NHS service provision has always been a one horse race. Now, with the advent of supply-side reform, competition is being introduced to the market. This month, Pf turns tipster and offers advice on how best to win the race.
THE UK GOVERNMENT has made the provision of choice for patients a central plank in its radical reform of the NHS. Patients will, according to the Department of Health, be afforded greater choice in how and where they receive their healthcare. In addition, and in partnership with their local PCTs, patients are also being encouraged to play a leading role in identifying the types of healthcare services their 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 April’s Pharmaceutical Field, are indeed radical. Their partner in crime, supply-side reforms, are revolutionary.
The Government’s full reform programme sets out to build a market economy from the apparent wreckage of the old NHS. Traditional supply and demand-style economics are being introduced to the NHS, with the aim of bringing competition to a market that has previously provided only one option: the NHS hospital. And the NHS Hospital has been buried in the stampede. The NHS of the future will no longer be a one-horse race and, with revolutionary ‘supply-side reforms’ already well underway, new runners and riders are being introduced to the market to deliver services that have historically been provided by local hospitals. In the process, services will be moved closer to patients’ homes and waiting times for treatment will, it is claimed, plummet.
Under starters orders
So what exactly are supply-side reforms? Well for a start they are controversial: communities the length and breadth of the land are currently fighting a whole wave of apparent plans to shut down many 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 country’s continued reliance on the NHS as a ‘National Hospital Service’ is not sustainable.
Radical restructuring and ‘modernisation’ of local health services is the current 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. They will give providers more freedom to be innovative and to deliver improved services that respond to patient need. They are, in short, the mechanism through which the Government can deliver the promise of demand-side reform: choice. In reality, they are much more than that, they are designed to introduce the language of economics to the NHS and:
|• to eradicate the perception of the ‘National Hospital Service’
• to encourage new providers into the market
• to increase competition
• to stimulate innovation
• to improve quality of healthcare delivery
• to drive down cost.
Runners and Riders
So who are the new service-providers? The new reforms are encouraging service-provision from a whole range of different players. National retailers such as Boots, Lloyds and Capio are natural entrants to the market, while private players such as BUPA and BMI Healthcare are obvious candidates. 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-forprofit organisations that are accountable to local communities rather than central government. Despite this, they remain part of the NHS and match 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, and, due to their autonomy from central power, enjoy greater freedom to respond to local need. They are able to decide for themselves what capital investment is required to improve their services, and are free to retain any surpluses they generate in order to support this investment. There are currently 65 NHS Foundation Trusts, with the first established in 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 2006/06.
ISTCs are generally private sector companies who provide contracted clinical services for the NHS. They receive ‘National Tariff’ payments from the Department of Health and/or NHS Commissioners, depending on the specific services they provide.
The Government encourages ISTCs to find cost-savings in the delivery of their services, for which they will receive a percentage. Outside of Foundation Hospitals, it is anticipated that Independent Sector Treatment Centres will provide the lion’s share of the Government’s much-vaunted patient choice. In addition to choice, it is hoped that such providers will help reduce waiting times and encourage innovation.
The Government claims that ISTCs, which have been operating in the NHS since 2003, have already had a positive impact on healthcare delivery.
The full SP for pharma
So what does all this mean for the pharmaceutical industry? Well, supply-side reforms promise to end the long-standing era of the NHS monolith, and as such UK pharma 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. The good news is that this provides a huge opportunity for proactive pharmaceutical companies to (at last) partner with the NHS. Moreover, it could enable companies to offer greater value for the NHS beyond simple provision of drugs. The question remains: how? The key, to begin with, is developing an understanding of the role of NHS Commissioners, and beyond that, building relationships with them.
The widespread encouragement of an increase in service-providers means that, in theory at least, pharmaceutical companies could themselves become providers and bid for NHS contracts.
Although this is at present appears highly unlikely, and ABPI regulations are restrictive to this kind of approach, drug companies do possess many of the qualities that attract NHS Commissioners.
What seems more likely is that pharma will be able to offer support and skills to the more inexperienced companies that are gearing up to become NHS providers. While the larger private companies are well-placed to provide services, smaller, embryonic organisations are poised to enter the market. For example, GP-led groups are forming companies to deliver services in their communities. Such companies are familiar with their local health economies, have a wealth of knowledge on their patient-bases and local needs, and unparalleled clinical knowledge – however, they lack some of the essential skills and resource required to develop and deliver new services. This provides a powerful opportunity to add true value to its long-standing relationships with clinicians, and partner with them to provide support. This will represent a shift from the traditional relationships pharma has had with doctors, and will move away from the clinical messaging and product marketing approaches where those relationships first began. It will instead allow pharma to offer management skills, resource and innovation to its customers.
In the process, pharma companies will be wellpositioned to work in partnership with potential providers and help design services in tandem. This will unlock opportunity to place individual products within a package of care that will deliver the health outcomes NHS Commissioners are seeking. The new-wave of business-focused Commissioners are looking for services that deliver quality, improve care and provide demonstrable health outcomes. These are their ultimate criteria, and in many cases, the Commissioner will not be looking at the drug but the patient benefits the whole service will bring.
Jockeying for position
It’s important to remember that, from a provider’s point of view, Commissioners may be able to award ‘provider status’ to companies, but they cannot guarantee 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 worthy of being considered as an option. The award of provider status is no guarantee of business. 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-centric. Providers will need to demonstrate that their services are easy to access, and provide true benefits for patients. They will also want to be assured that a service is clinically efficient and can deliver measurable health outcomes. Finally, they will need convincing that the provider shares a mutual desire to improve quality. The most attractive services, of course, will offer all of these benefits and achieve cost-savings.
The issue of ensuring patients are aware of available services is essential: 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 service, no matter how good it may be, the objective of reducing waiting lists and improving efficiency will be lost and the reliance on the ‘National Hospital Service’ will be exacerbated.
But this does provide a great opportunity for pharma to help inexperienced providers market their services to patients. Pharma has strong marketing prowess, whereas the NHS has never needed to market its services to patients. In the new environment, the local hospital will now be competing for patients. Having spent decades trying to sell products to the local hospital, pharma can now support it through partnership.
Hedge your bets
So how do sales professionals adapt to the new culture? Well, in tandem with the marketing function, pharma will need to develop wide and varied messages to take to what has become an enlarged market. With a potential array of new service providers in the market, pharma companies will need to tailor their messages. They will need to identify where their products sit on the patient pathway – ie, where they are used and how they are administered (hospital, primary care) – and determine whether they can fit within any prospective new service to change the way treatment can be delivered. Furthermore, they will need to identify all the service-providers in their locality, and develop business cases for each one. Whether a Foundation Trust, an ISTC, a GP-led consortium offering services in the community, or an old-style NHS Hospital, each provider will require a different approach, and sales professionals will need to be flexible with their messages.
Fundamentally, the key to success will be in understanding your local health economy and all the stakeholders within it. The GP will remain a significant part of your customer-base and traditional clinical messages will still form an essential promotional ingredient. However, the growing influence of NHS Commissioners, responding to the needs of local communities and other healthcare stakeholders, means that understanding how your product can fit into a wider service, and how that service may be delivered, is fast-becoming a vital skill for sales and marketing professionals.
|FORM GUIDE – TOP TIPS FOR SUPPLY-SIDE SUCCESS
|• Understand how your product is used currently, and how it could be used differently in the future to help meet local and national objectives.
• Identify the main stakeholders in your local health economy and talk to them about how your product could 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. Who are the threats? Where are the opportunities?
• Prepare a business case for each service provider.
• Remember that, when communicating with providers, you are discussing a model of care, not pushing a product.