In the first part of a new series looking at NHS reform, Pf explores demand-side reform. The NHS is being challenged to provide greater patient choice and a new commissioning culture is emerging. What does this mean for sales professionals? Chris Ross reports.
THE NHS IS CHANGING. There, I’ve said it. So too, it would seem, has every other healthcare commentator in the land. We all know the NHS is changing, and we all know that it needs to.
But do we know how it is changing? And, more importantly for medical sales professionals, do we know how it affects us? This month, Pf begins a four-part series looking into the government’s reform agenda. The vision for change has been laid out in the DH’s 2005 publication Health reform in England: update and next steps, which outlines four strands of reform: demand-side reform, supply-side reform, transaction reform and system management reform. These various strands encompass some of the headline policies we have already heard about, many of which sales professionals are facing in the market today. Pf’s series ‘Reforming the NHS’ takes a detailed look at the four tranches of reform and how they all hang together. We begin with demand-side reform.
“The main dangers in this life are the people who want to change everything – or nothing.”
Lady Nancy Astor
As the first woman to take up a seat in the House of Commons, Lady Nancy Astor stands tall as an icon for political change in the UK. Lady Astor was a fierce debater, and is best known for a heated exchange with Sir Winston Churchill where she said: “Mr Churchill, if I were your wife I’d put arsenic in your coffee.” Churchill replied: “Madam, if I were your husband, I’d drink it.” Nowadays, it seems the NHS has become the poisoned chalice for modern government. It is arguably the most widely debated aspect of British politics, and after years of sustained rhetoric and reinventing of the wheel, is now at the centre of the most radical reform agenda in its history. If Lady Astor’s assertion that the main dangers in life are those who want to change everything or nothing is true, these are dangerous times for healthcare in the UK. The latest reforms change everything – itself a risk. For the medical sales professional, the biggest risk is changing nothing. Clinging onto traditional methodology just will not work.
The bigger picture
The first challenge in managing change is to understand what it is, what it’s trying to achieve and what has driven it. The new reforms are designed to bring a business-focused health service to the UK. The NHS is in deficit, the hospitals are full, the population is getting older and the healthcare budget cannot withstand it. What’s more, the single-supplier service that is the NHS, founded on a principle of ‘free for all at the point of need’, was not built with such circumstances in mind.
The government wants to introduce competition into the market to improve quality, drive down cost and provide choice for healthcare consumers. Central to these aims is the introduction of the traditional supply and demand model of economics that dominates other business sectors, but that has always been absent in healthcare. Previously, if a service needed commissioning, it would be commissioned to the local hospital. It was ever thus.
The desire to move away from this model has heralded a wave of policies under the umbrella of ‘Demand-side reform’. So what is it?
Demand-side reform is all about choice, more specifically patient choice. It focuses on giving patients a stronger voice on the type of healthcare services they need, and input into how they want them delivered. Moreover, demand-side reform is about establishing the philosophy that patients should have a choice in the way they consume healthcare services, and creating a framework that enables that choice to occur. This philosophy is supported by the aims of supply-side reforms, which we will look at in more detail next month.
For demand-side reform to succeed, the process of commissioning services in the NHS needed a radical overhaul. Traditionally, commissioning has not been a strength of the NHS and an effective system to support it has never truly been in place.
As such, demand-side reforms have the twin objective of implementing a robust framework for an improved commissioning function, and providing greater choice for patients.
Restructuring the system
Many of the headline initiatives of demand-side reform are either under way or have already taken place. Last year, the entire structure of the NHS was reshaped to provide a platform for implementing change. As we know, the boundaries of Strategic Health Authorities (SHAs) and Primary Care Trusts (PCTs) were redefined, creating bigger, stronger but essentially fewer bodies to govern the system. The purpose of this restructure was to strengthen the commissioning functions of PCTs and, in the process, give them the support, framework and infrastructure to design services that would help deliver local and national healthcare priorities. The new, enlarged PCTs are, by sheer size alone, much stronger commissioning bodies covering larger patient populations.
In addition, demand-side reform acknowledges that the NHS represents only one aspect of healthcare delivery in the UK. Other public services such as Social Services, Care and Transport impact on the management of health and can make a substantial difference to the improvement of public health. To this end, the demand-side programme endorses a whole-system approach to healthcare, where the NHS is encouraged to work more closely with local authorities and to adopt a holistic approach to how healthcare is delivered.
As such, at the time of the NHS restructure in 2006, most PCTs were made co-terminates with local authorities.
Thinking nationally, acting locally
Aligned with the restructure of the system, demand-side reform also introduced another policy with which we are all very familiar: practice-based commissioning (PBC). PBC enhances the commissioning function at the local level within PCTs and satisfies the patient choice element of demand-side reform. Through PBC, PCTs can improve liaison with patients, listen to their requirements and design services that meet the needs of local communities. In theory, PBC adds the vital ‘patient voice’ to the commissioning process.
The DH hopes that PBC will become an important mechanism through which the current high number of hospital referrals can be reduced and replaced by an increased provision of healthcare services nearer patients’ homes. Budgets will therefore be delegated down to practice level, but PCTs will, of course, retain strategic responsibility for the commissioning process. The government sees PBC as a key initiative to ensure the patient voice is heard at local level.
New culture, responding to demand
Alongside this, demand-side reform is precipitating a new culture of commissioning. Traditionally, commissioning has always been undertaken by virtue of block contracts, awarded, yes you’ve guessed it, almost entirely to the tried and tested local hospital. Commissioners purchased services that delivered a given number of out-patient appointments, leading to an output-led service. For example, a commissioner would buy a service that guarantee 100 cataract operations – 100 preagreed outputs.
In the new environment, commissioning will be outcome-based. A commissioner cannot award a bulk contract to a local hospital based on volume because, in the era of patient choice and an anticipated range of service providers, volume cannot be guaranteed. Instead, commissioners will ask service providers to guarantee outcomes. This cultural shift empowers the purchaser and commits the provider to agreed levels of quality and tangible results. Allied to PBC, this creates a market that is able to respond to demand. The patient’s ability to exercise choice and select a service provider from a range of options is enabled by another of the government’s recent policies, Payment by Results (PbR). PbR is an example of Transaction Reform, and will be examined in the third part of the series.
The impact on the sales professional
So what does all this mean for the field force? Well, demand-side reform signals the true emergence of a new customer-group for the pharmaceutical sales professional: the commissioner. In addition to being called NHS Commissioners, this significant role is being undertaken by individuals working under a range of different titles within PCTs, such as Modernisation Directors, Directors of Strategy and Directors of Service Provision. Their collective importance cannot be underestimated.
Unlike clinicians, commissioners are not responsible for prescribing or recommending brands, but they are the key decision-makers in determining how money is spent on service provision. Since the services they commission will, by association, contain products, decisions made by commissioners will undoubtedly impact how brands are used. Consequently, sales professionals will need to develop and deliver a different set of messages to commissioners, as well as maintaining traditional clinical communications with clinicians. These new messages will need to be based on an understanding of these customers and what their priorities are, and how a specific product fits into the NHS environment and can help commissioners achieve their objectives.
A commissioner has a range of objectives, the most fundamental of which is to improve health outcomes in the most cost-effective manner. The opportunity for the sales professional is to identify how you can persuade a commissioner to change a service in a way that delivers a cost saving, improves health outcomes and, in the process, increases the likelihood of your product being used.
• Can your product be delivered as part of a community-based service?
• Will it have a positive impact on hospital waiting lists?
• Will your treatment enable secondary care patients to be discharged earlier?
• Does your product prevent people going into hospital at all?
• Can you wrap your product up in a package of care that is going to help a commissioner meet a target?
In the spirit of outcome-based commissioning, hardline purchasers are business-orientated and driven by achieving their ultimate objective – health gain. The modern commissioner is not interested in who provides a specific service, but will seek assurances that it is provided to an agreed specification and delivers agreed outcomes. If your product can become a part of such a service, the opportunities for growth are enormous.
Of course, from an industry perspective, demand-side reform is not an invitation to change for change’s sake. Sales professionals, and the pharmaceutical industry in general, should not neglect the traditional methodology that has proved so successful in the past. There remains an overriding need for sales representatives to detail clinical messages to clinicians, and in some cases this will continue to be the most appropriate approach. If yours is the sixth ACE Inhibitor to market, the clinical message is likely to be the best option available to you.
However, with its complex and far-reaching reform agenda, the UK government has embroidered a new tapestry of customers for the pharmaceutical sector. What’s more, through its demand-side reform programme and a focus on providing choice, it has armed UK patients with a needle and thread of their own and invited them to play a part in designing a new healthcare service.
The challenge is to sell the new concept to a sceptical public that views the NHS as the National Hospital Service. Patient choice will only work if the public believes that true and meaningful choice exists. If it shuns the concept, the hospitals will remain full to bursting and the theory will collapse. As Lady Astor said, the biggest dangers are those who want to change everything, or nothing. The latest radical reforms are set to change everything.
Ironically, however, for a reform built on the notion of improving outcomes by providing choice, changing nothing is not an option for the pharma sales professional. But if the patient chooses not to embrace the change, the outcome will be bleak. The opportunity is there for the pharma industry to help make sure that doesn’t happen.