Opinion

David ponders the collision of healthcare services and commerce.

David Thorne 03 July 2017

 


Remember the Alamo!

 

Warning: In the light of the General Election result, expect major change to the structure and ways of working across the NHS in England. And whatever you do, don’t construct your team’s territories on the basis of 44 STPs.

There is one trend that hasn’t been altered by the result, and one which has major implications for pharma – the rise of ‘arm’s-length’ companies owned by
NHS Foundation Trusts. This is so fresh from the kitchen, it doesn’t have a name,
so let’s call them ALAMOs – ‘arm’s-length and managed organisations’. It also reflects the last somewhat desperate stand.

This is happening because acute hospital trusts lose money treating patients. The payment-by-results prices do not cover the cost of care for most tariffs, especially those for unplanned care. If you don’t believe me, then ask yourself why almost every acute trust ended the year overspent.

Interestingly, those that underspent tend to own companies that provide commercial synergies. Northumbria Healthcare, my local Foundation Trust (FT), is one of the country’s largest fleet car operators and supplies payroll services to multiple companies. I believe it was the most profitable FT in England last year, as commercial activity enabled them to subsidise their clinical work.

A small FT, 10 miles from me, has an ALAMO called QE Facilities, which is growing so quickly I can see it having a larger turnover than its host’s clinical income within five years. Those two aren’t the only examples, but it is significant that their North-East labour market and estates costs have helped them develop such a model.

It’s a bit like the situation at Manchester United – there used to be a football club, but now it is a seller of replica shirts that every so often hosts football matches. Indeed, it even buys players for their impact on short-term sales, rather than playing ability.

So, what does this mean for you? Well, imagine if procurement decisions for a hospital in, say, Dorset or Sussex are managed from Gateshead. Now include tender management, stoma care procurement, infection control, pathology super labs, regional imaging hubs, private IVF, wound care product selection, training, home delivery of medicines, locums, clinical guideline development, tattoo removal, homecare, prescribing protocols and formulary management.

The key factors here are consolidation, working at scale, Carter Review principles and opportunities from regional cost variations – all behind the NHS brand logo.

Do you know which trusts are working like this and which trusts are their clients? What impact does this have for your products? What are the opportunities here for pharma to offer business-to-business models?

Surely it is a chance for pharma companies to back up the oft-repeated claim that they are ‘healthcare providers, not just makers of pills and lotions’. If this is more than throw away jargon, seize the day and prove it with ALAMOs.  

 

Get Carter

The Carter Review – submitted by Lord Carter to the DH – made recommendations to hospitals about being more transparent, making procedures consistent and working closely with neighbouring NHS trusts. His review revealed unwarranted variation in running costs, sickness absence, infection rates and prices paid for supplies.

 

David Thorne is Chair, Washington Community Healthcare and Non-Executive Director, City and Vale GP Alliance. Go to blueriverconsulting.co.uk


 

 

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