Change Please

All change please

Putting the best new healthcare ideas into practice

Professor James Barlow and Jamie Burn Edited by Gavin Lockhart All change please

Putting the best new healthcare ideas into practice

Professor James Barlow and Jamie Burn Edited by Gavin Lockhart

Policy Exchange is an independent think tank whose mission is to develop and promote new policy ideas which will foster a free society based on strong communities, personal freedom, limited government, national self-conﬁdence and an enterprise culture. Registered charity no: 1096300.

Policy Exchange is committed to an evidence-based approach to policy development. We work in partnership with academics and other experts and commission major studies involving thorough empirical research of alternative policy outcomes.

We believe that the policy experience of other countries offers important lessons for government in the UK. We also believe that government has much to learn from business and the voluntary sector.

Trustees Charles Moore (Chairman of the Board), Theodore Agnew, Richard Briance, Camilla Cavendish, Richard Ehrman, Robin Edwards, George Robinson, Tim Steel, Alice Thomson, Rachel Whetstone, Virginia Fraiser, Andrew Sells. All change please

About the authors

Professor James Barlow, Gavin Lockhart Imperial College Business School. James is Public Services Commission, Policy a Professor of Technology and Innovation Exchange. Gavin Lockhart has respon- Management, focusing on healthcare, sibility for crime and justice research at and a Director of the Health and Care Policy Exchange and is part of Policy Infrastructure Research and Innovation Exchange’s public services commission. Centre (HaCIRIC). He has previously Gavin worked as a management consult- held positions at the University of Sussex, ant before joining Policy Exchange in University of Westminster and the Policy August 2006. He has edited nine Policy Studies Institute. He has a PhD from the Exchange reports including Measure for London School of Economics and a back- Measure, Fitting the Bill and Unlocking ground in geography and economics. the Prison Estate.

Jamie Burn Jamie is a Research Fellow in the Health and Social Care Unit at Policy Exchange. He has an MSc with distinction in Policy Studies from the University of Edinburgh and a ﬁrst class BA Honours in Philosophy from the University of Sheﬃeld.

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2 Contents

Acknowledgements 4 Executive Summary 7

1. Introduction 12 2. Academic literature on spreading innovation in the healthcare sector 17 3. Challenges for the NHS 21 4. Making change happen 31 5. Spending on diﬀusion and support 40 6. Lessons from North America 45 7. Recommendations 54

Glossary 58 Appendix 1 64 Appendix 2 67

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Acknowledgements

Policy Exchange thanks the Charles Wolfson Charitable Trust for their generous support of this project. "e authors would also like to thank those who agreed to be interviewed as part of research conducted for this work:

l Adelstein Brown, Assistant Deputy Minister, Health System Strategy Division, Ministry of Health, Ontario l Alan Bentley, Director of Commercialization for Cleveland Clinic Innovations l Alan Maine, Head of Government Affairs, Wyeth Pharmaceuticals l Andy Goldberg, Founder, Medical Futures l Andy Jones, General Manager of Procurement and Property Development, Nuffield Health l Andy King, Department of Health l Bill Fera, Director of Medical IT at UPMC l Bill Moyes, Chairman of Monitor l Bob Gomersall, Chairman, LEAN Healthcare Academy l Brian Steven, Finance Director and Deputy Chief Executive of the Newcastle upon Tyne NHS Hospitals Trust l Cathy Fooks, President & CEO of the Change Foundation. l Christina Hoy, Director, Health data, Ministry of Health Ontario l Colin Callow, Project Manager, NHS National Technology Adoption Centre l Colin Morgan, Managing Director of Ethicon, Johnson and Johnson l Distie Profit, CERNER l Douglas Meislahn, Commercialization Analyst at Cleveland Clinic Innovation Centre l Dr Barry McClellen, President and CEO of Sunnybrook l Dr Bob Bell, President and CEO of University Health Network l Dr Carole Longson, Head of HTA, NICE l Dr David Colin-"omé, National Clinical Director for Primary Care, Department of Health l Dr Gillian Leng, Head of Implementation, NICE l Dr James Church, Chair and Director, Endoscopy and Research, Cleveland Clinic l Dr Jane Hendy, Imperial College Business School l Dr Michael Dixon, Chairman, NHS Alliance l Dr Steffen Bayer, Imperial College Business School l Dr Tim Green, Trauma & Elective Orthopaedics, Leicester Royal Infirmary l Dr Tim Walls, Medical Director of the Newcastle upon Tyne NHS Hospitals Trust l Dr Toby Delos Cosgrove, CEO of Cleveland Clinic l Dr Vasanti Srinivasen, Director of Health System Planning and Research, Ministry of Health, Ontario l Dr William Moyes, CEO, Monitor l Dr Barry McClellen, President and CEO of University Health Network l Elaine Warburton, Entrepreneur, Opaldia/Quantum DX l Gareth Redmayne, External Relations Manager, NHS National Technology Adoption Centre l Geoff Benn, Group Development Director, Care UK

4 l Glynis Laing, Manager of the "oracic and Cardiovascular Surgery Research at "e Cleveland Clinic l Ian Slonim, Group Procurement and Supply Chain Director, Nuffield Health l Jeff Combs, Commercialization officer at Cleveland Clinic l Jeff Porter, Physician Services Division, University of Pittsburgh Medical Centre l John Bewick, Director of Development, South West SHA l Judith Clarkson, External Relations Manager, LEAN Healthcare Academy l Leslie Boehm, Director of Research, Operations and Business Development at Sunnybrook Hospital and Assistant Professor of Health Policy, Management and Evaluation l Lori Hale, Senior Research Consultant at Change foundation l Lyn Maher, Head of Innovation Practice Institute for Innovation and Improvement l Lynn Chipperfield, Project Manager, NHS National Technology Adoption Centre l Margaret Parton, CEO, NHS National Technology Adoption Centre l Mark Low, Managing Director of Global Cardiovascular Innovation Centre, Cleveland Clinic l Mark Outhwaite, Strategy Consultant, Outhentics Consulting l Mark Treleaven, Strategic Business Manager, Microsoft l Michael Bainbridge, Senior Clinical Architect, Connecting for Health l Michael Sobanja, Chief Officer, NHS Alliance l Mike Beckley, Director and Project Manager, Healthlogistics l Mike Villalobos, Commercialization Officer at the Cleveland Clinic l Miles Ayling, Director of Service Design, Department of Health l Natacha Deshamps Smith, Policy and Project Manager, ABPI l Neil Veloso, Senior Commercialization Officer at Cleveland Clinic. l Nigel Edwards, Head of Policy, NHS Confederation l Oliver Wells, Research and Innovation, Chair ABHI l Pamela Grimm, Physician Services Division, University of Pittsburgh Medical Centre l Peter Ellis, Director, People in Health l Peter Elwin, Director of Healthlogistics l Prof. Bernard Crump, CEO, Institute for Innovation and Improvement l Prof. Michael "ick, Chief Clinical Officer, Connecting for Health l Prof. Nick Castle, Associate Professor, Department of Health Policy Management, University of Pittsburgh l Prof. Sir John Bell, Chair, OSCHR and Academy of Royal Colleges l Prof. Sir Michael Rawlins, Chairman, NICE l Rahul Aras, President and CEO of AcelleRX "erapeutics Inc l Rajiv Enand, Senior Vice-President Strategic Business Initiatives l Richard Hamblin, Head of Information, Healthcare Commission l Robyn Tolley, Vice-President, CERNER l Sam Kidderman, Director of New Ventures, Cleveland Clinic l Shannon Schuetz, Commercialization Officer, Cleveland Clinic l Sir Leonard Fenwick, CEO of Newcastle upon Tyne NHS Hospitals Trust l Sten Ardal, Director, Health Analytics branch, Ministry of Health Ontario l Stephanie Alexander, Senior Vice-President, Premier, Inc. l Steven Singleton, Regional Director for Public Health, North East SHA l Susan Bernat, Director Operations and Finance, Cleveland Clinic Innovation Centre l Tom Closson, President and Chief Executive of the Ontario Hospital Association l Tom Sackville, Director International Federation of Health Plans

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l Tom Sudow, Director, Business development, Global Cardiovascular Innovation Centre, Cleveland Clinic l Vanessa Bourne, Head of Special Projects, Patients Association

"e research also beneﬁted from participation at a roundtable discussion on innovation in US healthcare bringing together representatives from Imperial College Business School, MIT, Harvard Business School, and Massachusetts General Hospital. James Barlow also participated in the New Models for Health – Future Health Systems seminar, organised by MIT, which provided many useful insights. Finally, the authors would like to thank Philippa Ingram, Henry Featherstone, Iain Griﬃths, Julian Chant, Natalie Evans, Ben Ullmann and all those who commented on drafts of this report.

6 Executive summary

Even when backed by clear evidence, new improve services for patients. "ey are technologies and practices inch their way judged by how well they stay within their too slowly through the vast web of struc- budget and meet the tasks demanded of tures that make up the National Health them, such as the latest central government Service. "is is one of the reasons our target or National Institute for Clinical standards often fall below those of com- Excellence (NICE) directive. "inking of parable countries. Data collected by the new ways to meet the needs of patients is World Health Organisation shows that not a priority – indeed current structures premature deaths from causes that are may even discourage it. preventable with prompt and effective "e health and social care systems are healthcare are higher in the UK than hugely complex, with messy lines of com- Germany, Canada, Australia and France. munication and spheres of responsibil- A lack of MRI and CT scanners can lead ity, which encourage power struggles and to long waits for diagnostic tests, while bunker mentalities. As a result the barriers shortages in radiotherapy equipment are to the successful implementation of new a factor in our comparatively poor cancer technologies are greater in the NHS than treatment. Among European countries, in our other public services. Successive the UK is consistently below average in the waves of NHS restructuring have not adoption of new drugs for the treatment removed these barriers. of certain common cancers. And within "e landscape for procurement is heav- Britain, too, there is an unjustifiably wide ily fragmented – the UK healthcare mar- variation in outcomes of care – the post- ket consists of 426 NHS trusts, ten code lottery. 1,2,3 evolving or actual regional purchasing "e final report of Lord Darzi’s review groups (known as collaborative procure- of the NHS, High Quality Care for All , ment hubs), the NHS Purchasing and published in June 2008, addresses the need Supply Agency (PASA, created to pro- for more and better information about vide procurement guidance to trusts), clinical performance and examines ways to six private healthcare organisations, strengthen existing incentives to improve 11,000 healthcare suppliers and two non- practice. But the work could be bolder pharmacy wholesalers. "ese organisa- about reducing costs, reforming procure- tions buy and sell goods and services ment systems and simplifying the 40 plus worth about £21 billion a year. Improving organisations that have been created to the effectiveness of their trading relation- improve rates of innovation. ships and using contractual mechanisms to stimulate innovation require more Problems driving innovation and attention, but despite its centrality in the spreading new ideas across the NHS spread of new technologies, procurement 1 NHS Institute Delivering Quality and Value Team, “Focus was neglected in the Darzi review. on: productivity and ef"ciency”, Organisational capacity for innovation NHS Institute for Innovation and Improvement, Coventry, 2005 and adoption Little financial freedom or incentive to 2 Carruthers I and Philips "e public service history of the NHS may innovate P, “Safety First: A Report for Patients, Clinicians and mean that managers do not focus on the Many complain that the financial appara- Healthcare Managers”, success of their organisation. NHS manag- tus of most trusts is inflexible because the Department of Health, London, 2006 ers are not judged by how innovative they control of budgets is devolved to different 3 See Glossary for an explana- are or even necessarily by how far they departments. Financial planning is heavily tion of acronyms

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All change please

restricted by the annual budgetary cycle, so described as being predominantly about that trusts that do not have the freedoms of “survival in a heavily orchestrated world”. foundation trust status (even these may be Managers in the NHS tend not to act like threatened) are not able to accumulate dis leaders – engaging staff with the core mis- cretionary funds. Trusts do not have accu- sion of improving services for patients, rate costing systems giving them detailed and creating a collaborative, innovative information on what they pay per patient environment for organisational develop- to provide a service. ment. Instead they focus on meeting directives and managing a budget. If an Spending resources in the wrong areas initiative is not demanded from above, "e UK spends over £8 billion a year on then its financial and managerial burden innovating, refining, piloting, evaluat- is not balanced by any reward for success; ing, appraising and diffusing new health- failure, on the other hand, meets with care ideas, including annual public sector immediate censure. And even if there spending of approximately £2.7 billion. is a potential financial or reputational But our research suggests that £2.4 billion gain, past experience of the difficulties in is spent on the creation of new ideas, £0.1 managing change and realising benefits billion spent on the adoption of these contributes to extreme caution in assess- ideas, £0.06 billion on appraisal of these ing risks. ideas and £0.15 billion on the spread and implementation of ideas. In other Weak commissioning words, nearly 16 times more is spent on "e general consensus among the pro- invention than diffusion. "e discrepancy fessionals whom we interviewed is that between spending on creation and the health service commissioners are failing appraisal of innovations is striking – the to stimulate the uptake of best practice latter receives just 2% of the total public and innovation. Commissioners lack the funds. Funds are too heavily weighted information, the tools and the expertise towards creation. After all, ideas are of no to drive complex service change. Some use if they are not applied. And the alpha- blamed this on the reorganisation of com- bet soup of organisations created by the missioning at a local level, which led to Government to assist hospital trusts lacks the loss of expertise. "ere is also a skills a clear, joined-up strategy for spreading gap and a power imbalance between pri- these ideas. mary care trusts (PCTs) and large hospital trusts, and it is difficult for PCTs to engage Poor leadership and risk aversion with the introduction of complex innova- "e capacity for innovation in NHS tions. Commissioning improvements in organisations suffers from an endem- one United States health management ic aversion to taking risks. A study of organisation has saved 5,500 lives and $1.4 change capability in the NHS by the billion for five conditions. 4 NHS North Office of Government Commerce in July West has started piloting this ‘pay-for-per- 2006 gave the NHS a score of only formance’ system to see if similar benefits two out of a possible five points for could be gained in the NHS, but they have seven out of nine categories assessed. not included a penalty clause designed to "e NHS got low scores in the use of stimulate the poorest performers. change management methods, staff development approaches and change leader- Poor procurement 4 Hip and knee replacements, ship. Blame for failure outweighs the The Purchasing and Supply Agency was heart attack, heart bypass and Pneumonia reward for success. Leadership has been created to provide procurement guid-

8 Executive summary

ance to trusts and it exists alongside a Ways to drive innovation and spread number of other procurement bodies new ideas in the NHS such as the Centre for Evidence-based "ere are policy changes which would save Purchasing (CEP) and the commer- thousands of lives and billions of pounds. cial directorate of the Department of "e Treasury’s 2007 Comprehensive Health. However, since Trusts are under Spending Review linked variations in NHS no obligation to listen to PASA or productivity to differences in practice and CEP, their guidance often goes unheed- technology uptake. It stated that “reducing ed. According to one interviewee: such unnecessary variation could poten- “If PASA ceased to exist tomorrow, tially generate net cash savings of £1.5 nobody would notice.” billion per year by 2010-11”. 6 "is figure There are numerous problems with includes potential procurement savings. procurement in the NHS, which threaten to derail policies designed to improve Free organisations to adopt the best efficiency. For example, there are no ideas common descriptions or codes used by the NHS or its suppliers for items 1. "e Government should expand (but purchased, and the quality of supplier not interfere with the day-to-day manage- information in the medical device sec- ment of) academic health science centres tor is generally poor making it difficult "e government should not interfere with to compare prices. Trusts use differ- the development of academic health sci- ent purchasing systems, and different ence centres (AHSCs). "ese began in departments within the same trust may England as a ground-up organisational use numerous systems. Many orders are innovation, which came from the close placed directly with a company without association between universities and teach- any tendering system being used and ing hospitals, and the increased freedoms there may be no agreed contract price. in the system. Quantities of paper-based invoices and Competitive, world class AHSC’s will multiple sources of procurement data not come into being as a result of gov- are generated, requiring huge numbers ernment fiat or designation. "e nas- of permanent employees in accounts cent AHSC movement is the product of departments to match invoices to close association between universities and orders. Neither the trusts nor the central teaching hospitals on the ground, and is and regional bodies have accurate data designed to exploit the freedoms conferred on costs. This damages relationships with by foundation trust status. It is based suppliers, who do not know how many on the success of North American and of a product they will sell and must factor European examples, which evolved with- this in to their prices. The absence of con- out central interference. tracts and the lack of accessible systems for "e best contribution the government ensuring compliance with contracts can make is to allow a loose interpreta- make the pricing system variable and tion of existing legislation. For exam- vulnerable to abuse. Overall, there are ple, Imperial College Healthcare NHS huge inefficiencies throughout the NHS Trust has incorporated St Mary’s and supply chain. Procurement systems and Hammersmith Hospital Trusts, neither of duplication of effort waste more money; which are Foundation Trusts, to form an 5 See page 29 between £0.8 billion and £2.1 billion AHSC. "eir business case is solid and the 6 HM Treasury, “Pre Budget could be saved annually if procurement Secretary of State has the right to confer Report and Comprehensive Spending Review”, The 5 were improved. trust ownership, so what is the hold up? Stationary Of"ce, London, 2007

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2. Reduce restrictions on Foundation products, to unlock economies of scale Trusts without the current interference of the col- ere is scope for reducing the restrictions laborative procurement hubs. on foundation trusts, giving them the freedom to spend funds as they see fit without Focus spending on adoption and dif- applying for approval. fusion Foundation trusts are now able to exploit their intellectual property and enter into 5. Refocus spending on appraisal and commercial ventures that could boost their spread income and spread best practice. ey e Government is committing significant should be developing long-term business extra funds to health service research and strategies based on their strengths and the development, but this money will be wast- service gaps in their local health economy. ed if more is not invested in vital spread mechanisms. Harness the power of procurement to reduce costs and encourage the best 6. Create a best practice tariff ideas to spread NHS providers are paid for their activity according to a tariff system. is is cal- 3. Scrap the procurement hubs which sit culated annually and was initially based below PASA on the average cost of a group of around Government should dismantle the col- 50 procedures (known as health resource laborative procurement hubs and consoli- groups), using the previous year’s data. date all central procurement bodies. e It is therefore based on current practice current system of hubs hinders effective and does not reflect the real price. Indeed procurement. A central procurement body if an innovation improves efficiency by will have the central task of developing reducing activity, a trust may be penalised common data standards for all NHS pro- because it will receive less under the tariff curement systems in collaboration with system. industry. e latest tariff prices have gone a long way towards providing a price for different 4. Publish costs and a bestseller list of procedures, but there is still huge varia- pharmaceuticals and medical devices tion in the costs of delivery. Ideally, the NHS organisations tend to pay a variety tariff should reflect the cost of efficiently of prices for the same materials. Paying providing best practice. Financial incen- different prices for the same product is tives can be used to create an appetite for inefficient and wastes money. Information improvement, by linking the NHS tariff to from current contracts should be collated an innovation agenda. to produce recommended prices and the Under the Commissioning for Quality companies providing the best products at and Innovation programme, commission- the best prices. e DH should also intro- ers will be able to provide bonus pay- duce a bestseller list of pharmaceuticals ments for quality improvements in locally and medical devices. determined clinical areas. e experience Guidance should be produced based on of Premier Inc in the United States has the reforms of organisations like Nuffield informed this policy. But the pilot scheme Health that have generated savings of more in the North West Strategic Health than 10% of their procurement budget. Authority (SHA) does not incorporate Hospitals should be encouraged to enter the penalties used in the US for failures into local agreements to procure common to improve performance. is important

10 Executive summary

sanction should be introduced in England to boost the performance of under-performing hospital trusts.

7. Include pay-for-performance bonuses in clinician and managerial contracts Clinicians’ contracts should include a pay- for-performance element, linking in to successful implementation of board and departmental directives. Managerial incentives should be linked to improving outcomes as well as ﬁnancial performance.

Report Structure To understand why it is so difficult to spread new technologies and practices within the NHS, the authors of All Change Please interviewed senior healthcare professionals here and in North America. #ey draw on these comments throughout. In Chapter two we revisit the literature on innovation in health. Chapters three and four discuss challenges facing the NHS, and the Government’s response, under the general headings of organisational capacity for innovation; communication and networking; incentives; leadership and culture; commissioning; procurement; and use of evidence. Chapter five provides new analysis of how much is currently spent on innovation and diffusion, and Chapter six presents North American case studies and the lessons they provide. #e final chapter makes seven recommendations on how to improve the system.

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Introduction

"e NHS is 60, an anniversary that has might happen by investigating how ideas stimulated much debate and soul-searching spread through the NHS. It is based on into its future direction. One criticism often an extensive literature review, more than made is that the numerous components of 80 interviews with decision-makers from the UK health system don’t work together healthcare in Britain and abroad, feedback effectively to adopt new technologies and – including a roundtable discussion on our practices. In July the Government pub- interim findings – and research visits to US lished the final report of the NHS review, and Canadian hospital groups that special- conducted by Lord Darzi, High Quality ise in innovation. Care for All. "e review is an opportunity to rethink not only the organisation NHS performance of health service delivery, but also the Although there may be more innovation NHS approach to innovation. Our report, than we think in the NHS because it is typi- All Change Please , does more than simply cally excluded from conventional analyses, set out a case for improvement in health in many areas the service is not performing services: it shows how this improvement well. 7 We fit only 430 new pacemakers per

Figure 1: Scanners per million population, international comparison, 2004-05 8

45.3 CT scanners 45 MRI scanners

35 32.2

30 26.6 25

15.4 Scanners per million population 15

7 NESTA, “Hidden Innovation: 9.8 How innovation happens in six 10 7.5 low innovation sectors”, NESTA, 7.1 London, 2007 5.4 5 4.2 4.7 8 Leatherman S and Sutherland K, “The quest for quality in the 0 NHS: a mid-term evaluation of Australia France Germany UK US the 10-year quality agenda”, The Nuf"eld Trust, 2003

12 Introduction

Figure 2: Radiation therapy equipment per million population, international comparison, 2005 9

7.0

6.1 6.0 6.0

5.0 4.7

4.1 4.2 4.0

3.0

2.0

1.0 Radiation therapy equipment per million population

0.0 Australia France Germany UK Spain

Figure 3: the number of deﬁned daily doses of sildenaﬁl per 1,000 population

9 Leatherman S and Sutherland 120 K, ibid

10 McClellan M and Kessler 100 D, “A Global Analysis Of Australia Technological Change In Canada Health Care: The Case Of Heart 80 Denmark Attacks”, Health Affairs,18(3): France 250-255, 1999 Norway 60 Spain 11 Fitzpatrick, A, ‘The Cutting Sweden Edge’, Medical Technology and Switzerland Innovation, MTG, Issue 14, 2007 United Kingdom 40 12 Packer C et al, “International diffusion of new health technologies: A ten-country 20 DDDs per 1,000 population quarter analysis of six health technologies”, International Journal 0 of Technology Assessment Q1 Q1 Q1 Q1 Q1 Q1 in Healthcare, Cambridge 1998 1999 2000 2001 2002 2003 University Press Issue 22 p 419- 428, 2006

13 A retrospective diffusion study was undertaken of silde- million of the population a year compared non-Hodgkin’s lymphoma. "e hugely na"l, cyclooxygenase-II (COX II) inhibitors, beta interferon, verte- with the 900 per million fitted in France, variable diffusion of different technologies por"n, deep brain stimulators, Germany, Belgium and Spain. Yet car- in different countries is a reminder of the and drug-eluting coronary stents in ten countries—Australia, diac arrhythmia is one of the top ten causes gulf that exists between an evidence-based Canada, Denmark, France, The of unplanned hospital admissions. 10 Over ideal and local reality. Canada, Switzerland Netherlands, Norway, Spain, Sweden, Switzerland, and the 40,000 patients in Germany use insulin and Sweden are generally high users of new United Kingdom. Almost all countries experienced rapid pumps rather than self-administered injec- technologies; Spain, Denmark and, most adoption of sildena"l with diffu- tions to manage their diabetes compared especially, Britain are low users. 12, 13 sion to a similar level; there was variable adoption and diffusion 11 with less than 2,000 in the UK. Diagnostic tests such as scans are a of COX II inhibitors, vertepor"n, Out of 19 European countries, the UK is potential source of health system bottle- and interferon beta; drug-eluting stents penetrated the market consistently below average in the adoption necks, leading to delays in diagnosis and in a similar way in all but one of new drugs for the treatment of breast treatment. Figure 1 shows the number of country; and two countries had very different adoption patterns cancer, colorectal cancer, lung cancer and CT (computerised tomography) and MRI for deep brain stimulators

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(magnetic resonance imaging) scanners And it’s not just a question of slow per million population in five advanced uptake of new technologies or drugs. New countries in 2004-05. "e UK reported and existing practices do not spread easily low figures for both. even though their benefits may be clear. Shortages in radiotherapy equipment "is can lead to unacceptable variations can cause significant delays in treatment in quality, cost and access. "e Treasury’s and are a factor in the deficiencies of cancer 2007 Comprehensive Spending Review care in the UK. Figure 2 below provides a linked variations in NHS productivity snapshot of the availability of radiotherapy to differences in practice and technolo- equipment in 2005. Between 2002 and 2005, gy uptake. It stated that “reducing such the amount of our equipment increased by unnecessary variation could potentially 5% from 3.9 to 4.1 pieces per million popu- generate net cash savings of £1.5 billion lation. In Australia the increase was 13% and per year by 2010-11”. 14 in Spain 14% over the same period. Figure 3 shows the number of defined The last decade of policy developments daily doses (DDDs) of sildenafil sold per Since 1997 NHS expenditure has almost 1,000 population per quarter, until the quar- doubled in real terms. "is has been ter before the first competitor oral drugs for accompanied by substantial organisational erectile dysfunction were launched. "ere reform. "e overwhelming driver for this were no delays of greater than three months has been political sensitivity to failures in between launch and first adoption of sildena- the NHS. Increased funding has therefore fil in any of the countries included. Although been accompanied by firm central direc- all countries showed a rapid uptake of the tion as to how the money should be spent. drug, the UK was the laggard. Initially, this was predominantly directed Figure 4 shows the number of DDDs towards reducing waiting-lists and wait- for all COX-II inhibitors, non steroidal ing-times. But, following criticism of the anti-inflammatory drugs, sold per 1,000 inflexibility of target-driven management, population. "ere was a delay between the Government has become more wary of launch and first adoption of COX-II a prescriptive approach. inhibitors in Denmark, France and the "e concept of a provider-purchaser split, United Kingdom, while Switzerland and separating the supplying from the buying of Canada had a very rapid uptake. healthcare, was originally introduced by the

Figure 4: number of DDDs for all COX-II inhibitors sold per 1,000 population

4,000

3,500

3,000 Australia Canada Denmark 2,500 France Norway 2,000 Spain Sweden Switzerland 1,500 United Kingdom

1,000

DDDs per 1,000 population quarter 500

14 HM Treasury, “Pre Budget 0 Report and Comprehensive Q1 Q1 Q1 Q1 Q1 Q1 Spending Review”, The 1999 2000 2001 2002 2003 2004 Stationary Of"ce, London, 2007

14 Introduction

"atcher Government and is now central to Foundation trusts are allowed to retain the operation of the NHS. Its fundamental annual surpluses to invest in innovation purpose is to make the health service more and organisational development, which businesslike. In theory, primary care trusts should help them to move beyond the (PCTs) have become its most inﬂuential short-term planning horizons of conven- component, controlling around three-quar- tional trusts. "ey have also been granted ters of NHS expenditure. a limited level of borrowing from central Another key reform has been the estab- funds. Further devolution of NHS budgets lishment of foundation trusts (FTs), which is taking place through the introduction have been given extra ﬁnancial and opera- of practice-based commissioning, which tional freedom. For example, they are not places more purchasing power in the hands subject to the rules on delegated limits for of GP practices or groups of practices. capital investment. Initially these are hos- In 2003, Sheila Leatherman and Kim pital trusts, but the model will be extended Sutherland reviewed England’s ten-year to PCTs and other NHS organisations. “quality agenda” (1998 – 2008) at its

Table 1: Summary of policy initiatives designed to improve quality 15

Key functions Examples of discrete reforms

Standard-setting and monitoring National Institute for Health and Clinical Excellence (NICE) National Service Frameworks (NSF) Core and developmental standards (set by the Department of Health) Clinical audit

Target-setting Public Service Agreements

Clinical governance Legislation

Regulation Institutional - Healthcare Commission (HCC) - Monitor - Audit Commission

Individual - National Clinical Assessment Authority - General Medical Council (GMC) - Appraisal and revalidation

Patient/public engagement Patient choice of providers

Payment and incentives Payment by Results (PbR) GP contract Consultants’ contract Agenda for change

Public reporting Dr Foster League tables Star ratings (now superceded by the annual health check) 15 Leatherman S and Sutherland K, “The quest for quality in the Commissioning NICE commissioning guides NHS: a mid-term evaluation of the 10-year quality agenda”, The Nuf"eld Trust, 2003

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midpoint for the Nuffield Trust. "e care, duplication of effort and territori- policy initiatives this work spawned are alism. Her conclusion was that strong summarised in Table 1. "ey described policy conceptualisation and articulation it as “the world’s most ambitious, com- is too often unmatched by the necessary prehensive, systemic and intentionally competence in implementation”. funded effort to create predictable and In 2008, Nolte and McKee drew on sustainable capacity for improving the World Health Organisation (WHO) quality of a nation’s healthcare system”. 16 mortality data to compare countries in Five years on, no one could deny that the terms of premature death (under 75) past decade has seen an improvement in from causes that are potentially prevent- quality in the NHS. Table 1 provides a able with timely and effective healthcare. summary of these initiatives. However, "e results for 19 countries are illustrated given the ten-year time period, the gen- in the chart. It shows that the UK started erous increase in resources dedicated to with the highest rate of premature death healthcare, and the ongoing goodwill on and made the most progress in tackling the part of the public, patients and health mortality rates. Nevertheless, the most professionals, there are many who ques- recent data shows that UK rates remain tion whether progress has been as marked, considerably higher than those in most as rapid or as predictable as could have comparable countries. 17 been expected. "e reasons for this lack "e reasons for change are clear. "ere is of expected improvement might be – to an unjustifiably wide variation in outcomes quote Leatherman again – “constant flux of care, care is not as safe as it could be, the and reorganisation, tensions between the cost of care is rising at an unsustainable central, regional and local levels, peren- rate and poor patient experience remains nial problems with the coordination of a concern. 18, 19

Figure 5: Mortality amenable to healthcare, international comparison 1997-98 and 2002-03 20

140 1997-98 16 Leatherman S and Sutherland 130 K, “The quest for quality in the 2002-03 NHS: a mid-term evaluation of 120 115 the 10-year quality agenda”, The 110 Nuf"eld Trust, 2003 106 103 17 Nolte, E and McKee, M, 100 “Measuring the health of nations: 88 89 90 updating an earlier analysis”, Health Affairs 27(1), p 58–71, 80 76 77 2008 71 65 18 NHS Institute Delivering 60 Quality and Value Team, “Focus on: productivity and ef"ciency”, NHS Institute for Innovation and

Deaths per million population 40 Improvement, Coventry, 2005

19 Carruthers I and Philips P, “Safety First: A Report 20 for Patients, Clinicians and Healthcare Managers”, Department of Health, London, 0 2006 France Australia Canada GermanyUS UK

20 Nolte, E and McKee, M, Ibid

16 2

Academic literature on spreading innovation in the healthcare sector

What is “best practice” and what is of innovation to patients more rapidly, a “innovation ”? point also taken up in the review’s report e boundaries between the notions of on primary care, which states that one of best practice and innovation can be some- its aims is to stimulate more rapid spread what blurred, a fact recognised by the of innovation and good practice. Darzi review. Best practice is convention- Too often, though, innovation is narrow- ally defined as the most efficient and effec- ly defined, focusing solely on the research tive way of accomplishing a task, based on and development processes leading to new repeatable procedures that are proven to technologies. It needs to be seen as a broad- work. When you visit your doctor you want er concept, encompassing improvements to be sure that he or she is following best in the technologies and infrastructure that practice. Often, achieving it requires agreed, support healthcare, and in clinical prac- evidence-based protocols to be followed. tice and service design. Service innovation, Depending on the clinical area, a degree of according to the Darzi review, means “peo- standardisation can lead to better outcomes ple at the frontline finding better ways of – as the Darzi review points out. 21 caring for patients – improving outcomes, However, best practice should not be experiences and safety”. seen as fixed – it needs to evolve as new In All Change Please the authors follow ideas emerge. And the reality is that in Greenhalgh et al’s description of innovation healthcare, the influx of innovation means as “a novel set of behaviours, routines that best practice in many areas is con- and ways of working that are directed at stantly changing and evolving. According improving health outcomes, administrative to the Darzi review: “New treatments are efficiency, cost effectiveness or user’s constantly redefining what high quality experience, and that are implemented by care looks like. We must support innova- planned and co-ordinated actions”. 24 22 21 Darzi A, High Quality Care tion to foster a pioneering NHS.” It goes Within this umbrella definition there are For All: NHS Next Stage Review on to argue that it is essential to do away different forms of innovation – some may Final Report, p29, 2008 with outdated practice so that the adop- be technological, such as a new medical 22 Darzi A, ibid p49 tion of best practice everywhere can be device, and others may be changes in care 23 Darzi A, ibid p55 “the platform from which innovation can practices or the organisational arrangements 24 Greenhalgh T et al, “Diffusion of Innovations in Service 23 flourish”. Darzi recognises that strategic for delivering care. e boundaries, how- Organizations: Systematic health authorities (SHAs) and primary care ever, are often opaque, with new technolo- Review and Recommendations”, The Milbank Quarterly, Issue 82, trusts (PCTs) are keen to bring the benefits gies commonly requiring new practices or p581-629, 2004

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organisational forms for their successful the effort it will expend on managing introduction. A variety of different strate- the change and realising the benefits. gies to encourage adoption and manage "e capacity to adapt features of the implementation are therefore necessary. innovation to meet the needs of users "e authors do not touch upon the proc- may be important. 27 esses behind the initial creation of innovations. l Simplicity and adaptability. Some But we recognise that spreading innovation in innovations require major modifica- healthcare systems typically involves a com- tion to existing ways of working, and plex interplay between two forces: a “push” involve collaboration across established from manufacturers, central bodies and com- organisational groups. Some academ- missioners of healthcare and a “pull” from ics have argued that innovations often health service delivery organisations. comprise a “core” of well-defined irre- ducible elements and a “periphery” of Existing research elements that are negotiable, allowing According to standard theories the adoption different routes to adoption. "e more and diffusion of new ideas follow a predict- flexible the boundaries, the greater the able pattern. A slow initial phase, in which likelihood an innovation will fit well innovators and risk-takers adopt a new idea, into the existing organisation. 28 is followed by take-off when its benefits l Ability to trial or pilot an innovation. have been established. "is surge in uptake Organisations may look more favourably gradually tails off as laggards adopt what is on innovations that can be introduced now common practice. In the NHS, a com- on a trial basis before a binding decision mon claim is that there is an extensive lag, to adopt because this reduces the risk 29 25 Williams D et al, “Feeling the colloquially known as the “valley of death”, and increases the visibility of benefits. A pain: Disruptive Innovation in between the early adopters and the major- balance needs to be struck between trials Healthcare Markets”, Presented 25 at IFIP Basys Conference, ity take-off. Factors that are thought to necessary to demonstrate the impact and Oporto 23-25 June, 2008 influence adoption and spread include early safety of a new product and the excessive 26 Rogers E, “Diffusion of inno- publicity about evidence of benefits and repetition of these trials at an organisa- vations” The Free Press, New York, 1995 more effective networking to build a coali- tional level, which is a waste of NHS 27 Greenhalgh T et al, “How to tion for adoption in different locations. resources and makes selling products to spread good ideas: A systematic review of the literature on diffu- Standard explanations for the successful the NHS an uphill struggle. Too many sion, dissemination and sustain- uptake and spread of innovations usually trials can stifle the market for innovation; ability of innovations in health service delivery and organisa- focus on whether or not they possess cer- a solid evidence base and good dissemi- tion” National Co-ordination tain characteristics: 26 nation are needed to satisfy the needs of Centre for NHS Service Delivery and Organisation, p15, 2004 organisational decision-makers.

28 Denis J et al, Explaining l Unambiguous relative advantages l Compatibility with an organisation’s diffusion patterns for com- over existing technologies, products existing structures, procedures and plex healthcare innovations, Healthcare Management Review, or practices. "is can be demonstrated values. "e fit between the innovation 2002; Greenhalgh et al, ibid through the appraisal process, compar- and the organisation is frequently high- 29 Greenhalgh T et al, ibid; Fleuren M et al, “Determinants ing innovations with existing practice. lighted as a vital factor underlying suc- of Innovation within Health Care Although it seems obvious that changes cessful adoption. 30 An important aspect Organizations: Literature Review and Delphi Study”, International which provide higher quality care at of this is how an innovation’s risks Journal of Quality Health Care, lower costs will be sought after, this is and benefits are distributed within the Issue 16 p107-23, 2004 often not the case. High start-up costs organisation. "e more these coincide 30 Fennell ML and Warnecke RB, “The Diffusion of Medical may inhibit long-term financial gains, with the interests, values and powerbase Innovations: An Applied Network and the motivation to lower costs and of the various stakeholders, the easier it Analysis” Plenum, New York, 1988; Rogers EM “Diffusion of increase quality depends on whether the will be to build coalitions supporting Innovations” Free Press, New York, 1995 adopting organisation is rewarded for adoption and implementation.

18 Academic literature on spreading innovation

l Organisational structures and inter- innovations. Interviewees expressed nal politics. 31 "e internal structure, the view that there is a generation resources and politics of an organisation gap between older clinicians, socialised can be a powerful influence on how and trained under the old system and likely innovations are to be adopted and younger clinicians who are hungry for assimilated. "is includes the degree new ideas and opportunities. But this of autonomy in internal decision-mak- is a good sign; the attitudes to innova- ing regarding the use of resources. "e tion are beginning to change. approach to decision-making therefore l Peer and expert opinion. 34 Opinion influences what can be achieved. It needs leaders can have a strong influence on to be consensual and collaborative, with- the beliefs and actions of their colleagues. out involving too many people and sti- "ese may not be the initial enthusiasts, fling change through complexity. but are the senior professionals who l Organisational capacity and a receptive throw their authority and status behind a context for new knowledge. 32 An organ- change, based on their expert judgment. 31 Champagne F et al, “Structural and Political Models isational culture that encourages involve- Clinical reputation is an important cur- of Analysis of the Introduction of ment, experimentation and learning is rency in the NHS and can form the basis an Innovation in Organizations: The Case of the Change in influenced by strong leadership, a clear of efforts to spread best practice. the Method of Payment of strategic vision and collective attitudes l Communication and social networks. 35 Physicians in Long-Term Care Hospitals”, Health Services that are conducive to experimentation "e influence and membership of pro- Management Research 4 Issue and risk-taking. In addition, how new fessional and social networks can deter- 42, p94–111, 1991; Zaltman G et al, “Innovations and knowledge is interpreted, distributed and mine how well new knowledge spreads Organizations”, Wiley, 1973 used within an organisation is a crucial and create normative and institutional 32 Pettigrew AM, “Shaping Strategic Change: Making determinant of its innovativeness. pressures for adoption. Frustration with Change in Large Organisations” l Leadership. Effective leadership is inte- existing practices and technologies may Sage, London, 1992; Dopson SL et al, “No Magic Targets: gral to the creation of organisational affect how receptive people are to ideas Changing Clinical Practice to attributes which positively influence from these channels and how actively Become More Evidence Based”, Health Care Management innovation. It involves acknowledging they seek them out. However, rigid Review, Issue 37, p35–47, 2002

the challenges, supporting managers delineation between professional net- 33 Pierce JL and Delbecq and medical staff who are taking on works may limit spread if important AL, “Organization structure, individual attitudes and innova- an innovation, and fostering learning stakeholders are excluded, so the con- tion”, Academy of Management through trial and error without the figuration of networks is important. Review, 1977 l 34 Rogers E, “Diffusion of inno- fear of penalties. As well as board level Competition. "e literature discusses vations” The Free Press, New leadership, there is strong evidence environmental influences that stimulate York, 1995; Fitzgerald L et al, “Interlocking Interactions, the that adoption is more likely if clinical innovative behaviour and the adoption Diffusion of Innovations in Health champions with strong social connec- of best practice. Competition between Care”, Human Relations, Issue 55(12) p1429–49, 2002; Locock tions are willing to back the effort. providers can have important benefits, L et al, “Understanding the Role l Individual attitudes. 33 It is often as well as creating potential pitfalls. of Opinion Leaders in Improving Clinical Effectiveness”, Social argued that innovations are more like- "is includes competition to establish Science & Medicine, Issue 53 ly to be accepted if the adopter has a reputation for excellence and leader- p745–57, 2001 35 Coleman JS et al, Medical a similar socioeconomic, educational, ship in different fields and competition Innovations: A Diffusion Study, professional and cultural background to increase the market share, and thus Bobbs Merrill, New York, 1966; Rogers E, ibid; Valente to the current users of the innovation. the activity and income, of an organi- TW “Network Models of the "is informs the patterns of spread, sation. Competition tends to be associ- Diffusion of Innovations” Hampton, Cresskill NJ, 1995 which flow through and can be lim- ated with more innovative behaviour. 36 36 Rye C and Kimberly J, “The ited by professional boundaries, for However, an overly competitive envi- adoption of innovations by example. Clinicians in the NHS vary ronment may inhibit the willingness to provider organisations in health care”, Medical Care Research considerably in their attitudes towards share best practice. Review, 2007

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"ere is a large body of work examin- for its benefits and early feedback meant ing innovation and the spread of ideas in that it was rapidly adopted and diffused. 39 general. But its lessons are of limited value "e reality is often more complicated, for healthcare. 37 "e literature is found though. "e boundaries of the innovation wanting on a number of grounds: may be hard to pin down; it might have several objectives; it might involve combinations l Its general focus is on the introduc- of technology and organisational change; and tion of new products rather than new the decisions to adopt, or the implementation processes, and on comparatively sim- process, may require the involvement of mul- ple innovations – bounded, discrete tiple stakeholders. When innovations require and well-defined – where adoption the co-ordinated efforts of numerous organi- is explained in terms of independent sations from different parts of the care system, individual decision-making; or when it challenges existing patterns of inter- l Adoption and spread are often seen dependence among individuals or groups, as a series of logical sequential stages implementation is likely to be more difficult. that can be improved by address- Furthermore, the evidence for its efficacy may 37 Greenhalgh, T et al “How ing problems in the various stages be contested by different professional groups to Spread Good Ideas: A systematic review of the – for example the knowledge acquisi- or there may be no generally agreed criteria literature on diffusion, dis- tion stage can be tackled by improv- for judging its benefits. 40 In healthcare, where semination and sustainability of innovations in health serv- ing awareness during that stage, there are tightly demarcated communities of ice delivery and organisation”, National Co-ordinating whereas in reality this is a feature of interest such as those of different health pro- Centre for NHS Service the process and dissemination is an fessionals, collaborative efforts can be difficult Delivery and Organisation R 41 & D, NCCSDO, 2004; Fleuren ongoing requirement; to negotiate. M et al, “Determinants of l "e research is also overly focused on Healthcare organisations therefore can- Innovation within Health Care Organizations: Literature Review innovations that are centrally orches- not be seen as rational decision-making and Delphi Study” International trated because they are more visible machines that move through an ordered Journal of Quality Health Care, Issue 16 p107-23, 2004, Rye C and research is easier to fund, rather process of stages. Deciding whether to take and Kimberly J, 2007, ibid than on ground level innovations that up a new idea or innovation involves mul- 38 Grigsby J et al, “The diffusion of telemedicine” Telemedicine emerge and spread informally; tiple stakeholders and is a complex, organic Journal and e-health Issue 8 (1), l Few studies focus on the sustainabil- and untidy process, all the more so when p79-94, 2002 ity of innovations beyond the initial deployment of the innovation is ill-defined. 39 Nelson R et al, “Why and how innovations get adopted: a implementation phase because research "e efforts involve finding and collecting tale of four models”, Industrial efforts are not ongoing; evidence on innovations, researching their and Corporate Change, Issue 13, p679-699, 2004 l Finally, there is a lack of research on dis- implementation, and deciding what infor- 40 Ferlie E et al, “The nonspread engagement from old methods and its mation needs to be disseminated to support of innovations: the mediating part in poor adoption of innovation. 42 role of professionals”, Academy effective decision-making. of Management Journal, Issue Although, as Rye and Kimberly put it, 48, p117-134, 2005 Of course, some healthcare innovations “we still do not know as much as we would 41 Ferlie E et al, 2005, ibid do spread easily. Initial uncertainty about like, and what we do know, we may not 42 Perleth M et al, “What is ‘best practice’ in health care? the clinical value of MRI scanning was know for sure”, there is a growing literature State of the art and perspectives overcome by the clear superiority of its that draws on examples from healthcare in improving the effectiveness and ef"ciency of the European images (although the number of scanners settings to explore the dynamics of com- health care systems”, Health in England and Wales is still low when plex innovations. 43 "is literature points Policy, 2000 38 43 Perleth M et al, 2000, p254, compared to other countries). In the case us to ways of stimulating the adoption and ibid of live polio vaccine, unambiguous evidence spread of innovation in the NHS.

20 3

Challenges for the NHS

Chapter 2 outlined what the research lit- change cultures that have developed over erature tells us about the potential barriers many decades, under conditions of tight to innovation in healthcare systems – and budget control and a rigid hierarchy of hints at solutions for overcoming them. decision-making. "is chapter will look at a number of chal- "e public service history of the NHS lenges that have been identified as barriers means that managers do not focus on the to the spread of best practice in the NHS. success of their organisation. NHS man- "ese include: agers are not judged by how innovative they are or even necessarily how far they l Organisational capacity for innovation improve services for patients. "ey are and adoption judged by how well they stay within their l Communication and networking budget and carry out the tasks demand- l Incentives ed of them, such as meeting the latest l Leadership and culture Department of Health target, or directive l Commissioning from the National Institute for Health and l Procurement Clinical Excellence (NICE). l Use of evidence "e health and social care systems are hugely complex, lines of communication Organisational capacity for innovation and spheres of responsibility are messy, and adoption power struggles and cultural silos are common. As a result, barriers to the suc- “You can only change the culture with a cessful implementation of new technolo- change in culture at the top (but) a change gies are higher than in other sectors and in culture at the top would be necessary public services. but not sufficient.” 44 Caring for those with long-term conditions requires effective communication “#ere’s a light year between the DH and and collaboration between different pro- SHA level…and there’s another light year fessional teams that span the somewhat between the SHA and the Trusts.” artificial divide between health and social care. But where change requires collabora- Over the last ten years NHS reforms have tion between organisations within the sys- attempted to change a system operated by tem, difficulties are multiplied. "e costs, top-down central control to one in which risks and benefits of the effort are often decision-making is devolved to a local spread unevenly, yet every organisation level as much as possible. But changing must be satisfied that it is getting a good 44 All quotes are taken from the the structure of the health service does not deal if the project is to succeed. interviews

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Successive waves of NHS restructuring ily rationed system and their clinical per- have continually disrupted the relationships spective is (correctly) that patient safety that transcend these barriers. For example, is the paramount concern. "ey can be although the policy has been hugely ben- won over by arguments about quality but eficial overall, the move towards founda- tend to be sceptical about policies aimed at tion trusts, which are not under the direct improving efficiency. Vested interests can supervision of strategic health authori- also play a part in medical decision-mak- ties, has an impact on the overall ability ing. Healthcare is constantly changing, to co-ordinate the system and requires a rendering some professional expertise and new collaborative approach. "e perform- practices obsolete, and innovations that ance of individual organisations can be move care away from specialists or require expected to improve in a more market- extensive retraining for senior clinicians, oriented environment, but there are valid can face the greatest resistance. concerns that competition will reduce communication of good ideas and thus Culture reduce their spread. None of this means that the direction of reform is wrong, but “You don’t get any praise if you get it it means that efforts to bridge the barriers right, but boy do you catch it if you get it and co-ordinate the functions of regional wrong.” healthcare need to be redoubled. "e overriding perception that we gained Bloated middle management from interviewees is that the ingrained Some interviewees commented that there conservatism and blame culture of the are too many middle managers who spend NHS militates against innovators. "e too much time in inconclusive meetings and responsibility for improvement now lies not enough putting decisions into practice. with those working in the organisations Middle managers have limited powers. To that are responsible for delivering care, be successful in effecting change they must but there are cultural constraints within, get the support of clinicians, who are used and barriers between, the different groups. to complete autonomy and have greater Each NHS trust is made up of different authority than they do. "ere is often a fail- professional groups, and part of the chal- ure to establish a common goal and secure lenge is to get everyone engaged with the commitment of everyone involved their organisation’s mission and pulling before embarking on a change project, together in the same direction. In the past, which leaves middle managers marginalised the loyalty of doctors has been firmly to and ineffective. their profession, and more specifically to their specialty, and some have argued they Conservative clinicians are therefore less likely to be motivated to the pursuit of more nebulous “organisa- “#ere’s no question that one of the barri- tional priorities”. Tightly-knit professional ers to innovative medicine in the UK is the networks can operate as channels for new medical profession. And they’re very, very ideas. But they can also create cultural conservative…I would argue, exceptionally divisions between professions, reducing so, to the disadvantage and detriment of the spread of innovations that affect mul- their patients.” tiple clinical areas and require close inter- professional collaboration. In the NHS, Older clinicians come in for particular the more parties that are involved, the less criticism; they were brought up in a heav- likely change is to happen.

22 Challenges for the NHS

Case Study 1: Mediracer

Carpal tunnel syndrome (CTS) causes pain and tingling in the hands and affects 3-5% of the adult population. Currently, diagnosis requires referral to a neurophysiologist, which can delay treatment by up to six months. A Finnish company, Mediracer Ltd, has developed a hand-held device for diagnosing CTS that can be used in outpatient and primary care settings. "e diagnostic method is sensitive (94%) and specific (98%) compared to a conventional electrodiagnostic test performed by a specialist. A team in Leicester has adopted the technology and created a one-stop service for the diagnosis and treatment of CTS. In less than two years they secured more than 90% of referrals from the strategic health authority. "ey have achieved exceptional clinical results and improved efficiency and productivity to the tune of £1.7 million. "e team has attempted to publicise their achievement but have encountered significant opposi- tion from neurophysiologists, who argue that the test is not as accurate as the gold standard. Instead of looking for ways to incorporate the greatly improved pathway and make sure problem cases are referred for further tests, the new technology is being opposed and ignored. Several things could happen here. Commissioners could take this idea and replicate the pathway in their region, in order to meet waiting targets, improve patient experience and save resources for deployment elsewhere. Alternatively, the government could reduce the tariff for the treatment of CTS in line with the cost savings of this pathway, ensuring that time and support was given to implement the changes. "e Leicester team received a Medical Futures award in 2007 for their work. "is kind of positive reinforcement should be encouraged because the publicity it generates rewards innovators and serves to market the best ideas. Medical Futures estimates that national savings from the introduction of this pathway could be as high as £72 million.

Frontline staff bear the brunt of most be a relatively straightforward system. big changes. Some innovations require What is needed is a comprehensive re- greater effort than before and some may evaluation of the central bodies involved be against the interests of the group in this area, assessing their activities and charged with implementation – for exam- funding levels. ple, where a technology means a task Local healthcare organisations generally can be performed by less skilled prac- do not have the capacity to identify, collect titioners. It is well known – and was and assess every new innovation coming frequently emphasised by interviewees – to market, so efficient central mecha- that care professionals often resist change nisms are required to ensure all patients that disrupts their current practice or is benefit from important advances. Central not clinically led. Policy-led changes and organisations should provide guidance managerial initiatives are often ignored as and promote innovations where appropri- a consequence. ate. "ese organisations must be clearly mapped out with discrete boundaries, but Organisational structure must be joined up effectively so that there Figure 6 illustrates how organisations are no gaps or duplication of effort, and so designed to promote innovation and that organisations on the ground find their adoption are spread across the proc- support accessible and useful. According ess. Essentially, there are too many to our interviews, this is often not the case. organisations operating in this environ- "e complexity of the organisational land- ment, over-complicating what should scape inhibits the effective co-ordination

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Figure 6: The Innovation Pathway

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Basic research - MRC and others Research for innovation, speculation & creativity Healthcare Technology Cooperatives NEAT HTD Biomedical research centres & units Patient safety & quality research centres Research for patient beneﬁt Programme grants for applied research National Institute for Health Research Health technology assessment Service delivery & organisation Challenge fund for innovation NHS CfH research capability programme Collaboration for leadership in applied health research & care NHS Purchasing & Supplies Agency Centre for evidence-based purchasing National Institute for Health Appraisals & guidance & Clinical Excellence Clinical guidelines National Institute for Innovation National innovation centre & Improvement Support for commissioners & providers Primary Care Trusts World class commissioning NHS Providers Patient care Source: NIHR 45

of efforts to promote innovations, and Networking arrangements in the NHS the multiplicity of central actors vying do not function as an especially effec- for position confuses dissemination by tive mechanism for communication and bombarding local groups with too much knowledge transfer. Interviewees felt that low-quality direction. closer attention to the different forms of network was needed. For example, doc- Communication and networking tors tend to have informal horizontal networks that are effective at spreading peer “A lot of this is communication …We’ve influence and constructing and reframing got to find better ways to communicate.” the meaning of innovations, while nurses tend to have formal, vertical networks Innovations often originate and spread that are effective at transferring codified within professional communities. But information and passing on decisions those that require different groups to work from higher authority. together or originate outside a particular group can find it harder to win the Incentives necessary support. Communities of practice tend to involve one profession only. “What constipates the system is that if you Members identify with these groups first have a prospective plan you can’t generate and foremost. #eir goals are aligned with the money for that plan, whereas in any the interests of their profession’s develop- other business you would have a bit of lee- 45 Available at http://www. ment above and beyond the interests of way…it’s very difficult to get going in the crncc.nihr.ac.uk/index/networks/ comprehensive/clrns/western/ their organisation. #e groups are highly NHS because of that.” latest_news/mainColumn- institutionalised, with their own rules, Paragraphs/010/document/ Shef"eld%20080925%20 norms and objectives, and it takes a great Many complain that the financial appa- -%20BRfBH%20Update%20 effort to create functioning multi-discipli- ratus of most trusts is inflexible because presentation.pdf, last accessed 26/11/08 nary communities of practice. the control of budgets is devolved to dif-

24 Challenges for the NHS

ferent departments. In addition, financial reason to drop outdated practices and planning is very much restricted by the adopt new ones. "is applies especially to annual budgetary cycle. Trusts do not new medical devices and diagnostics which have the freedoms of foundation trust are procured at trust level and are less likely status and are not able to accumulate dis- to be promoted by NICE. 46 Several inter- cretionary funds. Indeed, if they generate viewees suggested that as a result the NHS a surplus it will be taken from them and was wasting a huge amount of its precious their budget may be reduced the follow- resources that could be spent on introducing year. "ese factors leave very little ing the latest treatments and improving headroom for investment in innovation quality. projects that may require significant up- front expenditure or involve a contribu- Leadership tion from different departmental budgets; the flexibility and strategic influence of “Don’t rock the boat, don’t change any- central management is constrained. "e thing, just leave things alone, run your own focus of management is on initial costs, so business well and don’t get too excited.” expensive innovations are less likely to be adopted even if they may have significant “We’re getting people into Foundation benefits further down the line. "e result Trusts slowly but surely, who’ve got real is a short-term outlook and generally risk- business credibility. But…they take their averse behaviour. brain out at the door…they don’t really see "e payment and reimbursement sys- a long-term strategic future.” tem operating within the NHS causes its own problems. NHS providers are "ere is an endemic aversion to taking paid for their activity according to a risks in the NHS. Blame for failure out- tariff system. "is is calculated annu- weighs the reward for success. Leadership ally and is based on the average cost of a has been described as being predominantly group of around 50 procedures (known as about “survival in a heavily orchestrated health resource groups), using the previ- world”. Managers tend to devote their ous year’s data. It is therefore based on time to meeting directives from above and current practice and does not subsidise managing a budget, rather than engaging the cost of innovative and possibly more staff with the core mission of improving expensive procedures that would improve services for patients and creating a suitable quality. Indeed if an innovation improves environment for organisational develop- efficiency by reducing activity, a trust may ment. If an initiative is not demanded be penalised because it will receive less from above, then its financial and manage- under the tariff system. rial burden will not be balanced by any Trusts do not have accurate costing reward for success; failure, however, meets systems giving them detailed information with immediate censure. And even if there 46 A recent survey found that on what they pay per patient to provide is a potential financial or reputational gain, two thirds of primary care a service. "is is undoubtedly the source past experience of the difficulties in manag- trusts failed to decommission any services in 2007/08 (HSJ, of variation in the costs of provision, a ing change and realising potential benefits 9/10/08: H. Crump ‘PCTs fail- phenomenon that is well known by the contributes to extreme caution in assessing ing to decommission services’). It was suggested that many of Department of Health from its calculation potential risks. As one interviewee put it, the decommissioned services of tariff prices from average costs. It means re#ected the additional capacity PCTs were building into the that trusts struggle to identify potential “Not to put too fine a point on it, the easi- acute system to hit the 18-week savings and are often unresponsive to tariff est thing to do is to do nothing. You can’t treatment target and their guar- anteed volume contracts with pressures to reduce costs giving them less be blamed for not doing anything.” the independent sector.

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Achieving real change in complex organ- the use of change management methods, isations requires a clear, consistent agenda staff development approaches and change and a commitment to the long haul. But leadership. A review by Ham et al found too many trust leaders focus on what is a significant deficit in project manage- immediately possible. Short-term outlooks ment skills across the NHS, specifically in are a serious barrier to the adoption of management that was hindering effective new practices because it can take time to progress in delivering sustainable service realise their benefits. "e problem stems improvement. 49 Nor was the level of inno- partly from uncertainties over the future vation linked to the number of initiatives. environment because radical policy shifts are perceived as commonplace. "ere is a Commissioning fear that the freedom to develop business strategies and create new income streams “Commissioning in the NHS is just book- could be withdrawn at any time. "is is keeping.” not without justification: the ability of foundation trusts to hold on to surpluses, "e general consensus among interview- an essential reform that promotes good ees is that commissioners are failing to financial practice, is already under threat stimulate the uptake of best practice and in the current economic crisis. innovation. Commissioners lack the infor- "e high turnover of trust CEOs is also mation, the tools and the expertise to drive part of the problem. "is is linked to the complex service change. Some blamed this comparatively modest annual salaries that on the reorganisation of commissioning they receive for running large and complex at a local level, which led to the loss of businesses and to the perception that the senior expertise. "e skills gap and power power to make changes lies in the DH imbalance between primary care trusts and and its affiliated central agencies. A recent large hospital trusts makes it difficult for study found a strong association between PCTs to engage with the introduction of poor hospital trust performance and CEO complex innovations. turnover and that pay was not being "e decision-making processes in PCTs linked to performance under the current were subject to particular criticism; they governance arrangements. 47 Policies to are seen as slow and ultimately indecisive remove barriers and improve the adoption when dealing with changes that have of best practice can succeed only if lead- the potential for significant benefits. "e ers are capable of meeting the challenge. perception is that commissioners, like Devolved governance means that the lines managers, too often focus on the impera- of accountability run clearly to the lead- tive of balancing the budget and resist ers of organisations. A sustained effort to costly changes. As one interviewee put it, 47 Ballantine J et al, “The improve local leadership in the NHS is the when discussing a potentially beneficial Governance of CEO Incentives in English NHS Hospital Trusts”, essential next step. new technology: Financial Accountability & "e literature asserts that leadership on Management, Issue 24:4, p385- 410, 2008 the ground is a crucial driver of innova- “#e health economics are fantastic. #e 48 Change Capability Review, tion, and is currently deficient in many ethics are great…it ticked all the boxes. It Of"ce of Government & Commerce, July 2006 NHS trusts. A study of change capability was placed in the national service frame-

49 Ham, C et al, “Capacity, in the NHS by the Office of Government work and clinical practice guidelines have culture and leadership: les- Commerce in July 2006 gave the NHS been produced by NICE. However, the sons from experience of improving access to hospital a score of only two out of a possible five commissioners have delayed implementa- services”, Health Services points for seven out of nine categories tion by saying they can’t afford it in the Management Centre, University 48 of Birmingham, 2002 assessed. "e NHS got low scores in current budget, and will need several

26 Challenges for the NHS

years to plan for its implementation. You "ere are numerous problems with pro- know it will happen sooner or later, but curement in the NHS that threaten to three…four years after now, there’s only derail policies to improve efficiency. "ere about half the country that’s bloody well are no common descriptions or codes doing it. And that’s because of the used by the NHS or its suppliers for items commissioning.” purchased, and the quality of supplier information in the medical device sec- Another concern is that areas in which tor is generally poor. Trusts use different joint commissioning would be beneficial are purchasing systems, and different depart- being neglected because commissioners are ments within the same trust may even have protective of their powers and don’t co- different systems. Many orders are placed ordinate effectively with local authorities and directly with a company without tender- other PCTs. For example, there are 31 PCTs ing and there may be no agreed contract in London, but certain specialist services such price. "is generates quantities of paper- as emergency stroke care require only a few based invoices from multiple sources that high-quality providers. Commissioners need require numerous permanent employees in to develop collaborative arrangements involv- accounts departments to process. As a con- ing specialist providers and the emergency sequence, neither the trusts nor the central services to ensure efficient, common referral and regional bodies have accurate data on procedures and rapid access to the best treat- costs, while suppliers do not know how ment – a few hours can make the difference many of a product they will sell and must between a return to normal functioning factor this into their prices. "e absence of and brain damage. However, innovation to contracts and the lack of accessible systems achieve this requires alignment of their inter- for ensuring compliance with contracts ests, something that often proves hard. make the pricing system variable and vulnerable to abuse. Overall, there are huge Procurement inefficiencies throughout the NHS supply chain, costing the taxpayer billions. “#e UK healthcare supply chain is "e landscape for procurement is heavily approximately 25 years behind the private fragmented – the UK healthcare market sector and has much lower efficiency com- consists of 426 NHS trusts, ten evolving or pared with best private sector practice in actual regional purchasing groups (known as the UK.” collaborative procurement hubs), the NHS Purchasing and Supply Agency, six private While “commissioning” in NHS parlance healthcare organisations, 11,000 healthcare largely refers to the provision of health suppliers and two non-pharmacy wholesal- and social care services, the term “pro- ers. "ese organisations buy and sell goods curement” tends to be used in relation to and services worth about £21 billion a year. goods and non-clinical services. Many of Improving the effectiveness of their trading the principles currently being developed relationships and using contractual mecha- as a result of the Department of Health’s nisms to stimulate innovation require more World Class Commissioning programme attention, but despite its centrality in the are applicable to the more mundane pro- spread of new technologies, procurement curement agenda. Until now this has been was neglected in the Darzi review. something of a backwater in the NHS, "e Purchasing and Supply Agency was even though it has often been demonstrat- created to provide procurement guidance ed public bodies can stimulate innovation to trusts and it exists alongside a number through their procurement policies. of other procurement bodies such as the

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Centre for Evidence-based Purchasing unresponsive to tariff pressures to reduce (CEP) and the commercial directorate of costs, while the tariff itself is inaccurate the Department of Health. However, since because of the lack of good costing data. Trusts are under no obligation to listen Stock control can be unreliable, result- to PASA or CEP, their guidance often ing in operations being cancelled for lack goes unheeded. According to one inter- of supplies. viewee: “If PASA ceased to exist tomorrow, It is not surprising that the uptake nobody would notice.” "e regional col- of beneficial medical devices is patchy laborative procurement hubs are intended when it relies on the fragmented, onerous to provide hands-on support and generate and antiquated procurement systems economies of scale among trusts. However, at trust level. Procurement, as present- they cannot enter into contracts with sup- ly organised, is a major barrier to the pliers on behalf of trusts, and have been spread of new technologies. As one inter- criticised for actually inhibiting trusts’ viewee said, freedom to develop effective purchasing models among themselves. “#ere’s great access to funds and innovation Where items can be purchased nation- and all sorts of things locally in the UK but ally, they should be because this will [there are] commercial barriers [to things] produce huge economies of scale. But being adopted through the procurement side.” there is little point in toothless central and regional organisations offering guid- In 2004, the healthcare data management ance. Currently, trusts do not have to company, Healthlogistics, established the join the collaborative procurement hubs NHS e-catalogue standard that exists and must pay £200,000 for the privi- today and is now on the PASA website. lege if they decide to do so. But joining It has customised software for use in the does nothing to solve the fundamental NHS and estimates that adoption of the problem that their purchasing data is technology alone could save the system not of sufficient quality to cost proce- £800 million per year for a cost of just dures or forecast demand. If the systems £80 million. to provide this data were rolled out in such a way that trusts and suppliers had Use of evidence compatible systems, then not only would a huge amount of waste be eliminated “[Clinicians] like trialability, they like within trusts, but also they would gain reversibility, they like observability.” a platform for strategic planning and collaborating on their own initiative; “We’ve created a culture where people feel and central bodies would gain the sound that if it’s not passed the NICE test then costing data necessary to set accurate tar- you can’t innovate a new service.” iffs and develop system-wide expenditure planning. One interviewee argued that: Clinicians have a justifiably careful approach to the interpretation of evidence. “Suppliers have never received a demand Research by the NHS Confederation, the forecast from the NHS in 60 years, and membership body for NHS organisations, they wouldn’t know what to do with it if on clinical attitudes to change suggests they received it.” that medical professionals tend to favour an empirical experimental model. But Under the current system trusts struggle there is a tendency to view anything short to identify potential savings and are often of the randomised controlled trial, the

28 Challenges for the NHS

Case study 2: Procurement best practice

Nuffield Health is the UK’s largest healthcare charity, delivering services from over 200 locations, including 30 hospitals. In 2004, in response to the introduction of the NHS tariff and the emerging NHS market for independent sector provision, it introduced Project Prime to develop centralised procurement and more efficient procurement across the group. Before it began, consultants and clinical staff had had a high degree of autonomy and often decided what products to use in the hospitals. As a result, the group found it was introducing up to 700 new stock items a month, usually from suppliers with no formal contract in place. It had 17,000 suppliers and was paying each of them manually. Nuffield Health estimated that it could save 1% of its procurement budget (£1 million) simply by paying the same price for the same product across its hospitals. As well as central procurement, Project Prime introduced nominated suppliers and standard products; it automated purchase orders to enable product tracking and the effective costing of procedures. It also introduced a “bill of materials” approach, leading to the development of a single list of basic products per procedure where before there may have been several hundred. Coupled with a much more robust system for introducing new products – ensuring clinical and financial checks are made before authorisation – all this has helped to standardise the products used and rationalise the number of suppliers. For example, for prostheses, its category of highest expenditure, the number of suppliers has been reduced from twenty to just three. Nuffield Health now either asks nominated suppliers to tender for a set amount of products for the entire group through a reverse auction or, with trusted single suppliers, it arranges long-term relationships. Suppliers can offer products for less under these conditions because they have a secure income stream and less waste from overproduction. By contrast, PASA cannot specify how many products will be required in NHS organisations and the collaborative procurement hubs cannot enter into contracts with suppliers because they are not legal entities. As a result, despite its far superior purchasing power, the NHS has to pay higher prices than Nuffield Health, which has saved over 10% of its procurement budget over three years under the new system (£31 million) and have aver- aged 23% savings on each area of focus. If similar savings were derived from the £21 billion annual procurement spend in the NHS, this would save £2.1 billion per year.

gold standard of evidence, as lacking any requirements for medical consensus are credibility. Many have pointed out that often too stringent. And even where there this is frequently inappropriate because is a strong evidence base, clinicians often some innovations, especially those involv- lack the time and incentive to find it and ing modification in the use of a service analyse it. or technology, are not amenable to this "e sheer quantity of evidence and approach and so the evidence base for the finite resources of the health serv- such changes is usually less clear cut. ice require it to be efficiently collected, "e quality and rigour of NICE health assessed and disseminated. Currently, technology assessments (HTAs) and clini- there are too many sources of evi- cal practice guidelines (CPGs) are widely dence, often making it hard to access praised, but recommendations from the and understand. National Institute for Health and Clinical Dissemination is often a passive proc- Excellence are not always quickly and ess and there needs to be a systematic uniformly adopted. In part, interview- method for promoting evidence-based ees felt that this is because the evidence innovations or best practice through the

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system. NICE guidance is supposed to “NICE is often quoted where it bans fulﬁll this role, although it does not the use (of an innovation), or it doesn’t have the resources to assess all the new approve it. What never gets examined is technologies coming on to the market. where NICE has suggested an appropri- Commissioners are required to dissemi- ate protocol and it’s not being followed in nate its new guidelines to their providers. 80% of the Trusts and it’s where there is Compliance with the guidance is one permission but it doesn’t happen anyway.” of the Healthcare Commission’s core standards for regulation. However, as one interviewee said:

Case study 3: Oesophageal doppler monitoring Severe loss of blood and fluids (hypovolaemia) during surgery is known to increase the length of stay and the chance of post-operative complications. Oesophageal doppler monitoring (ODM) allows a surgical team to monitor, and optimise, blood flow during surgery using ultrasound. Since 1995, no fewer than seven peer reviewed clinical studies have demonstrated that ODM can reduce recovery times by three days and improve outcomes, and the technology has been recommended by the Centre for Evidence-based Purchasing in the Department of Health. In January 2006, NICE declared that ODM was already standard practice and would not be reviewed, yet despite the fact that this technology has been available for more than ten years and has a clear evidence base, it is used in less than 5% of major operations in the NHS. 50 "e first NHS trust to use ODM widely during surgery, the Medway Maritime NHS Trust in Kent, reported savings of over £1 million a year. "e leading manufacturer of the monitor estimates that if the length of stay were reduced by just two days, the NHS could save £400 million per annum. "e NHS national technology adoption hub, based in Manchester, was launched in September 2007 to increase the uptake of new technology. It is attempting to introduce ODM in three hospitals 50 “Geographical variation in recovery times”, The Clinical and will use the experience gained to convince other providers of its clinical and financial benefits. Services Journal, April 2008

30 4

Making change happen

Lord Darzi’s review local priorities. Supply-side freedom will “It is relatively easy to set out a vision, also grow by expanding foundation trusts much harder to make it a reality.” 51 and greater use of the independent sector; Although we welcome Lord Darzi’s review patient choice will be extended. However of NHS performance, the final part of targets have not been abolished – there will which was published in June 2008, the be closer monitoring of performance via senior health professionals we interviewed published information and robust mini- felt that it does little to simplify the com- mum standards to counterbalance reduced plex structure of the NHS in promoting central direction. "e quality of healthcare innovation. More central bodies have been is to be raised through a combination of added, but little attention paid to which organisational reforms, ensuring informa- can be removed. Since the exact role of the tion on relative performance is readily avail- organisations that shape “the NHS quality able, and the more effective use of incen- landscape” is not specified, there may be tives. Innovation is seen as a fundamental gaps or overlaps. And with so many dif- to quality improvement and the review pro- ferent initiatives being rolled out at once, poses a number of measures to stimulate it. there is a danger of confusion over the lines Much of the responsibility for realis- of responsibility of central bodies. ing the proposals will fall upon strategic "e Darzi review neglects the short- health authorities and trust managers, comings of hospital procurement systems. especially primary care trusts. "e nine Hospital trusts do not understand their SHAs making up the NHS in England cost base and are therefore not sufficiently were each instructed to develop plans for responsive to pricing pressures or able implementing best practice in their area. to identify efficiency measures. "e data "ese were published in May and June does not exist for collaborative procure- 2008 and provide much of the detail ment hubs to make firm commitments to about changes that will be implemented order, preventing them from negotiating as part of the Darzi strategy. 52 Each SHA the best prices, and they cannot enter into has also produced a report outlining how contracts on behalf of trusts because they it proposes to implement the recommen- are not legal entities. Rationalising NHS dations of the Darzi review in light of its procurement systems could potentially own circumstances. All the reports except save billions. one discuss how to stimulate innovation 51 Darzi A, “High Quality Care "e review proposes further devolution in varying levels of detail. For All: NHS Next Stage Review to local level by reducing central diktat, By spring 2009, after further consulta- Final Report”, Department of Health, p15, 2008 especially blunt process-based targets, and tion on the support they need, each PCT 52 Available at www.ournhs. more freedom for local purchasers to set will be expected to publish a five-year nhs.uk

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strategic plan for introducing evidence- ment because they are still developing the based pathways. Additional funds and systems that will allow them to operate as support for local initiatives will be pro- independent businesses. Foundation trusts vided centrally. are already performing better than normal "e problems we have identified are dis- hospital trusts according to the Healthcare cussed under the following headings: Commission, the outgoing NHS watch- dog, most notably in relation to the use of l Organisational capacity for innovation resources. 54 However, it is not clear how and adoption far foundation trusts will be allowed to l Communication and networking develop their business models, and some l Incentives of our interviewees felt there was insuf- l Leadership and culture ficient flexibility in the interpretation of l Commissioning their governance requirements. "e recent l Use of evidence moves by the Treasury to claw back foundation trust budget surpluses suggests that Organisational capacity for innovation their freedom of action may be limited. and adoption Integrated care organisations Foundation Trusts "e Darzi report also proposes piloting It is with the extension and refinement organisations that bring together health of the foundation trust model that most and social care professionals from com- hopes lie. As the review puts it: “"e munity services, hospitals, local authorities freedom of NHS Foundation Trusts to and others, depending on local needs. innovate and invest in improved care for "is is intended to break down divisions patients is valuable and essential.” 53 between health and social care provision, "e Darzi review has made it clear that and between primary and secondary care all acute, mental health and ambulance organisations in England, divisions that trusts will attain foundation trust status could be made more pronounced by great- but no date has been agreed about when er autonomy and competition. this will happen. "ese freedoms will even- Drawing on international models that tually be rolled out to all NHS providers, suggest that organisations bringing together making the NHS a commissioning organi- healthcare providers, industry and educa- sation that purchases care from individual tional institutions improve the capacity to providers, who will be responsible for their innovate and adopt best practice, the Darzi own good governance and for meeting Review lends its weight to the develop- NHS standards. "e vision is one of well- ment of new organisational models, with managed, autonomous hospital trusts that matched funding, that would share strategic are able to respond to incentives and com- goals, pool resources, run joint innova- pete against other service providers. tion programmes and use their expertise It is inherently better that the day-to- to strengthen clinical practice. NHS hos- day management of the health service is pital brands currently have little resonance in the hands of people who are aware of overseas; the aim is to foster world leading

53 Darzi A, “High Quality Care local circumstances and priorities, who organisations within the UK, to drive inno- For All: NHS Next Stage Review are close to their patients and who have vation development and early adoption. Final Report”, p61, 2008 the authority to deliver improvement on 54 “The Annual Health Check 2006/07: A national overview their own initiative. It is too early to judge Academic Health Science Centres of the performance of NHS how eﬀective foundation trusts will be "e trend for teaching hospitals to use Trusts in England, Healthcare Commission, 2007 in stimulating innovation and improve- their new freedoms to form closer partner-

32 Making change happen

ships with affiliated universities is recog- on strategic health authorities to innovate, nised in the Darzi review. 55 "is is based which may mean only that central govern- on the university hospital networks or ment seeks to control the agenda of these academic health science centres (AHSCs) organisations. As one interviewee put it: that have evolved in North America. "e hope is that integration of research organi- “Innovation requires freedom to take risks. It sations and hospitals, through a combined is counterintuitive to believe it can be man- management structure and of clinical and dated or that organisations without indepen- professional teams according to their area dent governance and independence of action of expertise, will strengthen the capacity can embrace an innovation agenda.” for clinical research and create a foundation for translating academic research into Communication and networking clinical practice. It is important to understand the influ- "e AHSC model will potentially lead ence of local networks and whether more to increased product development, while extensive and inclusive networking could the combination of research and clinical influence the utilisation of the latest medi- provision should make academic health cal knowledge. Strategic health authorities science centres an attractive partner for have a role to play in co-ordinating these businesses looking for expertise and early relationships, as do organisational and market entry. "eir research infrastructure, clinical leaders, while the royal colleges access to a broader skill base, increased have a strong influence on professional resources and the opportunity to conduct networks and need to co-ordinate efforts trials and apply research could also be used to disseminate knowledge and develop 55 The "rst AHSC in England to improve the organisations ability to professional training. was announced by Imperial adopt innovations from elsewhere. Patients So far, efforts to use networks have had College London in October, 2007, embracing "ve hospitals in should benefit from access to world-class mixed success, with most emphasis being west London. Since the "rst step specialist centres and AHSCs should act as placed on formal networks and professional there has been a #urry of activity with other major Universities a beacon to other NHS providers, demon- peer groups. North West SHA plans three merging management with strating the utility of new technologies and multi-professional clinical networks focusing Foundation Trust teaching hospitals, including Kings College practices and sharing their experience. on urgent care. "ese will be responsible for London, Manchester University, Although flagship hospitals have failed supporting the implementation of change Warwick University and Oxford University. Pre-existing plans in the past because they were viewed programmes, auditing their effectiveness and will now be reviewed by the DH, 56 which wishes to impose central as special cases, developing world-leading “horizon scanning for innovation”. criteria for AHSC status. organisations to drive specialist innovation Most of the recommendations in the 56 Darzi A, “High Quality Care in the UK is a worthy ambition. "e idea is Darzi report are about building local col- For All: NHS Next Stage Review Final Report”, Department of that their example of early adoption could laborative networks for developing and Health, p.39, 2008 develop the evidence base and momen- translating research into practice. "ere are 57 There are also a number tum for wider uptake. However, we are a number of initiatives already underway. of Contact, Help, Advice and Information Networks (CHAIN). concerned that the DH has hijacked the "e NHS Institute for Innovation and The "rst two, focusing upon Evidence-Based Practice and AHSC model. It has set up a committee Improvement is attempting to engender Work-Based Learning have to designate AHSC status and ensure that a “culture of innovation” by helping “the in excess of 4000 members. CHAIN 3 has over 900 members, only “world-class” centres should gain this NHS to spread and sustain the effective who can choose to enrol in standing. But successful academic health concepts and processes”. Its plans involve one of the sub groups, which cover No Delays, HCAI, Long science centres in North American were five networks, including the SHA link direc- Term Conditions, Improvement not created by central diktat, as we will tors and NHS Live programmes, which are Educators, Lean Thinking, HR & OD. They disseminate so-called 57 see. "e DH displays a continuing desire at various stages of development. ‘Improvement Stories’, covering to micromanage the NHS environment. Health innovation and education clus- areas such as 18 weeks, screen- ing programmes and community "ere is also talk of imposing a legal duty ters (HIECs) – recommended in the Darzi mental health projects.

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review – are based on the principle that resource groups (HRGs) from the previous participation in networks improves the year. Because some NHS trusts had costs capacity of organisations to innovate and per HRG significantly higher than the adopt best practice. "e clusters will bring average, full roll-out was staggered and has together partners from primary, commu- only recently been completed. 59 nity and secondary care, universities and "ough better than the previous system, colleges, and health service industries. "e the tariff has not provided incentives for make-up of the clusters will not be centrally improvements in practice. "is is because determined. Applications for assigned status neither the Government nor the NHS trusts and matched funding for local initiatives know what individual procedures really cost. will begin this year. Much is made in the "e HRGs are the units of financial data SHA reports of the need for local networks available and from them the Government linking universities, industry and NHS. For knows that there is significant variation in example, North East SHA aims to strength- costs. "e explanation is that hospitals do en ways that local health services, industry, not have the costing systems in place to know the academic sector and other partners work what they spend on each procedure, leading together to maximise individual strengths. to unidentified inefficiencies and a lack of West Midlands SHA wishes to establish managerial leverage. "e inefficient operators three formal collaborations between local also drag up the average costs, reducing pric- NHS commissioning organisations to deliv- ing pressures. "e Department of Health has er and fast-track teaching, research and begun to refine the tariffs, but it is limited by cutting-edge health services. South West the data available. SHA intends to develop a compact with In theory the tariff should promote cost local education providers, to form centres of reduction. However, the NHS Institute for excellence which will promote change. Innovation and Improvement has looked at nine common conditions, and found a Incentives great deal of variation in the cost of treatment, reflecting variations in clinical prac- “We don’t actually reward anybody in tice. "ey sent clinically led teams with the NHS for making people better, we analysts, general managers and improve- just reward them for seeing them and ment specialists to the best and worst treating them.” performers, in order to understand how they differ from one another. "is research "e 2002 White Paper, Delivering the was used to design care pathways that NHS Plan , introduced a system of pay- reflect efficient, high-quality performance. ment by results in which providers of NHS Instead of basing the tariff retrospectively services are paid according to a centrally on an average of the variable cost data, set tariff. 58 "e intention was that provid- the institute is looking into the possibil- ers compete for commissioning contracts ity of publishing a prospective normative and patients by offering superior quality tariff, based on a reproducible, fully-costed as opposed to lower prices. It also encour- pathway gleaned from the best performers. ages providers to reduce costs in order to It would require national dissemination of

58 NHS, “Delivering the NHS maximise profits against the tariff or mini- the processes and costs, with central sup- Plan: Next steps on investment, mise deficits, freeing up capital for service port and time allowed for implementation. next steps on reform”, The Stationary Of"ce, Norwich, 2002 development. Payment by results began It should also allow for regional variation

59 Department of Health, with the announcement of a preliminary in costs and a bonus to reward successful “Reforming NHS Financial Flows tariﬀ based on average NHS costs for a redesign. Organisations would then have Introducing payment by results”, HMSO, London, 2002 group of 50 common procedures or health a strong incentive to implement best prac-

34 Making change happen

tice in time for the change in payment. tice in poor performers, and use this Making innovation a performance knowledge to set process measures metric for trusts, rewarding leadership in that indicate the required standard of innovation or improving the flexibility of care. "e objective will be to clearly payment by results raises some challenging disseminate the best practices and questions: what would an innovation per- to reward providers with bonus pay- formance metric look like, can you target ments above the tariff price for imple- professionals on the ground who would menting improvements. actually develop an innovation rather than l GP practices that provide more respon- managers in the boardroom, and can you sive services and attract more patients put in place incentives for sustainable will be subject to a fairer reward uptake, rather than simply development or scheme under the Darzi proposals. At initial adoption? present, most practices receive historic "e wider issue is over the extent to income guarantees that bear no rela- which commissioners will have an incen- tion to the size or needs of the patient tive to encourage innovation per se. To population that they serve. Protected what extent should a PCT commission income payments will now be phased purely to meet local needs, or should it out and resources channelled into also take account of the greater good. Of providing fair payments reflecting the course, dangerous risk-taking should not needs of the local population. be allowed or encouraged, but neither l Finally, the review aims to intro- do we want to stifle innovation through duce funds and prizes to support and excessive central control or overly con- reward innovation. Regional innova- servative behaviour. tion funds will be held by SHAs and "e Darzi review proposes several a national independent expert panel changes to the payment and reimburse- will assess local applications and make ment system: awards. "ree of the individual SHA reports took up this idea. 60 l "e first deals with the tariff, widely seen as an inadequate incentive Leadership because it is based arbitrarily on the "e Darzi review acknowledges that: average cost of current practice. A “Leadership has been the neglected ele- new model is proposed from 2010- ment of the reforms of recent years. "at 11 reflecting the cost of best practice. must now change.” 61 Clinicians should play "e Commissioning for Quality and a greater role in governance. It argues that 60 North East SHA, East of Innovation Scheme will enable PCTs the corollary of holding clinicians account- England SHA, South West to encourage the adoption of best prac- able for outcomes is increased powers over SHA. East of England SHA (p4, 48, 105-106) plans to create tice by overlaying the tariff payments the services they provide. "e review pro- an innovation fund to support with bonus payments in commission- poses that they – along with nurse manag- new approaches to staying healthy, focusing initially on new ing contracts. "is should allow com- ers and clinical directors – are given greater approaches to tackling child- hood obesity. This will include missioners to more adequately address control and responsibility to determine the work in partnership with Health local priorities. Commissioners will direction of the services they deliver and to Enterprise East to offer prizes for innovation. South West SHA be required to collect and monitor make resource decisions (including HR) (p119) proposes to establish provider data to determine who is within their departments. "e vision for a "nancial regime designed to ensure an operating surplus for achieving the best outcomes in pri- improving quality for patients, the man- innovation and investment.

ority areas. "ey can then research agement methods for delivering change, 61 Darzi A, “High Quality Care the processes that are yielding these improving organisational governance and For All: NHS Next Stage Review Final Report”, Department of outcomes, how these diﬀer from prac- the communication of goals and realities Health, p66, 2008

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with staff will be left to management at practice led to this improvement. And board level. 62 the organisations were happy to pool By creating a meritocratic hierarchy of knowledge even though in some cases clinical and non-clinical leadership posi- they were in direct competition. tions, it is hoped that more clinicians may branch off into management, which is com- Commissioning monplace in many other healthcare systems but relatively rare in the NHS. Experienced “It is only the commissioner who has the best clinicians with proper management train- interest of the patients in mind (and) who ing are in a strong position to understand should be able to specify, I want this next the strategic priorities of the health service. drug or device…and Mr. Provider, you Senior clinicians need to be given autonomy provide me with that (in) the competitive with accountability if they are to be fully market. But, it’s also about how the provid- involved carrying out reform. ers can feed the commissioners, because the "e plan is to invest in new programmes big ideas are not going to come from the of clinical and board leadership and the commissioners, but they can drive it.” review identifies a number of specific measures for improving leadership. Some World class commissioning is a key clinical awards schemes will become more weapon in the Darzi armoury. "is means conditional on activity and quality indica- challenging providers to use the best tors. "ere will also be greater scrutiny diagnostics, the latest medical devices of managers. and the best available drugs and to drop "e authors of All Change Please outdated practices. "e drive to introduce have argued that cultural change among practice based commissioning will also healthcare providers requires both a continue, with support in the form of change in culture at the top and a improved information, managerial and shake-up of the conservative views of financial support. Much innovation in managers and the medical profession. healthcare is supply-side driven – new "is is a necessary, although not on its technologies are developed and brought own sufficient condition for shifting to the market. Darzi seeks to redress the the endemic aversion to taking risks balance and increase the part played by and the frequently strategy-free busi- demand-driven innovation. ness environment. "ere are examples of Although the tariff sets prices, this does central support for improving manage- not negate the importance of a contrac- ment. "e NHS Institute for Innovation tual relationship between commission- and Improvement has recently working ers and providers specifying the range with chief executives from ten trusts to of services to be made available, referral create a transformational vision for their or treatment protocols and performance organisation focusing on key priorities. criteria. Contracts can, of course, contain After nine months, the organisations incentives and penalties and they provide formed a network to share their different an opportunity to specify evidence-based strengths, using tools, techniques and practices and an efficient care pathway metrics developed with the institute. "e across different organisations. results were substantial, with improve- "e Darzi review recognises that PCTs ments in mortality, patient experience are potentially able to use their investment and the adoption of clinically appropri- choices to influence service design, increase 62 Darzi A, “NHS Next Stage ate new methods. "e combination of choice and drive continuing improvement. Review: Leading Local Change”, Department of Health, 2008 vision, engagement and transfer of best A concern is that PCTs may be too small

36 Making change happen

Case study 4: Premier, Inc A pilot project run on the US Medicare and Medicaid programmes by Premier, Inc, an alliance of not-for-proﬁt hospitals and health systems organisations, provides an example of eﬀective commissioning. Five clinical conditions (Hip and knee replacements, heart attack, heart bypass and Pneumonia) were chosen, each with about 20 quality measures, in a sample of 260 American hospitals. In year one, Premier, Inc’s role as commissioner was to determine clinical priorities and evaluate the existing data to determine best practice. "e best performers in terms of outcomes were investigated to determine best practice processes in each of the clinical measures. It then negoti- ated a set of process measures and each hospital agreed to collect data on these measures. For three procedures (hip and knee replacement, heart attack and heart bypass) this pilot scheme saved 5,500 lives. Figure 7: Potential cost savings

$1.5 billion $163,670,525 Hip and knee $1 billion $275,912,282 Heart attack (AMI) $395,175,435 $500 million Heart bypass US dollars $891,659,846 Pneumonia $0 Total costs saved

Hospitals were given market updates, as well as support for improving their services, in return for providing the necessary data and committing to the quality improvement agenda. In year two, there was mandatory data reporting and the data was fed into a national database, which government regulators sampled and validated, to avoid gaming. "e hospitals each set up an oversight group of senior executives to build and execute a hospital plan for the roll out of process improvements, and they acted as a point of contact between commissioner and provider. Premier, Inc provided administrative and financial advice to the hospital-based teams. It also linked up the best performers with groups of other hospitals, achievers were happy to do so even in a competitive market place. In the third year an attainment level was set and the top 5% of the hospitals received a 2% bonus payment above the standard tariff price. "ose in the sixth to tenth percentile got a 1% bonus. If by the end of the year performance had not been raised to a set threshold then the 1% bonus would be withheld. All the hospitals improved their conformity with the performance measures for all of the conditions every quarter. "e preliminary results in the fourth year suggest that 91% of the 260 hospitals will achieve the levels of the top fifth of performers before the scheme began, removing virtually all of the earlier variation in performance. "is approach is now being piloted in North West England SHA from October 2008, although it has decided not to withhold payment for fear of destabilising services. Using discharge data, the impact of improving care was determined based on a pay-for-performance model. "e improvement opportunity is the potential savings, in lives and money, if reliable patient care could be delivered across the board. "e cost, mortalities, and outcomes for patients in 2003 were calculated, assuming the population received care at the same level of quality shown in the study (ie the same percentage of the population fell into the low, medium and high-quality care categories).

to procure eﬃcient and innovative care the sensitivity to accusations of a postcode pathways, and ensure that providers adhere lottery in NHS provision means that con- to the commissioning requirements. And cerns remain over the quality of the data although steps are being taken to ensure and how transparent it will be. transparency in the assessment of how Imaginative, proactive commissioning local practice compares with best practice, requires changing the culture of risk in pur-

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chasing. Mechanisms for sharing the risks and awareness, motivate people, develop practical rewards of innovation play a significant role support and monitor uptake of their recom- in stimulating innovation in other industries. mendations was necessary. "e Department Longer planning and budgetary cycles and of Health’s health technology assessment increasing provider autonomy through foun- and clinical practice guidelines have helped dation trusts will help. But it is by no means to establish and disseminate the benefits of clear that risk and reward sharing is under- new technologies and procedures. National stood within the NHS and social care organi- Service Frameworks, which outline clearly sations, or by suppliers of new technologies. defined standards of care for specific condi- "is will need a move towards value chain tions, are another important mechanism for costing, an emphasis on objective criteria such communicating best practice. as health gain and value for money to support "e authors welcome this emphasis on decision making. Questions also remain over supporting NICE’s role as an innovation the ability of commissioners – and suppli- gatekeeper – providing the best quality guid- ers of innovative services and products – to ance on the evidence for innovation. Horizon understand value chain costing. 63 scanning and decision-making processes for new drugs and treatments coming on to Use of evidence the market are to be strengthened through "e Darzi review acknowledges that more partnership with industry. A faster appraisal could be done to make evidence accessible and process for new drugs will be introduced, to spread knowledge throughout the system. allowing NICE to issue its guidance within It remains essential that there is full recogni- a few months of a drug’s UK launch. For tion of the problems of developing evidence in medical devices, which are often not assessed cases where innovations are complex and there by NICE and whose uptake is not manda- is flexibility over what is interpreted as ‘accept- tory, the review proposes that new clinical able’ evidence in these cases. We also agree technologies should be subject to a single with the Healthcare Industry Task Force that evaluation pathway and their uptake will be there should be more effort in co-ordinating benchmarked and monitored. trials to avoid unnecessary duplication, perhaps by strategic health authorities. Information in the system "e NHS benefits from central evi- "e review believes that those involved dence collection, assessment and dissemi- in both providing and consuming health- nation. "e National Institute for Health care need sufficient information to make and Clinical Excellence was created in informed decisions if improvements in qual- 1999 to identify, collect and assess innova- ity are to be achieved. Patients must be able tions, establish best practice and provide to choose between care providers on the authoritative guidance for NHS providers quality of care they deliver. and commissioners. However, NICE has "is involves benchmarking the perform- limited resources and cannot assess every ance of NHS providers and using “disrup- new technology or provide evidence-based, tive information”, such as league tables, to up-to-date clinical practice guidance across stimulate change. More effective clinical every discipline. In fact, NICE only assesses audit and collection of comparative data 63 Value-chain costing is about 5% of innovations. And where there informs commissioners where the prob- de"ned in Barron’s Accounting Dictionary as “an activity-based is an absence of NICE guidance, there is lems are and where to find best practice. cost model that contains all of no impetus to improve at a local level. It challenges underperforming clinicians to the activities in the value-chain (design, procure, produce, mar- Initially, there was no implementation learn better methods and shines the spot- ket, distribute/render and post- strategy for NICE guidance, but it quickly light on the best performers. Patients who service a product or service) of one organisation became apparent that interventions to raise have clear, up-to-date information on best

38 Making change happen

practice for their condition and on where review puts it: “Greater clarity on standards, different services are available can begin to and where to go to find them, will support make informed choices – providing another the commissioning and uptake of the most pressure to improve the quality of care. clinically and cost-effective diagnostics, "e proposed NHS Constitution guarantees treatments and procedures.” 65 A series of patients access to information on quality organisational reforms are proposed to help and choice of NHS provider. 64 All registered achieve this objective: NHS healthcare providers will be required to publish “quality accounts” on the NHS l A National Quality Board (NQB) Choices website. "ese will report safety, will provide ministers with a strategic patient experience and outcomes. "e Care overview of clinical priorities for qual- Quality Commission will provide independ- ity improvement, to help improve the ent validation of provider and commissioner metrics for measuring quality and report performance and will publish its assessment annually to parliament on performance of comparative performance. New indica- compared to other countries. "e board tors of clinical effectiveness are being pro- will work with NICE to establish more duced as part of the quality and outcomes independent quality standards, and framework. In the spirit of local devolution, address current gaps in the system. PCTs will be able to select quality indicators l A new Care Quality Commission will that reflect local priorities for monitoring. be established, (replacing the Healthcare Commission and the Commission Standards, metrics and targets for Social Care Inspection), to moni- In the past, governments have relied on tor compliance with the standards and targets to bring about change in accordance help providers to identify areas in need with their political priorities – with some of improvement. “Quality observato- success. However, this conveys the message ries” will be established in each stra- that these priorities are the sole criteria for tegic health authority to monitor and success or failure, creating pressures that lead local improvement efforts, enable undermine a long-term strategy for organi- local benchmarking, develop metrics and sational development. Setting a target that identify opportunities for frontline staff is appropriate to patients’ needs, easy to to innovate and improve. A new position communicate, challenging but not impos- of clinical lead will be created in SHAs to sible to deliver, and that has only the desired provide clinical leadership on quality. consequences is difficult. Sometimes the need to convey a simple political message has Conclusions overridden the need for a more sophisticated Successful implementation of some of the approach on the ground. It is often argued good ideas contained within the Darzi that there are too many inappropriate targets review will depend on whether the DH lives and that one target can work against another. up to its side of the bargain, providing sup- Some targets have had to be revised because port and allowing reasonable risk-taking. what was clear and simple turns out to "e rest will depend on strong leadership at a be unsuitable for the complexity of clinical local level, and the time to develop new ways 64 Patients with long-term service delivery. Nor do they provide a mech- of working without undue political interfer- conditions will also be empow- anism that positively reinforces innovation. ence or major changes in direction. But one ered through a system of personal healthcare budgets and an Although there remains a role for certain problem not addressed in Darzi is that too agreed personal care plan. targets, the Darzi review places more empha- much investment is made in creating new 65 Darzi A, “High Quality Care sis on using transparent quality standards to ideas, rather than putting them into practice. For All: NHS Next Stage Review Final Report”, Department of achieve improvements in services. As the "is issue is discussed in Chapter 5. Health, p49, 2008

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Spending on diffusion and support

Britain spends more than £8 billion annu- total allocation of public money. "e figures ally on creating, piloting, appraising and in this section are derived from a wide range diffusing new healthcare ideas, including of public sources on the designation of public sector spending of approximately funding – such information that is publicly £2.7 billion. 66 Our research suggests that available is limited. "e figures are intended only 6% (£153 million) of this is spent to reflect current annual funding levels, on spreading innovations either through although in some cases estimates are based dissemination activities or implementation on previous years and secondary sources. support. Although there is debate about We estimate that of the approximate the appropriate allocation of spending in total of £8 billion, about £2.7 billion is these categories, it is striking that 16 times spent by the central Government on the more is spent on the creation of innova- innovation process. "is involves support tions (about £2.4 billion.) Also, despite the for creation, adoption, appraisal and the growing influence of NICE guidance, the spread of improvements from the private, Government contributes relatively little to public and charitable sectors. "is is neces- either dissemination or implementation. sarily an estimate – and, of course, how one Funding for adoption of new methods will defines creation, adoption, appraisal and increase by about £70 million, but there spread will make a difference to the alloca- are no plans to reassess funding levels for tion of funds in each category. Every effort guidance. "is is perverse because early was taken to ensure accuracy, but there are adoption is a local phenomenon and will inevitable ambiguities in the definition of not in itself lead to widespread change or broad-ranging activities. "e figures in this sustainable change in the target organisation section are intended to illustrate the distri- – especially if technologies or processes are bution of public sector funding, in order to piloted with short-term funding. Generally assess the priorities and efforts of govern- speaking alternative sources of investment ment at the macro-level. Cumulatively, this (such as charities and venture capital funds) data should provide a reasonable reflection are heavily weighted towards the creation of the contribution of central government 66 Public funding estimates 67 from Policy Exchange analysis. of innovations, so government backing for to health innovation. Industry estimates and char- the adoption and spread of innovations Significant support for the private ity funding estimates from, Research and Development is paramount. sector is also provided by some £150 Directorate, “Best research for R&D million in tax credits for commer- Best Health: A new national research strategy”, Department Spending on innovation – from crea- cial health and life sciences enterprises. of Health, 2006 tion to spread "ese tax credits are vital for the balance 67 For detailed assumptions "e authors reviewed health innovation used in the generation of "gures sheets of biotech and specialised device in this section, see Appendix 2 funding to reach a broad estimate of the and diagnostic companies. However

40 Spending on diffusion and support

although they help to develop research designated public funds because, although capacity for commercial products and serv- the decision-making power rests elsewhere, ices, they are focused at the research and its source arguably is the British taxpay- commercial development (refinement) end er. Tax credits to private companies are of the spectrum, providing little input into also designated public funds because they the NHS or service delivery improvements. involve waiving public income. Of the £2.7 billion from the public sector, approximately 88% was spent on creation, Creation 4% on first-time adoption, 2% on appraisal, A range of activities from curiosity-driven and 6% on diffusion. 68 #is heavy front-end research to product development is included weighting raises questions about whether in this category. #e Government’s role in the Government has got the balance right supporting the knowledge-based economy in ensuring that beneficial innovations are and the wealth creation that stems from adopted. #is does not necessarily mean generation of intellectual property justifies that it should set up a central organisation attributing a substantial level of government to tell everyone how to innovate and what funding to these activities in the healthcare to adopt; more funding could be invested sector. Britain has strong research universi- in leadership, for example. As we have seen, ties as well as world-leading biotechnology the system-wide incorporation of improved and pharmaceutical industries. Charities products and services throughout the NHS such as the Welcome Trust also contribute is limited and funding levels do not seem to significant resources. However, creation is reflect the disparity between Britain’s high of limited value if it doesn’t also generate performance in creation and low levels of health benefits for the population; success- adoption. 69 ful development benefits from early access to the domestic market. 71 Funding sources #e funding discussed is predominantly Early adoption from the central budget, although some Early adoption refers to the first application matched funding and subscriptions from of a new product, technique or process in NHS Trusts have been included. EU fund- an NHS setting. It typically involves some ing for research and development has been government funding to contribute to the

Figure 8: Total Health Innovation Resource Estimate for England in 2008-09. 70

£2,500

£2,000

68 Policy Exchange analysis £1,500 69 The authors recognise that some relevant funding plat- forms such as the World Class £1,000 Commissioning Programme have been omitted. This was

Annual spend (millions) due to the broad remit of such £500 programmes and the dif"culty of attributing relevant funding levels.

£0 70 Policy Exchange analysis Creation Early Appraisal Spread adoption 71 Cooksey D, “A review of UK research funding”, HM Treasury, 2006

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evidence base, such as a pilot scheme or offices based in London and Manchester. feasibility study. Generally speaking, gov- Its work is supported through a series of ernment funding in this area is for short- directly commissioned national collaborat- term studies of the utility and application ing centres and university-based academic of health service innovations. Pilot studies units funded through the NIHR, so about have an important role in developing the 2,000 individuals (excluding stakeholders) evidence base and may lead to publica- are involved in developing guidance at tions that begin to generate an awareness any one time. In 2005, NICE produced of new developments. However, many of 62 clinical guidelines, 142 technology those interviewed for this research claimed appraisals, 256 interventional procedures, that the findings from a very large propor- 12 public health interventions and two tion of pilot projects never see the light of public health programmes. 72 But this is a day and anyway replicate pilots elsewhere. drop in the ocean compared to the level Innovators at a local level are being encour- that would be necessary for a continuous, aged through funding mechanisms such as systematic approach to appraisal – early prizes. "e problem with these activities NICE guidance already needs updating. – apart from instances of wasteful duplica- NICE tends to focus on new drugs tion – is that pilots or small- scale local tri- rather than medical devices, (covered by als cannot promote change throughout the guidance from the Centre for Evidence- healthcare system. based Purchasing) or evaluation of service delivery innovations. Arguably, NICE Appraisal should spend more money on appraisal Appraisal is dominated by the NHS because evidence-based guidance carries National Institute for Health Research weight within the NHS. (NIHR). Its health technology assessment research and service delivery research are Spread conducted according to the NICE method- Recommendations from the appraisal ology and are used to produce comprehen- process should ideally be communicat- sive guidance. "e funding levels involved ed to decision-makers who will then be reflect the fact that the majority of new responsible for adopting the changes that technologies are not assessed through this address regional priorities. Other central mechanism – the majority of pilot projects efforts designed to improve spread focus or trials of new technologies or approaches on the organisational capacity for innova- are never formally appraised. tion, primarily improving leadership and In the public sector, only around £62 commissioning. We also included support, million is targeted at appraisal of health such as procurement guidance and fund- services and their improvements, for exam- ing of local communication networks, as ple through NICE guideline development. spread-related activities. "ese resources are critical to determining "e NHS allocates approximately £153 the benefits of innovation and the value million dedicated to system-wide diffusion created through pilots, individual initia- of improvements through bodies like the tives and service changes. NHSI, PASA and NICE’s proposed NHS "e National Institute for Health and ‘evidence portal’, which will take over 72 NICE, “Submission to the Clinical Excellence has 280 full-time staff, from the NHS library and provide a single, House of Lords Science and Technology Committee”, 2005 an annual budget of £35 million and web-based source of evidence.

42 Spending on diffusion and support

Table 2: Estimated spending by organisation per annum. 73

Spread & Funding source Funding body Creation (£m) Early Adoption (£m) Appraisal (£m) Implementation (£m)

EU b HMT RDAs £220 Tax Credits b DTI/DEFRA Technology Strategy Board b DIUS NESTA £2

Higher Education Funding Council £400

BBSRC £208 EPSRC b MRC b DH NIHR b Challenge Fund for Innovation b Research and Patient Beneﬁt Project b Grants Programme Grants for Applied £6 Research Health Technology Assessment b Programme + Horizon Scanning Service Delivery & Organisation £10 Programme Infrastructure and Technology b Research Networks £32 NICE Guidance b NHS Evidence b PASA £26 Centre for Evidence-Based £1 Purchasing Commercial Directorate £1

DH & Wellcome Trust Health Innovation Council £10

NHS Social Enterprise Investment NHS £9 Fund

Design and Production of Solutions NHSI for the NHS eg commissioner/ £41 management tools

Dissemination to Support Adoption b and Spread NIC and Innovation hubs £10 Management Training Schemes £21 Infrastructure b

Total spend £2,377 £113 £62 £153

73 Policy Exchange analysis

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Figure 9: 2008-09 Spending by Organisation 74

Regulators HCSC, NICE, MHRA, HO, DEFRA, BERR, EU

Defra - Cross- funding of DCSF DIUS DH Philanthropy Treasury/FCO Industry RC Institutes /Charities /DBERR

DH Healthcare Trans. Gov. Off. OSCHR Programme Innovation Medicines MISG & for Science Board Board Council Board (TMB) MMTSG

NHS Evidence £50m Centre for Lott. NESTA Health NICE R&D Tax Industry & Evidence Based & TSB Innovation Guidance Credits ˆ£150m VC Funds Purchasing £1m £384m+2+50m Council £10m £35m NESTA £2m ˆ£5.1b/917m

Higher Education EU Health Tax NHS Social NHSI MRC MRC & other NHS (SEIF, Libr, Funding Council Funding in the Credits Enterprise £86m £450m Res. Coun C4H) £73m+8m £400m UK £75m £150m Fund £9m ˆ£930m Funding Guidance Dept.

PASA £26m HE Funding Council ˆ£640m Technology BBSRC RDAs EPSRC Commercial Nat. Inst for Strategy Board £208m £220m £74m Directorate Health Research £25m £1m NIHR £885m £912m Research Charities ˆ£330m

Health Sector Inst. for UK Clin. Res. NHS Inst. for C4H NHS Pur. Innovation Strat. All - HEIF -42m PSRE Knowledge Fund -6m Collaborative Innov. & Imp. NHS Library & Supply Challenge Joint Invest. Transfer (UKCRC) (NHSI) Agn. (PASA) Fund Frame

(SSDA) Know. Know. Trans. Centre for Centre Evi. National NIHR Skills Transfer Net. Partnerships Clinical Based Purch. Innovation Programmes for Health (KTNs) (KTPs) Evidence (CEP) Centre (NIC) (incl. NEAT) Delivery

Society Design Adoption Hub 9 Regional Ctrs. Innov. Health & Dev. Council & Training NHS Innov. & Train. Elect Diploma Hub Hubs Cars (CITEC)

Innovators AHSCs, Investigators, Providers, PCTs, FTs, Incubators, Small Medium Enterprises

74 Policy Exchange analysis

44 6

Lessons from North America

"is section discusses two hospital case access to high quality healthcare, free at the studies that provide lessons for the govern- point of use. "ere is a purchaser-provider ance arrangements of academic health sci- split: local health integration networks ence centres, the development of closer ties (LHINs) act as commissioners on behalf with academia and industry at the provider of the state government, purchasing serv- level and ways to benefit from the commer- ices from autonomous providers. It has a cialisation of research. "e research team decentralisation reform programme that visited the Academic Hospital Network mirrors our own; objectives include reduc- and Sunnybrook Health Science Centre ing waiting times, improving service qual- in Toronto, Canada and the Cleveland ity and increasing care in the community. Clinic and University of Pittsburgh Toronto has strong autonomous hospi- Medical Centre in America. "e defining tal providers, which are closely integrated features of both are the close affiliation with academia and industry and have suf- of leading hospitals and universities and fered relatively little policy interference. Its the freedom they are given to exploit their experience offers lessons for the develop- strengths. "ey compete for status, market ment of our business-oriented founda- share, the best staff and alternative fund- tion trusts as well as the new academic ing streams such as philanthropic endow- health science centres. "e research team ments, venture capital and commercial saw close parallels between the knowledge funding for innovations. economy and provider-base of Toronto and the emerging situation in London, Healthcare and Innovation in Ontario where Imperial College and King’s College are establishing AHSCs. “A lot of ideas come from the bottom up or Because they are operating at full capac- from closer to the point of service and get ity, hospitals in Toronto tend not to com- driven by leaders who have influence.” pete for patients. Nor do they compete for publicly funded research grants because “It’s becoming more collaborative all the these are very limited. However, leading time, where organisations realise that an hospitals do compete for large philan- investment in collaboration is going to result thropic donations on the basis of their in individual improvement as well, so it’s in brand, reputation for innovation and high- the best interest of the system, and it’s in the quality provision. "ey also compete for best interest of the individual institutions.” the best staff, many of whom are attracted by the larger salaries of private healthcare Ontario has a publicly funded healthcare in the US. "e limitations of capacity and system providing its citizens with universal the drive for excellence has led to different

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hospitals specialising in different services – ing research activity and clinical practice. except in the case of cardiac surgery, which Researchers and clinicians interact regu- is a popular source of donations. larly – sharing resources, knowledge and However, the problems in Toronto are engaging in collaborative activities. Product very different from those in England. development is assisted by Sunnybrook’s "e Ministry of Health is concerned that technology transfer office, which has estab- hospital CEOs have trouble saying no to lished a link with its counterparts at the innovations. "is is perhaps because there University of Toronto and therefore has is no body performing the role of NICE, a wide range of experts who can spot determining which innovations represent the commercial potential of specialised value for money and because such a high research. As one interviewee put it: premium is placed on innovation. "e LHINs are supposed to co-ordinate pro- “Most of the time the scientists don’t even viders in the best interests of the local know what they’ve got, they don’t even health economy but there is also a lack of know that they’ve got a commercial idea, collaboration, such as in sharing informa- that’s what I call the hidden nuggets, and tion and best practice, and particularly in it’s like being in a goldmine, you’ve got to co-ordinating procurement and support uncover these nuggets.” services. "is underlines the importance of the commissioning bodies in our emerging Funding comes from a number of sources, system and suggests that organisational including income from a big pharma- freedom must be subject to checks and bal- ceutical company, Sanofi-Aventis, which ances, particularly in the areas of support has established its world HQ for cancer services and information policy. vaccines at Sunnybrook. Sanofi-Aventis pays C$500,000 in rent per annum, and Sunnybrook Medical Centre has enabled the medical centre to get a C$12 million grant to upgrade its research “We believe…that you can make the big- facilities. A further $600,000 in research gest difference if you actually focus your funds is available, which is used at the efforts down, and in an academic health centre’s discretion to support research with science centre have a very clear match commercial promise, plus C$500,000 in between your clinical expertise and your royalty streams from successful product research strengths.” development. "is income has a huge impact on the sustainability and growth Sunnybrook’s strategic plan is based around of the centre. "e Sunnybrook Working four priority areas (trauma, certain cancers, Ventures Medical Breakthrough Fund is a heart failure and stroke care, and high-risk venture capital fund set up to attract inves- maternal and neonatal care). Its strategic tors for promising research and was one of thinking takes a “whole industry” approach the first of its kind in Canada. It has been to healthcare provision, seeking the busi- followed by two further VC funds. "ese ness potential of its research excellence and attract private investment, so that the best exploiting practical opportunities to deploy ideas receive the backing they need to innovations. It claims to be the most suc- develop into beneficial products. cessful healthcare organisation in Toronto As well as nurturing and developing at commercialising its research in terms of new ideas, Sunnybrook draws on research patents, disclosures and spin-offs. conducted elsewhere to adapt its own Clinician-scientists are a major part practices. Interviewees suggested that this of Sunnybrook’s strategy for integrat- is facilitated by open lines of communica-

46 Lessons from North America

tion with other local AHSCs. It is widely with the programme medical director, who accepted that AHSCs have a role in dis- is usually an international authority in seminating the products of their research, the area with expertise in both research as well as implementing them themselves. and clinical care. "e programme medical In part this is motivated by a desire to director’s responsibility is to develop the preserve and enhance the reputation of the strategy for the programme, including the organisation. "is is not to suggest that amount of clinical care offered and the improvements are always taken up, espe- associated research and the education. cially in smaller community hospitals and UHN has three research councils: trau- other organisations which have very dif- ma (focused on cardiac transplant immu- ferent innovation environments, the view nology), cancer (focused on oncology) is that it is easier to embed innovations in and neuroscience. "ere is a common an AHSC. governance framework. "is structure "e culture in Sunnybrook is charac- is overseen by a public board, which terised by the desire to create the future of governs according to a balanced score- healthcare. "ere is pride in the collective card approach. 75 UHN easily meets most achievement and history of the organisa- Ministry of Health performance targets tion, as well as a clear sense of direction and chooses to set its own more strenu- and of what is expected of staff. "e view ous targets to maintain the momentum of of one interviewee was that it is not nec- quality improvement. "ere are 30 indica- essary to drive staff to innovate – they tors on the corporate scorecard for quality are attracted to Sunnybrook because they improvement. Progress is monitored every want to lead the field and see it as a place year and is used to set a strategy map that where they can realise their ambitions. identifies the critical success factors for the following year. University Health Network Vice-presidents are responsible for "e University Health Network (UHN) achieving targets for which they receive a in Toronto is a C$1.2 billion organisation generous bonus (15-20% of their salaries). made up of three hospitals. It provides "e programme management team is held general community services and highly spe- strictly to account for failure. Around half cialist care, and caters for the most complex the VPs will receive their full bonus in mix of patients in Canada, making it the any given year and for the rest it’s a case leading institution in Canada by that meas- of “try harder next time or you’re fired”. ure. UHN has long been a leader in clinical Industrial engineers with experience in innovation – it was the first centre in the process improvement back up the qual- world to administer insulin, it was an early ity team. In Toronto it is common for adopter of bone marrow transplantation experienced clinicians to gravitate towards and it has led pioneering research into stem well-paid managerial positions within hos- cell treatment for cancer. pitals. "ere is a perception that the chief It has five multi-specialty programmes: executive, and not the ministry of health organ transplantation, cancer, heart dis- (MoH), represents the top of the tree in ease, neuroscience and muscular-skeletal career terms. arthritis. Programme managers enjoy a UHN is actively developing internal high degree of autonomy and decision- skills and capacity for quality improve- making. An executive director or a clini- ment and process redesign. A dedicated 75 A balanced scorecard cal vice-president is placed in control of unit is working its way across the organisa- approach is a performance C$150-170 million budget and is given tion, educating staff and standardising pro- measurement framework that adds non-"nancial measures to responsibility for managing that field, along cedures to improve efficiency. "is effort traditional "nancial metrics

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is a response to MoH targets, which aim in the world and merit consideration. to reduce waiting lists by making better "e pressures driving innovation include use of existing capacity. "ey have already the regulation of the Joint Commission, achieved a 25% increase in throughput an independent, not-for-profit body that for targeted diagnostics by improving the accredits and certifies more than 15,000 booking system and methods for patient healthcare organisations and programmes, tracking. It plans to stagger the start times patient choice and the associated pressure for operating theatre staff to reduce con- from the influential US News and World gestion at the beginning of the day, which Report hospital rankings and other volun- has been identified as the cause of delays. tary benchmarking exercises, such as the UHN capitalises on its brand and rep- National Surgical Quality Improvement resentatives to provide project manage- Programme (NSQIP) that was set up after ment services, tele-pathology and other criticism of standards in hospitals run by support services for smaller hospitals in the Department of Veterans Affairs. Ontario. "is benefits other hospitals Compared with many other industr- which lack the expertise or capacity to ialised nations, the American healthcare provide services effectively, and provides system as a whole ranks near the bottom on UHN with an income stream to invest important measures of performance. It lags further in research and organisational behind other countries in the adoption of development. Emphasis is also placed on information technology that could improve the return on the investment in research quality and efficiency. In addition, it does a to provide income. UHN has created poor job of co-ordinating care for patients around 15 companies over the past three with chronic illnesses, a growing popula- or four years to commercialise its research. tion. 76 But medical innovation is a thriving It also has 20 to 30 licensing deals with market in the US. It can be industry-led existing companies, boosting its income where new products enter the market place and funding further innovation. without a targeted and proven use and are Overall, Toronto is a success story – the snapped up by doctors who want to make result of strong leadership and individuals a name for themselves as early adopters. with a vision and the freedom to pursue In such a receptive market money can be their objectives. On the other hand provid- wasted on inappropriate innovations. "e er autonomy and competition has discour- ideal is for beneficial innovations to spread aged co-operation, especially regarding the quickly once proven, while minimising development of shared support services. those that don’t offer value for money. "ere are signs that this is changing with the introduction of commissioning organi- "e Bayh-Dole Act sations and stronger policy direction. "e development of commercialisation arrangements and the steep increase in Healthcare and innovation in the US provider-driven innovation is closely asso- While the structure of healthcare in ciated with a single piece of legislation: the Ontario bears significant similarities to the Bayh-Dole Act 1980. "e federal govern- UK, the situation in America is fundamen- ment typically funds a lot of cutting-edge tally different. Here, the ultra-competitive, medical research, giving it ownership of commercial and financially abundant envi- the associated intellectual property (IP). ronment has produced “survival of the However, it did not necessarily spot the 76 Commonwealth Fund, “Health Policy Reform: Beyond fittest” strategic thinking. One can criticise potential applications or invest heavily in the 2008 Elections”, Columbia many aspects of the system, but the top Journalism Review, Supplement patent protection, and opportunities that to the March/April issue, 2008 hospitals are among the most innovative could have repaid the tax-payers’ invest-

48 Lessons from North America

Case study 5: the National Surgical Quality Improvement Programme Hospitals that sign up to the NSQIP follow a set methodology for data collection to benchmark their surgical outcomes against other providers. "e programme takes a sample of 40% of all the operations performed by general surgeons, colorectal surgeons and vascular surgeons and follows the outcomes of surgery. "is data is entered in a national database and is used to set standards for metrics such as length of stay, wound infections and mortality rates. It also identiﬁes outliers relative to national performance, so that hospitals are alerted to areas of weaknesses that may be endangering patients. Involvement in schemes like this is popular because success is publicised and helps to attract patients; the data also contributes to the highly inﬂuential US News and World Report hospital and department rankings.

ment were lost. "is changed with the has been described as a “crucible for experi- introduction of the Bayh-Dole Act, which mentation and innovation”. 78 With 12 hos- gave inventors and institutions appropriate pitals, 30 surgical centres, 38,000 employ- incentives to co-operate with industry in ees, 2.8 million visits a year and revenues in the development of products. A researcher excess of $4.4 billion, it is a hugely success- may understand the science of a product ful organisation. Its greatest strength is its and a clinician may understand its utility, heart and vascular institute, which has been but they do not necessarily understand the number one in the US News and World market potential and business develop- Report since records began 13 years ago. ment or how to legally protect their idea. Although situated in a city that is suffering Commercialisation offices, also known as from a declining population, the clinic is technology transfer offices, have sprung flourishing because of its global reputation up, bringing in expertise to unlock the for providing the highest quality care. benefits of research and bridge the gap Cleveland Clinic is a clinician-led organ- between the major AHSC providers and isation and a commitment to patient care industry. An estimated 3,500 products and clinical innovation are its raison d’être. have been brought to market, including Delos M. “Toby” Cosgrove, the CEO, is several hundred new drugs. "e Economist a world-renowned cardiac surgeon with magazine has stated that the Bayh-Dole 30 patents to his name. He has performed Act was “possibly the most inspired piece 22,000 procedures at the clinic and made of legislation to be enacted in America over a huge contribution to its finances. He the past half-century. 77 believes that his clinical background helps "e legal situation regarding IP varies his leadership: “It’s hard to have an army from country to country, but a number led by someone who’s never been to war.” have introduced comparable legislation, He has created a new post of chief experi- most notably Germany, while India and ence officer whose job is to track patients’ China are considering doing so. experience and communicate problems to clinical staff as well as representing the Cleveland Clinic patient at board level. Cleveland Clinic is in the process of “#ere’s competition internally, competi- reforming its governance structure: instead tion externally. #ere’s competition with of having separate departments for surgery, other organisations. I think competition medicine and research it is introducing 77 Economist, 12/14/02 makes everybody better.” institutes that bring together clinicians 78 Buescher B and Mango and researchers with a common interest P, “Innovation in healthcare: Established in 1921, Cleveland Clinic is in an area of the body. "e idea is that an interview with the CEO of Cleveland Clinic”, McKinsey & one of the leading providers in the US and researchers gain knowledge of clinical need Company, 2008

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and clinicians gain access to the emerging efits for the local economy and the genera- knowledge in their field. Recruiting staff tion of lifesaving treatments. who can straddle both, so-called clinician- Innovations are assessed on technical researchers, is a priority and a new medical merit, market potential and patentability. school is being developed on the site to A company will only invest if patent analy- provide dual training. "ese efforts are sis can demonstrate exclusivity, business designed to maximise the translation of analysis that there is market potential and research into clinical practice. "is is an clinical analysis that it has a strong poten- area that has been repeatedly identified as a tial to meet a health need. "is is because priority for healthcare in England because investment is high risk: very few products of our strength in academic research and will make it to market and turn a profit; relative failure to capitalise on its applica- it costs in the region of $600 million dol- tion for health and wealth. lars to take a drug to market, for example. CCIC adds value to promising ideas by Commercialisation performing the early risk assessments and Research is integrated with commerciali- building a business case for investors. It sation arrangements. "e clinic seeks to also invests in the development of pro- hire the best staff and encourages them totypes and uses the research capacity of with incentives such as annual innova- the clinic to perform proof-of-principle tion awards and by requiring them to experiments. In addition to licensing deals, make research trips to other organisations CCIC has developed 27 spin-off compa- working in their field. 79 If a clinician or nies, with a further nine in the pipeline. researcher has a good idea, there is a com- Creating spin-offs increases the risk but prehensive infrastructure in place to take it greatly enhances the rewards if successful. forward. Inventors are actively sought out Of the 27 companies created, only one has and are given access to the resources and failed to date. Of course, the benefits are expertise to develop a product. "e clinic not only financial. A recent technology recoups its investment from licensing deals that made it to market is estimated to have and successful spin-off ventures that take a saved 55,000 lives in its first year. beneficial product to market; the inventor is rewarded with 40% of the proceeds. University of Pittsburgh Medical "e Cleveland Clinic Innovation Centre Centre (CCIC) was set up to bridge the skills gap UPMC is an integrated network of prima- six years ago. It provides the clinic with a ry, secondary and tertiary services, closely source of income and allows it to attract affiliated with commissioning and univer- inventors because they can be confident sity research. It consists of 21 hospitals and that their ideas and clinical research efforts some 400 medical sites, and with 48,000 will be duly rewarded. It also plays a cru- employees is western Pennsylvania’s largest cial role in the development and spread employer. UPMC is a not-for-profit organ- of ground-up innovations. Since it began isation generating $7 billion in revenue last work, 253 inventions have been gener- year, $500m of which was surplus. ated from 135 inventors within the clinic. Its success is based on the advantages Cleveland Clinic is also using its expertise conferred by integrating different levels of in cardiac care by creating the Global care, which removes many of the barriers to Cardiovascular Innovation Centre, which the adoption and transfer of innovations. is partially state funded and has attracted "e managerial, clinical and commissioning 79 There is a cash prize of a cluster of biotechnology companies from expertise within the organisation enables it $50,000 to the Innovator of the Year the US and abroad to Cleveland, with ben- to successfully identify, assess and imple-

Lessons from North America

ment beneficial innovations. It has devel- “We can be a large-scale reference site. So as oped an efficient arrangement of specialist they go to market, if their potential custom- services and has introduced services that are ers are wondering, how does this technology traditionally hospital-based into primary work in the market place, they can come care settings through its access to internal here to UPMC and see it. #ey can talk to specialist support. Innovations adopted in our clinicians about why we like it, or what leading teaching hospitals can be more eas- are some of the issues in deploying it. What’s ily transferred to less innovative community hard about it, what’s not? How do we save hospitals if a network is in place. money on it? So we help the companies "e sheer scale of its organisation and actually develop their business [case].” mix of expertise enables it to draw in industry partners for the commercialisa- Whether an innovation is internally tion of research and the early adoption or externally derived, UPMC has a clear of innovations. UPMC has four joint assessment process. First it identifies a venture funds with different companies senior champion within the organisation, worth $170 million, tapping its expertise with the expertise to assess the product in information technology deployment in and make the case for implementation. healthcare. "e network provides funding "is leader is provided with funds and for new ideas to get off the ground, using facilities to pilot it and conduct research. its commissioning expertise to assist in "e next step is to model the cost and market assessment, its managerial expertise impact of implementation, including the to develop roll-out strategies, and its pro- cost of procurement and making the nec- vider base as a test bed to demonstrate that essary changes, and identifying areas where they work in a healthcare environment. As money will be saved in the future. From all one interviewee put it this an implementation plan is developed.

Case study 6: Digital pathology

"e University of Pittsburgh and UPMC have been conducting research into digital pathology for the past 15 years, and are considered a world leader in the field. Currently, tissue samples from biopsies are sent to a pathology lab, where technicians stain them and analyse them under a micro- scope. Digital pathology images the slide so that it can be viewed on a computer screen anywhere in the world and analysed using computer-aided diagnostic tools. "is eliminates delays and the expense of shipping the sample. UPMC are already providing transplant pathology services for an affiliated hospital in Palermo, Italy, which no longer has to employ pathologists or ship samples back to America. "e market for digital pathology products is estimated to be worth $2 billion and although there are other companies developing products, they are all in the early stages. General Electric, the world’s third largest company, has a long-standing interest in digital imaging and entered into a 50-50 partnership with UPMC. Each is providing $20 million and the IP from their research to date to set up a new company called Omnyx. "ey expect to have a product on the market by 2010. Rather than licensing its intellectual property to GE, UPMC will potentially benefit from 50% of the profits. Although this represents a greater risk, there is also potentially a far greater reward. GE has gained a strong clinical involvement, in addition to the research expertise, helping them to work out how to develop the product and how the product should be configured to appeal to the end users.

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University of Pittsburgh Medical hospital, where physicians use the system Centre and the application of IT in for nearly all their documentation. healthcare Physicians were won over by the quality argument. It is too hard to assess current “#is was not about an electronic medical practice with a paper-based system because record; this was about improving quality the data is not available to analyse quality of for patient care.” care. And UPMC’s experience is that with these systems in place, medical errors can be UPMC was an early and successful adopter dramatically reduced through compliance of electronic medical records and now has with core measures of best practice. over a decade of experience in IT systems However, the development of multiple in healthcare. Early attempts to implement systems creates issues regarding the transfer an electronic medical record in the US were of data from one system to another. To a failure because of a lack of enthusiasm solve this, UPMC has deployed dbMo- among clinicians. UPMC developed a strat- tion, a company which provides software egy to engage physicians, ensuring that clin- to facilitate health information exchange. ical representatives were involved from the Its solution gives caregivers and informa- start in the development of applications that tion systems secure access to an integrated would affect their practice. "e most senior patient record, even where the information physician in each department was made sources have no common technology. "is the lead trainer on behalf of CERNER, means that there is no real barrier to sepa- the technology supplier. "e advantage was rately procured and built systems forming that physicians felt in control and could rec- a single health information network; it is ognise the positive impact the technology already being used in national health sys- could have on the quality of patient care, tems in Israel and Belgium. as well as the efficiency of their practice. In IT systems have been at the heart of one hospital, within two weeks of going live UPMC’s recent financial success. As it gets all staff were using the system. clinical information, financial information "e lesson is that IT has to adapt to and human resource information systems to clinical practice, rather than the other way talk to each other, it can begin to develop round, a mistake made by the National a complete picture of its operations and Programme for Information Technology identify the causes of inefficiencies. "is has (NPfIT) in the UK, which has attempted huge advantages for developing management to impose a standardised solution for every strategies, such as how to save time, reduce hospital in the NHS. In contrast, UPMC the cost of delivery and inconvenience to has developed different applications for the patient. "e time between a clinician its academic, community and paediatric referring a patient to a radiologist or asking a hospitals to reflect their different needs. nurse to deliver a medication and the order Its biggest success is the UPMC children’s being carried out has been cut in half.

Case Study 7: International Best Practice Transfer case study: Newcastle FT

“FTs are now signing up open-ended commitments, signing their lives away and their money away to a scheme that may never be delivered.”

Introduction of the NHS electronic medical record has been painfully slow and expensive. "e programme sought to purchase one application, so that all clinical practice must be standardised to ﬁt it.

Lessons from North America

In a departure from the normally risk-averse health culture in the UK, Newcastle Foundation Trust has decided to opt out of the national programme and go it alone at greater expense, using UPMC’s experience and a custom-made system. "e systems it is introducing are designed by CERNER to be fully compatible with the NHS “spine” requirements and will interface with primary care organisations. "e business case has been approved by Monitor, the FT ﬁnancial regulator. And it is designed to go beyond the limited capa- bilities of the national system allowing automated billing and productivity measurement as well as incorporating data on their key quality outcome indicators. Its conﬁdence is such that it is building a new hospital without a paper records department.

Conclusion through product development, while busy "e environment in the NHS is very dif- on research or clinical practice. "is is ferent from the United States and Canada. why, in the NHS, “hidden innovation” Venture capital funding is far less common stays exactly that, hidden. International and endowments are relatively insignifi- examples of academic health science cen- cant as a proportion of income. Alternative tres suggest that they are more innovative funding streams are limited, and the NHS in terms of their research, and are also is a notoriously hard market to crack for effective at developing the skills within the new ventures. "e NHS arguably has a organisation to commercialise the products far better infrastructure for the spread of this research. Within an increasingly of best practice and innovation than the marketised NHS environment, AHSCs Canadian and American systems discussed. will potentially lead to increased product It has powerful central organisations, such development, targeted at health needs in as NICE, setting standards and assessing the UK, while the combination of research new technologies, and protecting against and clinical provision should make them the danger of too much innovation caus- an attractive partner for businesses looking ing waste. But North America has a far for expertise and early market entry. "ere more receptive market for the uptake of are many successful governance models in innovations because of strong leadership, North American organisations. "e lessons organisational autonomy and the pressures for foundation trusts and AHSCs are that to attract alternative funding. organisations should be free to determine Creative individuals cannot be expected their own configuration, while a combi- to draw up a business case, establish start- nation of strong clinical and managerial up companies and navigate their way leadership is a recipe for success.

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Recommendations

Ways to drive innovation and spread should encourage these centres to maintain new ideas in the NHS their global position and status through innovation. "ey should begin to develop Policy Exchange’s vision is for greater alternative funding streams through phil- competition between integrated providers. anthropic endowments for their research "e NHS should continue to learn from work, commercialisation of their research, abroad and allow centres of excellence such consultancy on the implementation of new as academic health science centres, foun- technologies and practices and provision dation trusts and health innovation and for international patients. education clusters, to develop in different Competitive, world class AHSC’s will localities. Britain’s success in biomedical not come into being as a result of gov- research and development comes partly ernment fiat or designation. "e nas- from having independent universities with cent AHSC movement is the product of the freedom to focus and compete in a close association between universities and global environment. "e hospital sector teaching hospitals on the ground, and is needs similar freedom to develop these designed to exploit the freedoms conferred proposed centres of excellence. "ese hubs by foundation trust status. It is based of excellent practice would help hospitals on the success of North American and to develop a brand that plays to academic European examples, which evolved with- and clinical strengths. "ese should lead out central interference. innovation in different services and play a "e best contribution the government role in the dissemination of best practice can make is to allow a loose interpreta- nationwide via consultancy, or alterna- tion of existing legislation. For exam- tively extend their franchise and expertise ple, Imperial College Healthcare NHS to different localities, potentially providing Trust has incorporated St Mary’s and remote specialist diagnosis. Hammersmith Hospital Trusts, neither of which are Foundation Trusts, to form an Free organisations to adopt the best AHSC. "eir business case is solid and the ideas Secretary of State has the right to confer trust ownership, so what is the hold up? 1. "e Government should expand (but "e Medical Research Council earns not interfere with the day-to-day manage- about £200 million per year in com- ment of) academic health science centres mercial funds from exploiting its intel- "e research team welcome the develop- lectual property, which it uses to fund ment of AHSCs, which should attract the medical research. But in December 2007 best clinicians and embed the principles of the Treasury claimed £92 million from the academic rigour and critical inquiry. "is fund to help to pay for general government

Recommendations

spending. "e Government must com- Foundation trusts are now able to exploit mit not to raid this revenue in the future. their intellectual property and enter into AHSCs must be allowed to develop as the commercial ventures that could boost their leading organisations in the hospital sector income and spread best practice. "ey and not have their commercial benefits should be developing long-term business expropriated; those that fail commercially strategies based on their strengths and the should not expect or seek government bail- service gaps in their local health economy outs for their mistakes. and working with their RDA and univer- "e Darzi review proposed a constitution sities to develop a coherent strategy for for the NHS, but it continues to commit attracting biomedical and medical tech- the fallacy of treating the NHS as a single nology enterprises to the area. Arguably, organisation. For example, SHAs have been providers will begin to adopt best practice, given a legal duty to innovate is unlikely to if they have the incentive to do so and be legally enforceable due to its vagueness. are given better access to information on "is will only lead to SHAs micromanage where best practice exists. Ambition can be innovation in their area; genuine innova- encouraged by providing funding for, and tion is driven by front line professionals publicly endorsing, innovative business solving problems and developing ideas. strategies, while allowing for failure where What is needed is a clear statement that the an acceptable risk is involved. Government is legally bound not to raid foundation trust budgets to enable long- Harness the power of procurement to term planning, as well as a statement setting reduce costs and encourage the best out the rules of the game for the long term. ideas to spread In the authors’ view, this should support the generation of new revenue streams and 3. Scrap the procurement hubs below commercial behaviour. PASA Government should dismantle the col- 2. Reduce restrictions on Foundation laborative procurement hubs and consoli- Trusts date all central procurement bodies. "e Monitor’s interpretation of the legislation current system of hubs hinders effective and regulation around academically com- procurement. A central procurement body mitted foundation trusts should take full will have the central task of developing account of the contribution they make to common data standards for all NHS pro- national standards and not just the narrow curement systems in collaboration with local community focus that may be appro- industry. It will review all NHS suppliers priate for purely service oriented organisa- and NHS Trusts to agree a set a common tions. "ere may also be scope for reducing product code and description for any the restrictions on foundation trusts, giving product available to the NHS (suppliers them the freedom to spend funds as they will benefit from greater security of orders see fit without applying for approval. "e and demand forecasts, as well as guarantees authors support the full roll-out of foun- of preferred order status). Local managers dation trust status, with new leadership will need to standardise a procurement where necessary, in order to increase the system across each trust. financial flexibility of hospital providers. "e situation could be improved further 4. Publish costs and a bestseller list of by linking budgets to the three-year plan pharmaceuticals and medical devices cycle so that leaders can invest to save in NHS organisations tend to pay a variety the longer term. of prices for the same inputs. Information

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from current contracts should be collated half times more is spent on the creation to publish recommended prices and the of innovations than these activities com- companies providing the best products at bined. While industry may contribute the best prices. to the diffusion of technologies through "e DH should introduce a bestseller list marketing efforts, generally speaking alter- of pharmaceuticals, medical devices, clini- native sources of investment are heavily cal practices, delivery models and manage- weighted towards the creation of innova- ment. Apart from increasing awareness of tions, so government efforts are paramount new, popular products, this can serve as in facilitating spread. a signalling device – if an innovation has Also, despite the role of NICE in promot- been widely adopted then it is likely to ing innovation in the NHS, the Government be useful to your group as well. "is list contributes around half as much to the would not only contain cumulative adop- appraisal of innovations as it does to early tion figures but would break them down adoption, and adoption funding is set to according to user group, GPs or neurosur- increase by around £70 million. "is is geons, for example. perverse because early adoption is essentially Guidance should be based on the local and will not in itself lead to widespread reforms of organisations like Nuffield change, or even sustainable adoption in the Health. To unlock economies of scale, target organisation as pilot schemes usually hospitals should be encouraged to enter have only short-term funding . into local agreements to procure com- Evidence-based guidance spreads rela- mon products. Savings of more than tively rapidly within the NHS, with clear 10% can be achieved using common dissemination responsibilities placed on data standards rather than the current PCTs and adoption monitoring by the imposition of collaborative procurement Healthcare Commission. Extra funding hubs. Where there are a number of could be used to increase NICE appraisals potential suppliers Trusts should con- of medical devices and changes in serv- sider using mechanisms such as reverse ice delivery, as well as ensuring effective auctions which reduce tendering costs horizon scanning and the development of and produce a genuine price. In order to comprehensive clinical guidance. Funding do this, trusts will have first to assess the is too heavily weighted in favour of the quantities required, and commit to pro- generation of knowledge and innovative curing that amount, to provide security products, yet the value of these activities for the companies bidding and reduce is diminished if they do not lead to widely costs. "is guidance should be provided dispersed health benefits. as part of NHS Evidence, a one-stop website for evidence-based information. Improve the funding system

5. Refocus spending on appraisal and 6. Create a best practice tariff spread "e authors welcome the commitment to Shift a proportion of annual spending introduce a new best practice tariff from from innovation to developing clinical 2010-11. Financial incentives can be used guidance, dissemination, diffusion research to create an appetite for improvement, by and implementation support. Our research linking the tariff to an innovation agenda. suggests that insufficient public money is "e latest tariff prices have gone a long way spent on spreading innovations through towards “unbundling” the tariff, but there guidance, dissemination activities and is huge variation across the country in the implementation support. Twelve and a costs of delivery. Ideally, the tariff should

56 Recommendations

reflect the cost of efficiently providing best Under the Commissioning for Quality practice. In order to do this, it must be and Innovation programme, commis- based on a standardised, normative cost, sioners will be able to provide bonus derived from research on efficient, high- payments for quality improvements in quality performers. locally determined clinical areas. #e expe- #e NHS Institute for Innovation and rience of Premier Inc in the United States Improvement has mapped out and costed has informed this policy. But the pilot nine transferable best practice processes, in scheme in the North West SHA does not areas with the greatest variation in costs. incorporate the penalties used in the US A sample of these should be used to set a for failures to improve performance. #is pilot normative tariff for roll-out over two important sanction should be introduced years, bringing organisations into line with in England to boost the performance of the most efficient, high-quality practices. under-performing hospital trusts. A more integrated funding methodology needs to be developed. Other jurisdictions 7. Include pay-for-performance bonuses with prospective payment-by-results sys- in clinician and managerial contracts tems have adopted tariffs that reflect com- Clinicians’ contracts should include a pay- plexity, co-morbidity and academic activ- for-performance element, linking in to ity. #ere is also a need to ensure national successful implementation of board and commissioning for specific national pro- departmental directives. Managerial incen- grammes rather than passing all through tives should be linked to improving out- regional commissioners. comes as well as financial performance.

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Glossary

Academic Health Science Centres Biotechnology (AHSCs) Technology based on biology Combinations of Universities and Hospitals with joint managerial and gov- Biopharmacology ernance structures and integrated research A branch of pharmacology that studies and clinical practice departments the use of biotechnologic drugs

(Acute) Hospital Trust British Medical Association (BMA) Hospitals are managed by acute trusts "e independent trade union and professional association for doctors and medical Adoption students "e decision to introduce an innovation at an organisational level Cardiac arrhythmia A term for any of a large and heterogene- Appraisal ous group of conditions in which there is "e analysis of medical and health abnormal electrical activity in the heart economic evidence using a defined methodology and criteria, to inform the Care Quality Commission decision on whether to adopt a medical "e NHS quality regulator replacing the innovation Healthcare Commission and incorporating regulation of social care services Bayl-Dole Act "e Bayl-Dole Act, which took effect in Carpal Tunnel Syndrome (CTS) 1980, forever changed the relationship A condition in which the median nerve is between biotech and academia by giv- compressed at the wrist ing federally funded universities control over scientific discoveries. "is allowed Centre for Evidence-based Purchasing academic institutions to engage in tech- (CEP) nology transfer, or the turning over of CEP is part of the Purchasing and discoveries to the commercial sector Supplies Agency (PASA) and collates evidence to inform procurement of new Benchmarking products "e process of comparing the cost, time or quality of what one organisation or CERNER individual does against what another does "e US healthcare information technology supplier Best Practice "e best technique, method, process or Clinical Practice Guidelines activity for achieving a common outcome "ese are recommendations, produced by NICE, based on the best available evi- Best practice tariff dence, on the appropriate National tariff price accurately reflecting treatment and care of people with specific the cost of best practice diseases and conditions

58 Glossary

Collaborative Procurement Hubs Creation Bodies providing advice to groups of "e generation of knowledge through aca- NHS trusts, normally within the same demic research, translational research and strategic health authority or regional clinical research, culminating in product boundary, designed to improve col- development and commercialisation laboration in procurement and supply chain decision-making, in conjunction CT Scanners with NHS PASA and other organisa- Originally known as EMI scanners after tions including Office of Government the company that developed them, Commerce (OGC) and Regional Computerised Tomography is a medical Developments Agencies imaging method using x-ray images to create a three-dimensional image Commercialisation "e process of introducing a new product Culture into the market Patterns of human activity within institutional structures that give these activities Commissioning significance and meaning "e act of granting certain powers or the authority to carry out a particular task Cultural silos or duty "e separation of different groups within the health service community, leading to Commissioning for Quality and tension and a failure to collaborate Innovation Scheme (CQUIN) Scheme which aims to encourage all NHS Demand forecast organisations to pay a higher regard to qual- Setting the level of demand with a sup- ity by introducing incentive payments for plier for a given period better performance against agreed metrics Diagnostics Communities of practice Technologies for the identification of "e process of social learning that occurs health problems and shared sociocultural practices that emerge and evolve when people who Diffusion have common goals interact as they strive "e process of an innovation’s spread via towards those goals multiple adoption within a system

Comprehensive Spending Review Digital pathology Governmental process in the United "e study and diagnosis of disease Kingdom carried out by HM Treasury through examination of tissues and bodily to set firm and fixed three-year depart- fluids from digital images mental expenditure limits and, through public service agreements, define the key Disruptive information improvements that the public can expect Information that disrupts ingrained work- from these resources ing practices by making problems public

Connecting for Health Dissemination "e body charged with rolling out the "e process of communicating the ben- NHS information technology programme eﬁts of an innovation

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Evaluation Horizon scanning Scientific trials designed to assess the risks Anticipating and preparing for future and benefits of a health technology and challenges, trends and opportunities produce evidence for appraisal Implementation Foundation Trust "e process of sustainably embedding an Foundation trusts are run by local manag- innovation throughout an organisation ers, staff and members of the public and have been given more financial and opera- Incentives tional freedom than other NHS trusts Any factor (financial or non-financial) that enables or motivates a particular course of Healthcare Commission action, or counts as a reason for preferring "e outgoing quality and standards regu- one choice to the alternatives lator for the NHS Innovation Healthcare Industry Task Force (HITF) A novel set of behaviours, routines and A group led by Lord Warner, ways of working that are directed at Parliamentary Under-Secretary of improving health outcomes, administra- State for Health, Lord Sainsbury, tive efficiency, cost effectiveness or user’s Parliamentary Under-Secretary of State experience, and that are implemented by for Science and Innovation, and Mr Mike planned and co-ordinated actions O’Brien, Minister of State for Trade and Investment intended to deliver recom- Local Health Integration Networks mendations for the benefit of patients and (LHINs) to stimulate science and industry in the "e 14 LHINs in Ontario, Canada plan UK to improve manufacturing, invest- integrate and fund health care services ment and exports and oversee nearly two-thirds of the $37.9 billion health care budget in Ontario Health Innovation Education Clusters (HIECs) Medicaid programme DH sponsored clusters bringing together Free medical programme in the USA for partners from primary, community and low income individuals and families secondary care, universities and colleges, and health service industries Medical research council (MRC) National Research Council promoting Health Resource Groups research into all areas of medical and Groups of case mixes (procedures of simi- related science with the aims of improving lar complexity and costs) that are used as the health and quality of life of the UK a means of determining fair and equitable public and contributing to the wealth of reimbursement for care services rendered the nation in tariff prices Medicare programme Health Technology Assessment (HTA) Medicare is a social health insurance HTA analyses technology through the programme in the US for people over synthesis or systematic review of scientific 65 or with a disability that makes evidence, and is used by NICE to inform standard private (actuarial) insurance its technology appraisals unaffordable

60 Glossary

Middle Managers National Quality Board A layer of management or senior adminis- Board reporting to ministers providing tration in an organisation whose primary a strategic overview of clinical priori- job responsibility is to monitor activities ties for quality improvement, to help of subordinates while reporting to upper improve the metrics for measuring management quality

Ministry of Health (MoH) National Surgical Quality Improvement "e Ministry of Health and Long-Term Programme (NSQIP) Care is the Government of Ontario A voluntary programme for monitoring ministry responsible for administering and benchmarking surgical outcomes in the healthcare system and providing the US services Networks MRI Scanners Connections between individuals and Magnetic Resonance Imaging institutions, providing a forum for communication National Institute for Health and Clinical Excellence (NICE) NHS Confederation "e National Institute for Health and "e NHS Confederation is the independ- Clinical Excellence (NICE) is the inde- ent membership body representing 95% pendent organisation responsible for of the organisations in the NHS as well as providing national guidance on the pro- a growing number of independent health- motion of good health and the prevention care providers and treatment of ill health NHS Direct National Institute for Health Research Healthcare information service for Manages the Department of Health’s patients Research and Development budget NHS Evidence National Institute for Innovation and A single portal for the dissemination of Improvement (NHS Institute) medical appraisal evidence for the NHS, "e National Institute for Innovation which is currently being established as and Improvement supports the NHS by part of NICE developing and spreading new ways of working, new technology and leadership NHS Live guidance A free, national learning network supporting staﬀ, patients and their National Procurement for Information communities to realise local ideas for Technology (NPfIT) improvement An initiative by the Department of Health in England to move the NHS NHS National Technology Adoption towards a single, centrally-mandated Centre electronic care record for patients and to A new organisation which works directly connect 30,000 GP surgeries to 300 hos- with NHS clinicians, managers and com- pitals, providing secure and audited access missioners to overcome barriers to the to these records by authorised health pro- adoption of beneﬁcial technologies that fessionals are failing to spread

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Non-Hodgkin’s lymphoma performance pilot for the Medicare and A type of cancer derived from lym- Medicaid programmes phocytes, a type of white blood cell, excluding Hodgkin’s lymphomas Primary Care Trust (PCT) (Hodgkin’s disease) PCTs manage primary care provision and control 80% of the NHS budget, com- Normative tariff missioning care to meet local needs Sets costs in accordance with a prescribed standard, which is modelled on efficient, Procurement evidence-based practice "e purchasing of products or services, here referring to the purchasing activities Oesophageal Doppler Monitoring of NHS Trusts to assist with their function Uses an ultrasound probe placed in the oesophagus to monitor blood flow during Purchasing and Supplies Agency (PaSA) surgery An executive agency of the Department of Health designed to ensure that the NHS Office for the Strategic Coordination of in England makes the most effective use Health Research (OSCHR) of its resources by getting the best pos- Coordinates medical research in the UK, sible value for money when purchasing overseeing the activities of the MRC and goods and services NIHR Quality Observatories Patient choice SHA units proposed by Lord Darzi to mon- Patients now have a free choice upon itor the quality of performance in the NHS referral of any provider that meets NHS regions, informing SHA service improve- standards and the tariff price ment policies and supporting commissioners

Patient pathway Radiotherapy "e patient’s path from first GP visit to "e use of high energy x-rays and similar the conclusion of treatment rays (such as electrons) to treat diseases for example, to destroy cancer cells Pay for Performance An emerging movement in health insur- Refinement ance/commissioning, in which provid- "e process of developing a product for ers are rewarded for the quality of their market healthcare services Reverse auctions Piloting A tool used in industrial business-to-business Refers to early adoption of an innovation, procurement whereby the role of the buyer where a short trial period can be used by and seller are reversed, with the primary an organisation or healthcare system to objective of driving purchase prices down- assess the evidence for, or guide, future ward. In an ordinary auction buyers com- adoption pete to obtain a good or service. In a reverse auction, sellers compete to obtain business Premier Inc. An alliance of not-for-profit hospitals Royal colleges and health systems organisations in the "e royal colleges represent different US, charged with managing the pay for medical professions and are responsible

62 Glossary

for representing their members and main- ments, which healthcare oganisations taining professional standards are expected to deliver

Silo budgeting Tariff Separate budgets controlled by different "e tariff sets the national price for people leading to an inflexibility accessing groups of procedures, based on the cost funds data provided by NHS trusts

Simulation modeling User Computer models of care pathways which "e clinical, managerial or administrative can be used to estimate the impact of dif- personnel charged with using a new tech- ferent variable values on outcomes nology, or operating a new process

Spread US News and World Report See diﬀusion US News and World Report Best Hospitals provides a list of the best hospi- Stock control tals in the US based on their reputation, Aims to minimise the cost of holding mortality rates and a mix of care related these stocks whilst ensuring that there factors are enough materials for production to continue and be able to meet customer Value Chain Costing demand An activity-based cost model that contains all of the activities in the value-chain Strategic Health Authority (SHA) (design, procure, produce, market, dis- SHAs manage regional commissioning tribute/render and post-service a product and (most) provision, setting local strate- or service) of one organisation gic priorities Wellcome Trust SHA Link Directors Charity funding innovative biomedical Each SHA has nominated a director research, in the UK and internationally, (known as a link director) to work with spending over £600 million each year the NHS Institute on enabling service improvement. For each link director, World Class Commissioning the NHS Institute have identiﬁed a cor- "e world-class commissioning aims to responding NHS Institute director to deliver a more strategic and long-term promote a closer working relationship approach to commissioning services, between organisations with a clear focus on delivering improved health outcomes. "ere are four key Targets elements to the programme; a vision "e current healthcare targets were pub- for world-class commissioning, a set of lished in July 2004 by the Department world-class commissioning competencies, of Health in National Standards, an assurance system and a support and Local Action: Health and Social Care development framework Standards and Planning Framework 2005/2006-2007/2008, and set out the Government’s priorities for improve-

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Appendix 1

Description of Government bodies designed to promote NHS innovation

"e National Innovation Centre (NIC) 2008 to improve the identification and "e NHS National Innovation Centre accelerate the development of promising (NIC) aims to speed up the development healthcare technologies and products. It of pre-commercial technologies likely to brings together two existing programmes benefit the NHS. It provides a resource – new and emerging applications of tech- for innovators to develop their ideas and nology (NEAT) and health technology access NHS funding. NIC calls on the devices (HTD). It funds the development resources of key national and interna- of basic research linked to a clinical need, tional organisations to provide tailor-made from proof of concept and research and plans for rapid and successful intellectual development, to small-scale production property development. It also co-ordinates and trial. It establishes closer links between the activities of the regional innovation the existing funding streams and a range of centres, or hubs, liaises with the healthcare ideas generators, such as the research coun- industry and, where appropriate, develops cils, the NHS national innovation centre, ideas that come from outside the NHS. the technology strategy board, healthcare Commercialisation of innovations aris- technology companies and organisations ing from within the NHS is managed by that can take products to market. the nine innovation hubs in England, most In other countries, such as the US, the of which are funded by the Department Government is less involved in the devel- for Innovation, Universities and Skills opment of innovations because organisa- (DIUS) and the Office of Science and tions at the provider level and within Technology (OST), via the Public Sector industry are motivated to fulfil this role. Research Exploitation (PSRE) fund, and by the Department of Health (DH). "e National Horizon Scanning Centre "e hub network was set up to sup- (NHSC) port NHS trusts and primary care trusts Horizon scanning is defined by the Office (PCTs) by identifying and developing of Science and Technology (OST) as: innovations that will benefit patients and “the systematic examination of potential society as a whole. "is is made possible threats, opportunities and likely future through the network’s activities and serv- developments, including (but not restrict- ices and by adoption of the DH guidance. ed to) those at the margins of current "e hubs offer legal and commercial sup- thinking and planning.” port to NHS staff who have a pre-market "e NHSC aims to provide advance product. In doing so, each hub serves the notice to the Department of Health in NHS organisations in its area by identify- England and national policymakers, including, protecting and developing intellectual ing NICE, of selected new and emerging property sourced from within the NHS. health technologies that may require evaluation, consideration of clinical and cost "e National Institute for Health research impact or modification of clinical guidance and the Invention for Innovation (i4i) before launch in the NHS. Its activity Programme includes pharmaceuticals, medical devices, "e i4i programme was launched in July diagnostic tests and procedures, therapeutic

64 Appendix 1

interventions, rehabilitation and therapy, l provides practical guidance, education public health and health promotion inter- and training to those involved in pro- ventions. For any non-pharmaceutical tech- curement throughout the NHS; nology, the notice period before UK mar- l promotes creativity from suppliers and keting is approximately 12-18 months. 80 encourage small and medium-sized Effective horizon scanning is centrally enterprises (SMEs) to do business important because it allows assessment of with the NHS; safety, efficacy, value for money and cost l promotes sustainable development effectiveness, and it informs and primes within the NHS and its supply chain to the development of implementation strat- reduce the negative environmental and egies. However, the quality of forward social impacts of procurement deci- planning in the NHS has been heavily sions and increase the positive ones; criticised, particularly in the case of non- l encourages the introduction of ben- pharmaceuticals, for which NICE does not eficial, innovative products and tech- commonly introduce guidance and trusts nologies into the NHS; must rely on the NHSC and purchasing l supports the national priorities of organisations alone. the NHS.

National Institute for Health and Centre for Evidence-based Purchasing Clinical Excellence (NICE) (CEP) "e National Institute for Health and CEP provides impartial and objective Clinical Excellence (NICE) is the independ- information about medical technology to ent organisation responsible for providing help the NHS make better purchasing national guidance on the promotion of decisions. It provide reports and guidance good health and the prevention and treat- to help decision-makers build business ment of ill health. In particular NICE guid- cases to underpin purchasing choices by ance covers: health technology assessment summarising evidence, undertaking equip- and guidance on the use of new and existing ment evaluations and collating product medicines, treatments and procedures with- specifications and market intelligence. in NHS clinical practice, and clinical practice guidelines on the appropriate treatment Health Protection Agency (HPA) and care of people with specific diseases and HPA provides independent testing and conditions within the NHS. 81 support services to the National Health NICE now runs NHS Evidence, which Service, local authorities, health profes- is a new web-based service set up in sionals, national and international bod- response to the Darzi review to help pro- ies, industry, and universities. It has three fessionals access appropriate evidence- national centres as well as teams that pro- based information. "is replaces the NICE vide services at a regional and local level and implementation directorate. aims to apply knowledge of patient safety to practical applications which have a clinical, Purchase and Supplies Agency (PASA) public health or financial benefit. NHS PASA is an executive agency of the Department of Health. It Knowledge Transfer Networks (KTNs) Knowledge transfer networks are funded l provides strategic guidance on pro- by the Technology Strategy Board to help curement to the NHS where procure- businesses innovate by providing them 80 http://www.pasa.nhs.uk/ PASAWeb/NHSprocurement/ ment is taking place at a regional or with networking and partnering opportu- CEP/NHSC.htm local level; nities, giving them up-to-date knowledge 81 http://www.nice.org.uk/

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on markets, technologies and routes to Technology Co-operatives that are DH funding and giving them a voice to influ- funded and conduct research into technol- ence our strategy and government regula- ogy solutions for specific needs. tion and standards. "eir main role is to put companies and innovators in contact The NHS National Technology with the knowledge and funding that they Adoption Centre need to bring new products and processes The NHS National Technology to market. Adoption Centre (adoption hub) was launched in Manchester in September 2007 e NHS Institute for Innovation and to promote the increased uptake of innova- Improvement tive technology in the NHS. Its role is to "e NHS Institute for Innovation and help organisations navigate the complexity Improvement supports the NHS in trans- of the “NHS adoption landscape” by sourc- forming healthcare for patients and the pub- ing new technologies, increasing their uptake lic by developing and spreading new ways of and improving understanding of how new working, new technology and world-class technologies are adopted by the NHS. leadership. It is looking at spreading best It aims to review up to 200 technolo- practice throughout the system, including gies that have already received regulatory current best practice within the NHS. "is approval and have been clinically and/or involves directly observing how services are economically praised but have not been being delivered and engaging with people easily adopted. For 15 of these it will on the ground to produce a system in which manage the implementation process, and best practice is spread efficiently. A priority will identify changes to the pathway or is to work on the tools that make evidence service needed to unlock the full benefits more widely available and used. of the innovation. In each region, there are innovation hubs For each successful technology the cen- funded by the Department of Trade and tre will produce a clear “adoption map”’ Industry and reporting to the Innovation of how to manage the adoption process. It Centre; there are also adoption hubs funded will also develop a full business case justifi- by the Department of Health and reporting cation for introducing the technology and to the NHS National Technology Adoption implementing any associated changes. It Centre, and there are procurement hubs will engage clinicians especially, at an early reporting to the Purchasing and Supply stage, to win support and promote wider Agency. In addition, there are Healthcare dissemination and uptake.

66 Appendix 2

Funding calculations

Funding source Funding body Assumptions Reference Date Notes

EU Statistics annex to European Commission Annual Report

HMT RDAs £2,200m invested in regions; 10% ).5#VEHFU 2008/09 on healthcare products and services. Distribution of funding varies according to regional priorities but they are predominantly focused on wealth creation activities.

Tax Credits R&D tax credits in 2008 estimated ).51SFCVEHFU 2008/09 BUbNIFBMUIDBSFBU/P report and Comprehensive information was found to inform the Spending Review - distribution so we assumed an even split exceeding 10,000 credits; along industry activities, although we http://www.hmrc.gov.uk/ would expect higher levels in creation. randd/#1

DTI/DEFRA Technology Assumes same level of funding as Technology Strategy Board 2006 Strategy Board 2004-2006. Total project costs Annual Report 2006 awarded over this period divided to give estimated annual spend in bioscience and health.

DIUS NESTA NESTA Annual Report

Higher Education This is a prospective value and is likely Best Research for Best Funding Council to be inﬂated. The total research spend Health; Recurrent grants for JTbN 2008/09: Final Allocations

BBSRC PGbNSFMBUFEUPNFEJDBM Delivering Excellence 2008 3JTJOHUPbNCZ innovation with Impact: BBSRC 2011 Delivery Plan 2008 - 2011; http://www.bbsrc.ac.uk/ organisation/spending/ analysis.html

EPSRC 11% of current grants are healthcare http://gow.epsrc.ac.uk/ related (£369m). The annual budget ListSectors.aspx JTbN4JODFTPNFPGUIJTXJMMCF centre costs and grants may include non-healthcare components, the annual spend on health was estimated at 10% of this ﬁgure.

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MRC http://www. timeshighereducation.co.uk/ TUPSZBTQ TUPSZ$PEF 3§ioncode=26

DH NIHR NIHR funding in other categories has http://www.nihr.ac.uk/ 2008/09 been deducted from total spend of about_funding.aspx bN

Challenge Fund The Challenge Fund for Innovation aims Best research for best bNJO for Innovation to promote and accelerate health implementation plan estimate rising gradually to the transfer of knowledge and 6.4 Invention for innovation £13m in 2009/10; innovation between the NIHR and the programme therefore assumed to NHS rise £3m per annum

Research and Transforming Health Patient Beneﬁt Research Project Report Project Grants

Programme This is projected to increase rapidly to Transforming Health Grants for bN Research Project Report Applied Research

Health Innovation Nation 2008 Technology Assessment Programme + Horizon scanning

Service Delivery NHS Institute Business Plan 2008 This includes & Organisation 2008/09 spending Programme commitments totalling £34.1m from PCTs and excludes income of £2.4m

Infrastructure and NHS Institute Business Plan 2008 Excludes income of technology 2008/09 bN

Research NHS Institute Business Plan 2008 Including £8.1m from Networks 2008/09 commissioners

NICE Guidance NICE HTA is done in conjunction with http://www.parliament. the NIHR and Universities. The NICE the-stationery-ofﬁce. budget is assumed to relate entirely to DPVLQBDN its own staff and guidance production DNIBOTSEDN remit. UFYUXIUN

NHS Evidence The budget for NHS Evidence is The National Knowledge assumed to be equivalent to the NHS 4FSWJDF1MBO Library, which has been moved from the NHSI to NICE and been rebranded.

68 Appendix 2

PASA Includes procurement hubs and CEP PASA Annual Report and "DDPVOUT

Centre for PASA Annual Report and 2005/06 Pre-merger - Evidence Based "DDPVOUT subtracted from Purchasing PASA budget to reﬂect their different roles

Commercial http://www.theyworkforyou. Parliamentary Directorate com/wrans/?id=2008-02- response EI

DH & Wellcome Health Innovation bNPWFSZSTQSPWJEFECZ Innovation Nation 2008 Trust Council the Wellcome Trust has been deducted as non-public funding - private source states that IC is focused on invention

NHS NHS Social bNPWFSZFBSTGPSTPDJBMFOUFSQSJTFT NHS Institute Business Plan 2008 *ODMVEFTbN Enterprise in health and social care from commissioners Investment Fund BOEFYDMVEFTbN income

NHSI Design and NHS Institute Business Plan 2008 This includes Production of spending Solution for commitments the NHS eg UPUBMJOHbNGSPN commissioner/ PCTs and excludes management JODPNFPGbN tools

Dissemination to Includes £1.25m projected for the NHS Institute Business Plan 2008 Excludes income of Support Adoption Adoption Centre and NHS Live website bN and Spread

NIC & Innovation NHS Institute Business Plan 2008 Including £8.1m from hubs commissioners

Management NHS Institute Business Plan 2008 *ODMVEFTbN Training from commissioners Schemes BOEFYDMVEFTbN income

Infrastructure NHS Institute Business Plan 2008 Includes £1.2m from commissioners

www.policyexchange.org.uk t Even when backed by clear evidence, new technologies and practices inch their way too slowly through the vast web of structures that make up the National Health Service. This is one of the reasons our standards often fall below those of comparable countries. Data collected by the World Health Organisation shows that premature deaths from causes that are preventable with prompt and effective healthcare are higher in the UK than Germany, Canada, Australia and France. A lack of MRI and CT scanners can lead to long waits for diagnostic tests, while shortages in radiotherapy equipment are a factor in our comparatively poor cancer treatment. Among European countries, the UK is consistently below average in the adoption of new drugs for the treatment of certain common cancers. And within Britain, too, there is an unjustifiably wide variation in outcomes of care.

To understand why it is so difficult to spread new technologies and practices within the NHS, the authors of All Change Please interviewed more than 80 senior healthcare professionals here and in North America. Professor Barlow and Jamie Burn discuss challenges the NHS faces spreading the best ideas through the health system. They provide new analysis of how much is currently spent on innovation and diffusion, and make seven recommendations on how to improve the system.

£10.00 ISBN: 978-1-906097-38-7

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