think strong industry leadership is required to help us understand our evolving customer, with high-profile examples of ‘best practice’ to inspire and guide us.
What does Lord Darzi’s Next Stage Review mean for the NHS as a purchaser of medical technologies?
There are good messages in the Darzi review for medtech businesses. Clearly, much space is devoted to the recognition that the NHS is falling behind as an innovator and adopter of new technology. This is a huge step forwards. To improve, the NHS needs to work at making things easier for small, innovative businesses.
Though the NHS says it’s open to smaller businesses, it can be incredibly daunting and off-putting when tender evaluation criteria score the size and longevity of the company, pitching you against large blue-chip multinationals. The NHS needs to be more realistic about the criteria it uses in selecting companies: if it wants innovative new businesses to come through and take products forward, it will have to work more closely at putting its own new measures of ‘innovation’ into tender evaluations.
Industry and the NHS are still some way apart, but there are signs that the gap may be narrowing. Groups such as the MedTech Cluster Opportunity Group in the West Midlands are bringing industry and the NHS together, building firm relationships and setting up exciting initiatives. In the same region, MedilinkWM has helped small businesses to engage with the HPC, who have been very helpful. These are hopeful signs for the future.