Ready for independents
Recent NHS reforms have established the independent sector as an important part of the UK healthcare system. Thoreya Swage explains the diverse roles of these new providers, and asks: is the healthcare industry ready to meet the unknown?
The days of the local NHS hospital being the only choice available for patients requiring a hip or a knee operation are long over. Indeed, the days of NHS hospitals being the only healthcare provider around are also over. The supply-side reform of the English healthcare system has brought new players into the market, and these players are growing in influence. They are the independent sector healthcare providers.
The Government’s stated aim in increasing the number of different types of healthcare provider is to stimulate change in clinical practice, improve access to care and deliver improvements in clinical services. Change can be achieved through ‘planting’ new organisations within a local health economy and then seeing the ripple effect of innovative or efficient practice passing through the other healthcare bodies in the locality.
These objectives are reinforced by the policy of Patient Choice or Free Choice: the Government wants the NHS to offer more convenient and personalised care that takes into account the preferences of patients as to where and when they would like to be treated. By 2008, patients will be allowed to go to any provider of their own choice for their treatment. The choice of provider can be from an NHS Trust, a Foundation Trust or an independent sector organisation so long as it meets NHS standards and costs.
Giving patients choice increases the chance that a more responsive, high-quality health service tailored to the individual will be provided. The independent sector has an essential role in providing this wider choice for patients.
An independent history
The involvement of the independent sector in the UK health system is not recent. Since the inception of the NHS sixty years ago, General Practitioners have worked as independent contractors who provide their services mostly, but not exclusively, to the NHS. Similarly, dentists who work from their own surgeries are independent businesses, as are high street chemists and opticians.
The independent sector is also a significant provider of mental health care (e.g. eating disorder services), social care (e.g. nursing homes) and palliative care (hospices), and has been used as a means to tackle long waiting lists for elective surgery.
The ISTC programme
Back in the nineties, the NHS practised ‘spot purchasing’: it went to independent hospitals to buy extra capacity in order to shorten waiting lists. These agreements were not efficient, however, as the NHS usually had to pay more than the standard reference costs for procedures and co-ordination for follow-up care between the NHS and the independent sector was poor. The use of independent healthcare was therefore limited at that time.
The involvement of the independent sector was given a major boost by the Government’s reform programme for the NHS: the independent sector was challenged to drive innovation, ensure contestability and deliver the additional capacity that the NHS could not.
The independent sector treatment programme was announced by the Government in 2002 in an effort to stimulate a reduction in the long waiting times for elective surgery that patients were experiencing. The independent sector treatment centres (ISTCs) are private healthcare companies that deliver care funded by the NHS and free at the point of delivery to NHS patients.
The first ISTC was opened in 2003. By late 2007 there were 23 centres across the whole of England, covering elective procedures including hip and knee replacements, cataract surgery and general surgery. Other initiatives in the ISTC programme include six commuter walk-in centres and diagnostic services providing imaging, MRI, echocardiography, ultrasound and endoscopy.
The ISTCs have provided to date nearly three-quarters of a million episodes of care.
A further development has occurred to support patient choice: the extended choice network (ECN). This is a system whereby independent providers have applied and been approved to provide care. There are currently some 100 providers on this ‘list’, and more are being added as the NHS moves closer to the 2008 Free Choice target.
The involvement of the independent sector in the NHS continues to expand through various developments, including:
- the ‘Fairness in Primary Care’ procurement, whereby providers are invited to tender to provide GP services in nine PCTs that are under-doctored
- the ‘Framework for Procuring External Support for Commissioners’ programme, which aims to provide commissioning support to PCTs
- the provision of medical oxygen to patients’ homes
- the growth of commercial home care delivery services – these enable patients to receive medical treatment such as stoma or HIV care or ambulatory dialysis equipment without having to go to outpatient clinics
- the development of decontamination services for the sterilisation of surgical instruments.
The introduction of a multiplicity of providers, including the independent sector, means that the NHS is no longer the sole significant buyer for the medtech industry. There are other customers with whom relationships need to be built and commercial deals need to be set up.
A new healthcare market
All of these changes add up to a new emerging healthcare market that requires closer examination by the medtech industry.
The introduction of a multiplicity of providers, including the independent sector, means that the NHS is no longer the sole significant buyer for the medtech industry.
There are other customers with whom relationships need to be built and commercial deals need to be set up.
Introducing new players into the healthcare market has resulted in the development of new services in many areas of medicine and surgery. This means that new care pathways have been developed within a local health economy.
The drive to innovate has led to new technologies and equipment being used to help implement evidence-based clinical care. For example, the average length of stay for inpatients at ISTCs is less than 50% of that within the NHS (4.4 days compared to 11–12 days), theatre utilisation is 33% higher than in comparable NHS trusts, and re-admission rates are much lower.
All of this adds up to greater clinical productivity, and therefore an increase in the use of medical equipment and supplies.
A testing ground for medtech
The emergence of ISTCs has implications for the NHS market. Some ISTC staff also work in the NHS; this provides an opportunity to influence the NHS indirectly, when staff can see how effective a piece of equipment or technology is when used in the ISTC setting.
This effect has stimulated changes in NHS clinical practice, where previously the uptake of new technologies was slow.
The independent healthcare companies setting up ISTCs or other services require information on medical devices and related equipment, as more often than not they will be establishing new facilities. This provides an opportunity for medtech representatives to form relationships with these new providers and discuss their products.
The independent sector provides a whole new customer base for training. Many of the ISTC staff are not conversant with the local healthcare systems, having worked abroad, and do not understand how the NHS works.
The local healthcare economy may not be very accepting of them. By providing joint training opportunities between an ISTC and its local NHS Trust, whether in clinical or management areas, medtech companies could facilitate the building of relationships between them and thereby help to improve the continuity and quality of patient care.
Another group of independent providers worth getting to know are those currently going through the process of being chosen to provide commissioning support to PCTs. You need to find out who these providers are and what services they will be required to commission. The key approach here is to demonstrate that your medtech products are evidence-based and have the potential to improve patient outcomes.
Medtech companies may also be in a position to get involved in service redesign, particularly if the products facilitate the transition of services from secondary care to the community.
The clear message is that medtech companies should review their relationship with the independent sector in all its forms, and consider how to develop good and robust relationships with these new players in the healthcare market.
Off the shelf
Private healthcare providers have a different challenge to face in the healthcare market of the future. The days when strictly private healthcare was the only alternative to the NHS for the affluent are gone.
In the past, the main advantage of private healthcare over the NHS was shorter waiting times and greater convenience for the patient. The Government target of a maximum of 18 weeks from GP referral (including diagnostic tests) to hospital treatment by the end of 2008 and the policy of Free Choice have eroded this advantage.
Although no more centrally-driven procurement programmes involving the independent sector are planned, the emphasis is shifting to the local procurement of services by PCTs and practice-based commissioning groups. NHS commissioners are required to demonstrate effective commissioning, using commercially-based contracts that provide a level playing field for any provider (whether NHS or independent) that wishes to offer services.
For the patient, this means an opportunity to choose the provider that best suits their needs, using criteria such as quality and convenience as well as (or instead of) waiting time. The effect is rather like the way a supermarket can compete with more ‘upmarket’ stores for customers by stocking the same brands at lower prices. The NHS customer will now have a wider range of healthcare brands to choose from.
The involvement of the independent sector in the UK healthcare system is not a simple process. It has a number of different facets, presenting the medtech industry with different market opportunities and challenges. The clear message is that medtech companies should review their relationship with the independent sector in all its forms, and consider how to develop good and robust relationships with these new players in the healthcare market. Dr Thoreya Swage is the Clinical Lead for new projects at the Commercial Directorate at the DH, with a responsibility to transfer the clinical knowledge and experience acquired from the Independent Sector Treatment Programme to the wider NHS. She has worked in the NHS both as clinician (psychiatry) and as senior manager, including Executive Director for a Health Authority, in various NHS organisations covering acute as well as primary care. She can be contacted at firstname.lastname@example.org.