David Stout, the deputy chief executive of the NHS Confederation, has been appointed as Managing Director for separate Commissioning Support Units covering Hertfordshire and Essex.

Mr Stout, who joined the confederation in 2007 as the first director of its Primary Care Trust Network, will begin his new responsibilities on 1 October 2012.

Mike Farrar, Chief Executive, NHS Confederation, said his deputy had made a “real contribution to the NHS as a whole”.

Commenting on his departure, Mr Stout said it will be a “big wrench” to leave but “it’s time to take on new challenges”. “I have really enjoyed my time at the NHS Confederation,” he said. “It has been a great privilege to represent both primary care trusts and the wider NHS on the national stage.

“I am really excited to have been given the chance to lead the two CSUs in Essex and Hertfordshire. I am sure we can make a huge contribution in the new reformed NHS.”

The CSU in Essex will cover a population of around 1.8 million people. In Hertfordshire, around 1.2 million people will be served by the CSU. The support units will be hosted by the NHS Commissioning Board until 2016 and assist CCGs in functions such as service redesign, procurement and risk stratification.

New research shows that SME growth provides the best prospect for economic recovery in the UK. But, as private equity firm ECI notes, finding the cash to reach out to global partners and markets can be a critical hurdle.

With continued pressure on governments across the Western world to reduce their expenditure, together with sustained macro-economic uncertainty and a tightening of bank funding, times are not necessarily easy for the average healthcare company – which often relies on the public purse for reimbursement and debt funding for growth. One might therefore expect the short-term outlook for growth to be somewhat muted, despite the backdrop of positive longer-term demographic drivers of demand.

Hence it is interesting that a recent survey of UK SME businesses by ECI Partners, a UK-based midmarket private equity firm, has found executives to be generally positive about growth prospects over the next 12 months, with 74% of respondents anticipating headcount growth and 60% expecting double-digit turnover growth.

The results met with a warm response from the Government, with Mark Prisk, Minister of State for Business and Enterprise, saying: “It’s good news that despite a tough few months, nearly three-quarters of the SMEs surveyed by ECI are looking to recruit over the next year and half expect to see substantial profit growth in that period. Up and down the country, it is Britain’s SMEs that are driving our economic recovery.”

Reaching out

This year, the survey conducted each summer by ECI Partners gained responses from a total of 246 chief executives from UK growth companies from a range of sectors with turnover between £10m and £200m. The results paint a positive picture against the gloomy economic backdrop of the Eurozone crisis and sluggish UK economy, and suggest that there remains growth potential amongst SME businesses – which account for around a third of UK private sector employment.

Steve Tudge, a Managing Director of ECI, commented: “Despite the barriers to growth, which are principally cited as a weaker macro-environment and funding constraints, we continue to be optimistic about the prospects for good mid-market companies.”

Executives see the key growth drivers to be increasing international sales – with Europe and the USA remaining the dominant international markets, though India and China are becoming more important – and organic growth through investment in sales and marketing and new product development. Over 40% of companies are also planning to increase their use of overseas suppliers to improve their margins.

Internal cash flows are viewed as the most likely source of funding for this growth, though around half of respondents say they are likely to seek bank debt within the next 12 months (despite continued complaints about its cost and due diligence requirements) and around 40% are also likely to look at private equity backing. Fewer than 10% of companies see the public markets as accessible, perhaps reflecting the recent volatility and liquidity issues associated with the AIM market.

Healthcare respondents are less bullish about high growth than their peers in other sectors, and are noticeably less positive about growth than they were last year. This no doubt reflects, in part, the political uncertainty surrounding the current UK healthcare reforms and the public sector spending constraints that are impacting on the health and social care sectors.

Despite this, companies remain more confident of raising growth financing – and of raising it from private equity firms, with over 50% saying that was a likely consideration over the next year.

Financing growth

What does all this mean for SME healthcare businesses in the UK? The sector certainly faces challenges in responding to Government spending cuts, which are tending to put pressure on margins if not always on volumes.

However, opportunities for growth remain amidst these challenges, particularly for companies who are able and willing to venture beyond the UK in order to seek new customers and cheaper suppliers.

Of course, this internationalisation can put a strain on smaller businesses, which may lack the scale to fully support an international infrastructure. Private equity groups with experience and expertise in this process can potentially offer support to management teams in this position – whether by making introductions, sharing best practice or simply financing the required infrastructure.

There are significant sums of capital available for investment from the UK private equity industry, and there remains an appetite to invest in market-leading healthcare businesses. Thus private equity should be considered seriously as an option by management teams in the healthcare industry who are looking to fund growth to help their companies succeed in the current economic environment.

ECI is a private equity group that has been investing in mid-market growth businesses for over 35 years. It invests across sectors, with a focus on UK and Irish companies. Healthcare companies in its current portfolio include a primary care provider (Harmoni), assisted living specialists (Premier Bathrooms, DLP) and medical software companies (Clinisys, Ascribe).

West Midlands home care specialist Salts Healthcare has acquired Healthlink, a Dispensing Appliance Contractor (DAC) covering Sussex, Hampshire, Kent and Surrey.

The acquisition will enable Salts to make its UK customer service network fully national, increasing its number of care centres to 17.

Sussex-based Healthlink has been run for 30 years by its founder and owner Liz Box, who is due to retire.

Family-owned Salts Healthcare, established over 300 years ago, specialises in stoma and continence care products.

The company’s home delivery service, Salts Medilink, provides specialist nurses and rapid prescription delivery via a network of customer care centres.

According to Peter Salt, Salts Healthcare’s Managing Director, the company “provides a vital service to ostomy and continence patients throughout the UK”. He added: “That passion to provide the very best service is found across the Healthlink team, and it’s that same quality of care and professional principles that attracted us.”

“This is a new chapter for both me and the company, and I’m delighted that my work will be continued with the same passion by Salts Healthcare,” said Liz Box. “As a family-owned firm, I know that Salts will look after my company, my staff and most importantly the patients.”

For Salts Healthcare, the last year has seen new product launches, significant export growth and the acquisition of UCI Healthcare.

Philip Salt, CEO, (pictured above with Liz Box and Peter Salt), commented: “Our early history shows we were originally metal workers who progressed to surgical instruments. This adaptation was borne out of our home-made but specialist skills and the desire to innovate. The same principles apply now, especially in a global economy with pressures for cheaper products coming from across the world.”

Teva UK has appointed Richard Daniell as its new Managing Director.

The former commercial operations officer succeeds Dipankar Bhattacharjee, who has been promoted to a wider European role, after more than two decades working with the Teva group.

Mr Daniell says he is “excited about driving the future and vision of Teva in the UK”.

Before being appointed commercial operations officer in 2009, the new MD served as a senior director at Teva UK after serving as director of generics at IVAX Pharmaceuticals UK.

“We want to keep growing, and keep serving our customers well, and I’m confident we can do both of those things with the talented people we have in our team,” said Mr Daniell.

“I’m delighted to be leading such a forward-thinking organisation and I’m proud to be at the helm of one of the UK’s leading pharmaceutical companies.”

The first advance in the treatment of bone cancer in children and young people in two decades has been recommended in final guidance by NICE.

Takeda’s Mepact (mifamurtide), in combination with postoperative multi-agent chemotherapy, has been made available to the NHS at a reduced cost under an agreed Patient Access Scheme (PAS).

Sir Andrew Dillon, NICE Chief Executive, says for those treated with Mepact “the health benefits continue over the rest of their lives, effectively being a cure”.

The appraisal saw NICE for only the second time in its history clarify its ‘methods guide’ for treatments which can restore health over a long period, and together with the PAS, reduced the cost per QALY of Mepact.

“Following a clarification from the NICE Board on this issue, and in addition to a revised patient access scheme from the manufacturer, the extra cost per unit of health gained that the NHS will pay for mifamurtide is now lower than previously determined, but still above the normal range that is usually accepted,” said Sir Andrew.

“After having looked again very carefully at a number of factors (such the curative potential of the drug for some people and the small patient population) and taking these factors into account, the Committee was able to recommend mifamurtide for osteosarcoma as a cost-effective use of NHS resources.

“Today’s recommendation of mifamurtide will help children and young people with this very painful and distressing disease, as well as providing some for hope for them, and the people caring for them.”

NICE initially failed to recommend the treatment in an FAD published in October last year. However, after the revision to its methods guide and the proposed PAS, Yasuhiro Fukutomi, Managing Director of Takeda UK, says the company is delighted with the outcome.

“We are grateful to all those who have been involved in this long process including those at NICE, the Department of Health, physicians and patient organisations,” he said. “It has taken everyone’s collaboration to lead us to this successful conclusion for osteosarcoma patients today.”

Mepact was recommended by NICE in draft guidance in September and was approved for use in Scotland in August 2011.

The NHS is not using high-value diagnostic imaging and radiotherapy equipment to its full capacity and is failing to meet patient needs as a result, according to a report from the Government’s Public Accounts Committee.

The report, ‘Managing high value equipment in the NHS in England’, stated that poor co-operation between trusts is leading to a “scandalous” shortfall in provision of vital services such as post-stroke scans.

NHS Supply Chain has said it is working with the DH to address the issues raised by the report and the “significant challenge” of procuring costly but much-needed equipment.

The NHS in England spends approximately £50m per year on MRI and CT scanners and linear accelerators for radiotherapy. However, the Committee said, the use of this equipment to provide services is “fragmented and uncoordinated”.

The number of CT scans carried out per machine in a year was found to vary between 7,800 and 22,000, with availability ranging from 40–100 hours per week.

Shockingly, the report found that only 50% of stroke patients received a CT scan within 24 hours – an essential service for determining immediate treatment.

Margaret Hodge, Chair of the Committee, said the way high-value equipment is bought and used by the NHS “is not providing value for money”. She described the shortfall in post-stroke CT scans as “scandalous” and the inequalities in usage between regions as “unacceptable”.

“The Department of Health has got to look at how machines can be used more efficiently to make the best use of scarce resources,” she concluded.

The report highlights the challenge for the new NHS Commissioning Board to ensure that Foundation Trusts work together to ensure access to capital equipment.

Health Minister Simon Burns commented that more streamlined procurement of scanners had already begun: “The NHS has saved up to 15% on scanners by working with NHS Supply Chain to co-ordinate large orders over time with other trusts. This is the NHS working smarter.”

“We are currently working with the Department of Health to consider the recommendations in the report,” said Andy Brown, NHS Supply Chain’s Managing Director for Diagnostics. “Buying and maintaining equipment during times of budgetary restraint will provide a significant challenge for NHS trusts and our range of frameworks to plan, aggregate, purchase or lease and maintain high-end equipment will be invaluable to the NHS.”

The switch to Key Account Management is one more companies are introducing to tackle current challenges. Apodi’s Tony Swift highlights the principles of effective execution and making a strategy work for a smooth transition.

More and more companies are now addressing the changing healthcare market by transitioning the sales process from one which primarily involves representatives engaging with healthcare practitioners on a ‘one-to-one’ basis, to the establishment of Key Account Management (KAM) teams.

The rationale for this change is irrefutable. Access to GPs is increasingly difficult and the ‘customer’ now represents a series of more complex accounts with numerous stakeholders and influencers. Furthermore, decision making is both at a national and regional level and there is now a greater need than ever to focus on local healthcare economy needs and requirements.

As a result, pharmaceutical companies have established, or are in the process of doing so, KAM teams in which individuals have increasing responsibility and autonomy in addressing the needs of their customers at a local level. Some pharmaceutical companies have even taken the model further and given team members, or a small collection of them in a specific locality, P&L responsibility – essentially establishing micro business units within the team itself.

 

A different approach

Some years ago it could have been argued that any company transitioning to the KAM model was differentiating itself from the competition. This argument is much more difficult today because most pharmaceutical companies have moved, or are moving this way – in short, almost everybody’s doing it.

However, there is still a key source of competitive advantage in this environment – and that is to actually make the new model succeed.

Our research, and the feedback we have received from companies trying to adopt the new model, is that the execution process is much more difficult than originally anticipated. The type of feedback we receive often includes the following observations:

• Account managers do not appear to be acting in any materially different way than the sales representatives of the past
• They are adopting the new model at vastly different rates with a small number leading the way and the rest struggling to come to terms with the new strategy
• The move to more local autonomy is creating confusion about the role of the centre and its interaction with the decentralised function.

 

Difficulty of execution

So why is it that so many companies are finding the execution process more difficult than anticipated? The primary reason is that there is often an underestimation of the scale of the organisational change required.

For instance, many sales functions in pharmaceutical companies have historically been based on a traditional command and control structure. Here, the sales management instructed sales representatives on which HCPs to target, how many times they should be called on and exactly what to say during any meeting with them.

Within the new model however, many of these individuals are now faced with adapting to a new environment where decentralisation, decision making, autonomy and P&L accountability are now among the order of the day. Given the above, managements’ task of transitioning the organisation from the old to the new model requires considerable skill, focus and expertise.

 

A decentralised approach

Many management commentators argue that decentralisation is a panacea for all ills. If executed effectively, in an appropriate environment, this structure can deliver enormous benefits to an organisation. However, the move towards decentralisation often creates a number of serious problems which, if not addressed directly and quickly, will significantly impact on performance.

These problems are as follows:

A lack of expertise: a decentralised structure almost always requires an increase in expertise in the key roles within the structure. For example, increased knowledge will be required by employees AND management to solve problems, address more complex customers and, in effect, run businesses – particularly if P&L account responsibility is part of the role.

Inertia: many employees enjoy going to work in an environment where they understand exactly what the day will bring; the common challenges they always face and, in exceptional circumstances, being able to refer any unusual problems to their line manager. In a new environment where their decision making authority is increased, many employees will be reluctant to do things differently and may continue behaving much as before.

Lack of responsibility: the new environment is a scary prospect for some people. The last thing they want is more responsibility and a fear of failure and an inability to work in the new way paralyses them – again leading to ineffective execution.

At Apodi we have looked at specific pharmaceutical companies that are struggling with the implementation of KAM teams and researched the reasons for their difficulties. In every single example, one or more of the problems outlined above was prevalent – and in most cases all three problems coexisted together.

In fact, some of our own executives have reported their own first-hand experiences of working with companies in which the almost evangelical zeal and enthusiasm of top management continued unabated whilst chaos reigned and they failed to achieve an effective transition.

 

The way forward

As we have seen, the execution process can be difficult. And because of this, it is critical that a clear procedure for managing an effective transition is implemented. This process needs to address the following:

1. Identify clearly the strategic intent of the company, including the projected benefits of changing the model and how these are to be measured

2. Given the strategy noted above, clearly identify the role of the centre and the role of the decentralised units and how these might evolve over time. In our view, companies are often too ambitious in managing the transfer of responsibilities from the centre to the divisions or KAMs. Clear standard operating procedures need to be driven from the centre in the early stages and KAMs need to understand the rules that they are expected to work to. Think carefully about giving newly formed KAM teams P&L account responsibility. It may be better to transition to this over time, and in some cases, not even to go this far

3. Identify very clearly the roles and responsibilities of management and KAMs at all stages in the change process

4. Given the roles identified in the new structure, carefully recruit the appropriate personnel. Implement a training and development programme focussed on areas such as the role of Key Account Management, the implementation of a complex sale, general business disciplines and other skills

5. Management need to quickly identify any KAM team member who cannot make the leap to the new world of working and deal with this appropriately

6. Instil best practices across the whole KAM team by establishing effective coordination and information sharing processes

7. Establish effective incentives to drive the performance required

8. Put in place appropriate controls, feedback, learning and corrective action processes to improve performance. Key to this is the management team that drives KAM performance. This team needs to be highly experienced and knowledgeable about the requirements of KAM teams and how to manage a change process.

 

Leading the way

As ever, the role of the leader is absolutely critical in driving through the changes to address the needs of the new healthcare economy. Whilst the development of a sound strategy is critical, it is also the relatively easy part of the process. In every pharma magazine, nearly all consultants and most competitors will support the notion of moving towards a KAM driven business.

However, it is the effective execution of this transition that the leader should focus on. They will also invariably experience many of the challenges that are common to such change programmes, such as internal politics, resistance to the new way of operating, lack of appropriate skills within the team and so forth.

It is because of this that a leader needs to draw on commonsense business disciplines to be successful. It is also crucial that the immediate management team are able to do the same. Therefore, before embarking on the process, it is important to make sure that the management team is capable and ready to execute change.

As I noted at the beginning of this article, many companies are implementing similar strategies. It is therefore logical to assume that, everything else being equal, it is the company that has the management capabilities to execute these changes most effectively that will gain a competitive advantage over its competitors.

 

Tony Swift is the Managing Director of Apodi. He may be reached on tony.swift@apodi.co.uk.

VistaMed’s investment of €7.2 million in R&D and product expansion will create 79 jobs, nearly doubling its workforce.

The Irish company designs, develops and manufactures catheters and complementary medical devices, exporting to the UK, Europe, US, South America and India.

Paddy Mulholland, Managing Director of VistaMed, said that the company “has continued to develop its capabilities and today we offer a comprehensive design development and manufacturing of innovative catheter solutions”.

The company’s investment is supported by the government through Enterprise Ireland.

Currently, 93 people are employed by VistaMed at its facility in Leitrim.

Diabetes care specialist Novo Nordisk has launched a new type of insulin pen in the UK that allows injection at the touch of a button.

The FlexTouch disposable prefilled insulin pen is available with Novo Nordisk’s rapid-acting insulin analogue NovoRapid (insulin aspart).

The design of FlexTouch includes a spring that allows any insulin dose (from 1 to 80 units) to be injected by pressing a button.

In a survey, 3 out of 4 healthcare professionals rated FlexTouch as ‘very easy’ to use for injection of 20 units.

The device is prefilled with 300 units of NovoRapid insulin. The dose is adjustable in 1 unit increments up to 80 units.

Debbie Hicks, Nurse Consultant, Diabetes, Enfield Community Services BEH-MHT, commented: “This new device really does offer potential advantages to patients. Everyone benefits when the pen is simple and easy to use – patients, doctors and nurses educating the patients.

“It is really important that we continue to give our patients options in the way their treatment is delivered, so that this becomes as little an interruption to their life as we can make it.”

“We are very proud to make FlexTouch available to UK patients, as it is designed to benefit both patients living with diabetes and the healthcare professionals who are treating them,” said Viggo Birch, Managing Director of Novo Nordisk.

Based in in Denmark, Novo Nordisk is a global company that specialises in diabetes care, haemophilia care, growth hormone therapy and hormone replacement therapy.

The FlexTouch was granted approval by the European Commission in July 2011.

Midlands medical device company Judd Medical Ltd has been contracted by the Belfast Health & Social Care Trust to supply 103 sets of reusable surgical instruments.

The instruments, which will be used at the Mater Hospital to support the Trust’s ongoing decontamination project, cover a range of specialities including hysterectomy, cervical sections and abdominal surgery.

Peter Judd, the company’s Managing Director, said: “Judd Medical worked closely with the Trust during the various stages of the contract in order to fulfil the specific needs and requirements of the Trust.

“Our range of specialised surgical instrumentation is uniquely manufactured in the UK and we are extremely proud to be amongst the few remaining British manufacturers of surgical instruments.”

Judd Medical’s instrumentation is manufactured by sister company Incus Surgical Ltd. Both companies have ISO-approved quality management systems.

Judd Medical is based in Bromsgrove, Worcestershire.