Healthcare systems around the world are under unprecedented financial pressure.
This is the consensus across most developed nations and is certainly the case for the National Health Service (NHS) in England, a situation that Lord Carter’s review on operational productivity in acute trusts attempted to address.
It is now approaching 18 months since the final report of the Carter review was published and the impact on the NHS is becoming clear.
The recommendations of the review, and the path it lays out, will have significant traction within the Department of Health, to an extent rarely seen by civil servants.
Productivity and efficiency
The review acts as the starting point for the productivity and efficiency agenda that has followed and become a primary focus for NHS Improvement, the organisation responsible for overseeing NHS providers.
The flagship exercise being undertaken by NHS Improvement, as recommended by the Carter review, is the development of the so-called model hospital in an effort to reduce what it calls unwarranted variation — a favourite phrase of the review and estimated to be worth £5bn ($6.5bn) in potential savings — between trusts.
This online portal allows trusts to compare data on both productivity and quality in order to identify opportunities to improve, an important tool for NHS Improvement as it attempts to stabilise the finances of healthcare providers up and down the country.
The development of the model hospital relied on something at which the NHS is historically poor — collecting and processing the huge amount of data at its disposal.
The work of the Carter team and NHS Improvement is thought to have been extremely successful in this regard, with all trusts now supplying granular data on a monthly basis in quantities never before seen.
They’ve also begun using standardised metrics such as the adjusted treatment cost and weighted activity unity, making the comparison of organisations in terms of productivity and efficiency easier.
Hospital procurement — responsible for around £9bn in spending by trusts each year out of a net annual national expenditure in England of around £120bn ($156bn) — could be significantly brought down by this use of data.
The report revealed huge differences between what different trusts spent on a wide range of resources, including medical devices.
The NHS is often accused of not harnessing its purchasing power as the largest single-payer healthcare system in the world, but it might be that by enabling trusts to compare costs with one another the model hospital is able to do this while maintaining the internal competition laid out by the 2012 Health and Social Care Act.
Opportunities and threats
This shake up of procurement presents both opportunities and threats for medtech suppliers.
A more data-literate NHS will likely result in greater pressure on suppliers to reduce their prices.
Equally, with trusts already working more closely following the introduction of sustainability and transformation plans and the increasing use of long-term managed service contracts it is possible that smaller manufacturers will struggle to compete with their larger rivals.
This is already a problem within the in vitro diagnostics industry, where four large multinationals command most of the primary market since they are the only ones large enough to meet the specification of many managed service contracts.
However, opportunities will also arise.
The Accelerated Access Review that ran in parallel with the Carter review means that if a product cuts costs or improves efficiencies it will likely be fast tracked.
If it works at the model hospital it would be able to spread across the NHS quickly.
Meanwhile, the use of data means procurement officers are more likely to know exactly what they want, allowing medtech companies to focus development on what’s in demand.