Turning the Titanic – pursuing excellence for all

Will financial hardship be the catalyst the NHS needs to reinvent systems and embrace innovation?



Claudia Hammond (chair), Presenter, BBC Radio 4 and BBC World Service

Richard Blackburn, Managing director, Pfizer UK

Paul Corrigan, Management consultant and executive coach, freelance

Jim Easton, National director for improvement and efficiency, NHS

Richard Kaplan, Associate director, National Cancer Research Network

Patrick Nolan, Chief economist, Reform

Chris Toumazou, Director and chief scientist, Institute of Biomedical Engineering, Imperial College London



Claudia Hammond Thank you for coming. We have three themes before us today: what we mean by innovation; how receptive the NHS is to innovation and what can be done about that; and whether the tighter fiscal environment is going to drive or hinder innovation.

In the NHS, money is undoubtedly going to be tight, with the combination of an ageing population and ever-improving - but often costly - technologies. In the three years from 2011 onwards, the shortfall between rising costs and the available budget will require estimated efficiency savings of £15bn-£20bn. It could be argued that innovation straddles the competing priorities of providing the best health care and staying within budget. Technological and pharmacological developments can save lives but are expensive. However, they could provide the key to running a cost-effective service.

In discussing what place there is for innovation in the NHS of today and tomorrow, I want to start with some concrete examples of what we actually mean by innovation. Jim Easton, what recent innovation do you think has made a real difference?

Jim Easton I am interested in innovation that both increases measurable quality of care and reduces unit costs. Health care is almost unique in that - not just in the NHS, but worldwide - innovation is seen as increasing costs rather than reducing them. There needs to be a deep structural change in understanding innovation.

The things I have seen that have most excited me recently involve the application of medical front ends to ubiquitous communication technologies. We are seeing the development of all sorts of devices that allow you to monitor and manage people in their homes and hospitals. As soon as you have created a usable, cost-effective front end that can sit on existing communications technology, you unlock the potential of self-management or remote management instead of this huge infrastructure that is about sucking people towards expertise, with all the costs that involves.

I think we are on the cusp of a breakthrough, but we have known that for a long time. The issue is: why do we not do it? The NHS brings some specific and important context that we need to change. However, I think it is deeper than the NHS.

Claudia Hammond Paul Corrigan, what do you think innovation means when it comes to health care?

Paul Corrigan I would define it as significantly better outcomes for significantly fewer resources. In the NHS, we think that is very difficult, but actually, all the technology in this room we are using now falls into that category. There is a whole range of industries which take that as normal. Jim is right; it is not just our health-care system that fails to recognise that, it is all health-care systems in developed countries. One of the reasons is that, over many decades, we have seen that the only way in which health care can have value added to it is through coming into contact with a doctor, a nurse or a piece of kit. However, most other industries now recognise that customers add value themselves.

The people who currently own all the value - let us call them doctors - have to recognise that other people - let us call them patients - can add value. This is a very radical shift because doctors genuinely do believe, in the nicest possible way, that they are the givers of health care and that I, as an "ageing population" person, am a drain on value. The problem for developed countries is that I have stayed alive and, because of that, I am a drain on value. In many other industries, an ageing population is seen as something that can add value, but apparently not in health care.

Jim Easton Let me give you a practical example. I have a chronic health problem. I went for my six-monthly check-up and my GP, who is excellent, brought up a checklist on the PC and read out each question to me. I answered each question and they typed the answer into the computer. At the end of it I said, "Do you mind me asking what value you added to that as a doctor?" And she said, "I hadn't really thought about it, but none at all."

Claudia Hammond You could have done that at home.

Jim Easton Yes. We have not unlocked the health gain and the cost potential. It is about the deep model of health care. If we think it is some easy policy change without tackling Paul's fundamental challenge, we will continue to be frustrated.

Claudia Hammond Innovation could mean different things in different areas. Richard, what does innovation mean in your area of cancer?

Richard Kaplan We hope that the interventions of the future will be more about preventing cancer than they are now. Right now the biggest focus is on treatment, but the stage is set for being able to prevent cancers because we are beginning to understand the way cancers arise and the molecular and genetic changes that lead to them. As we target those changes, we ought to be able to change the history of the way cancer works across the population. That will lead to longer survival, more drain on the economy in some ways, and presumably a rise in other diseases that will take over.

Claudia Hammond What would that mean in practical terms of innovation?

Richard Kaplan Cancer medicine will be stratified medicine in the future. It will be the use of interventions or drugs in the specific populations with the highest chance of responding to them. That is going to save expense across the board; patients who are not going to respond to treatments will not receive them. The cycle of finding out which drugs work for which patients will speed up because we will be able to target those initial studies more quickly. I think those will be the practical implications in the cancer field.

Claudia Hammond What do you mean by innovation in health, Patrick?

Patrick Nolan Innovation is getting people to do things differently and to do different things. We must understand that the health service is just that - a service - so it is all about the people, and what they do during the day at their jobs. Other countries have gone further than the UK with ICT and have managed to adopt some of these technologies. In Denmark, for example, if you are unfortunate enough to get hit by a bus and end up in A&E, a doctor can access your personal records on a handheld PDA. If we look at other industries, such as transport or travel, it is amazing what you can do online. Other industries and countries can do it, so why are we not doing it now?

It is a different sort of change, in that it is not a change you can plan for. If you look at innovation in other industries, new entrants drive most of it. We had IBM; then Microsoft came in and fundamentally changed business. Then Google came in and fundamentally changed business. This is the power of new entrants. The process of change that is driven by the market can really drive innovation.

Richard Kaplan Innovation is proactive change, as opposed to reactive change.

Claudia Hammond Separate companies can come up, doing the latest things online, but can something as big as the NHS ever do that?

Paul Corrigan If the NHS is a single organisation, the answer is definitely "No". If the NHS is a range of organisations in a system, then it is
like a software industry. The NHS has to stop treating itself as if it is a single organisation with, say, a single chief executive who pretends he is the chief executive of an organisation when it is actually a system. If we can encourage new entrants into our system, they will do the types of things that have just been described - then it is just like another service. If we see it as a single organisation, we have big problems.

Jim Easton I agree with that strongly. I think the leadership of the NHS would agree, but it is a complicated thing. People underestimate the scale of the NHS; with 1.4 million people, it is a large enterprise. It is like quantum physics: sometimes it looks like an organisation, sometimes it looks like an industry. In some ways, using the word system is a compromise between those two, because it really acts like a system. Sometimes it pretends to act like an organisation, often a failed one. More often it looks like an industry of relatively independent people.

I strongly agree that we need innovation to come in through new entrants, and I am a huge advocate of that. I have been relatively disappointed about the amount of genuine service and system innovation that exists outside the National Health Service. We talked about people such as Microsoft and Google, and, in international terms, they are hovering around health care, which they rightly see as one of the last great, unreconstructed industries. It seems that even people with the talent of Microsoft and Google have not yet found the key to exploit that transformation of power in world health care.

I have also been relatively disappointed in the amount of deployable real innovations. We did some great things about bringing in some companies to do surgery in the NHS - Paul was involved. It did some important things in changing the way the NHS worked; it brought us all the benefits of new capacity and provided some challenge to contracts - but relatively little service innovation. I was hoping for more. I think that, just as there is a challenge inside the service, there is a challenge to the wider innovation community, which I think is geared up to produce widgets - fantastic new drugs, new bits of equipment. It is not geared up to think about how you turn those into service innovation.

Richard Blackburn Part of the problem is that, when we talk about innovation, often we are talking about different things. You can talk about innovation being characterised by the introduction of widgets, but it is more than that. It seems that we have an easy consensus that innovation is a good thing when different parties come to the table, but that is often because we are actually talking about very different things.

I think it has to mean different things in different circumstances. We have been very exercised recently by the definition that has been put on pharmaceutical innovation by Sir Ian Kennedy in the report [Appraising the Value of Innovation, July 2009] for the National Institute of Health and Clinical Excellence (NICE), where he defined innovation in pharmaceuticals as something that is new, something that offers an advance, but is also a step change in terms of patient outcomes. That's fine as a definition; the trouble is that it probably does not apply to most new medicines, where the improvements tend to be incremental rather than step changes. If we have a definition of innovation that does not apply to most new medicines, then we probably have a problem.

Chris Toumazou I am involved with technology, and one of the big problems I am confronting right now, in terms of getting innovation into the system, is not the technology itself. I am developing things that you can stick on your body continuously to monitor your vital signs wirelessly. We have the widgets; we have the wireless continual monitoring. The problem is getting the hospital to accept the business case. That is where the bottleneck is with innovation within the system. It is all about evidence-based medicine. It is all about: "If you invest in this now, what is it going to lead to and what are the savings in the future?" The big wins will happen when this technology detects something early enough to become preventative medicine.

However, how do you quantify preventative medicine straightaway? Unless you can do that, and unless we can sit on the back of a bulldozer such
as Pfizer or Microsoft, which can perhaps disrupt the system and carry these new technologies on their backs, I think it is going to be very hard. I am struggling right now to get these things into the NHS, even though the innovation is there in terms of the technology.

Claudia Hammond As a scientist, how do you go about trying to get your innovations into the NHS?

Chris Toumazou Actually, I am sad to say that I am on the back of a big US company right now because the US seems to understand how to get those bulldozers into the system. It will use the NHS as a flagship, as a place where perhaps it does its trials, but, for some reason, it is very, very difficult to break into this system. I am relying on big distribution companies to try to get my product in with the chief financial officers and the chief technical officers of these companies.

Richard Kaplan The overall driver of the NHS is delivery of adequate, solid health care. Excellence is not really one of the drivers for the system or the individual parts of the system that Paul was talking about. In the US, with all its faults in health care, it is every hospital and sometimes every doctor for himself in terms of trying to demonstrate that they are better than the one down the road. That is not the way the NHS has worked. There is no incentive for that kind of excellence. There is excellence in individual hospitals, and individual programmes within those hospitals do strive for excellence, but it is not there in the system as a whole. We have to find a way for it to do that.

Jim Easton I think your charge about an aspiration for mediocrity was correct. I think it is quite deeply culturally rooted still, that there is a belief that a publicly funded service that aims to provide equitable access to people can only ever be mediocre. That is not the aspiration that we have to set for it, because that way lies inevitable failure - the type of failure that characterised the NHS in the 1970s and 1980s, which was a pursuit of mediocrity for all. We have to break out of that, change and aim for excellence. However, the excellence in the US is bankrupting the country.

Richard Kaplan Absolutely.

Jim Easton I accept Chris's points. We offer an impenetrable bramble or thicket of obstacles to people trying to introduce innovation. One of my jobs is to find and back it on a serious scale, or promote entry points, for people to do things. However, we have to make a huge amount of practical change for that to happen.

Claudia Hammond Why are those obstacles there? Is it historical?

Richard Blackburn There is a fairly poor relationship between the NHS and industry. The problems come from both sides but, over the years, we have somehow allowed a system to be built up where industry feels that it needs to push and promote its products in order to try to gain uptake. Consciously or unconsciously, the NHS puts up barriers out of concern for spiralling health-care costs and so on, and actually it is very dysfunctional. If we can change the nature of that relationship . . .

Jim Easton The change is as profound on both sides, for exactly the reason you said. The business model for industry has included promoting products of limited value as well as fantastic products. I accept that our business model is set up in a way that neither allows us to make conscious decisions about the "less great" products, nor really to motor on the fantastic innovation. Those are quite deep structural problems on both sides.

Richard Blackburn We have an absence of trust in the relationship, which destroys the debate and discussion.

Paul Corrigan I think we have begun to make steps in reform to overcome the ideological problem of seeing excellence as being opposed to equity. The foundation trust model is an attempt to construct organisations that really want to compare themselves to the rest of the world rather than the norm. I think we are beginning to see that there needs to be a series of engines in organisations that drags innovation into them. If they do not drag innovation into them, they fail in a variety of terms; perhaps economically, perhaps in terms of their reputation. However, if you are at the front of an industry and you are comparing yourself to the norm, you are always better, so why bother?

I have been talking to chief executives of leading hospitals, and there is a very interesting issue about them checking out all the time that they are not being inequitable. In some of the poorest parts of the country, they are saying, "Is it OK if we go for excellence?" You say, "Look at the people out there. Wouldn't it be great to provide the best health care in the world for the people of south London?"

People who have grown up in the NHS are anxious that, if they go for excellence, they are in some way letting down the side. We need to find a way of being honest about that; then we need other drivers - and I think these essentially are economic as well as reputational - which will say to a middling organisation, "If you do not take innovation into yourself, you will fail economically."

Claudia Hammond Patrick, how do you think the NHS could make itself more open to innovation?

Patrick Nolan I think the key, quite simply, is culture. Cultural change comes from focusing more on consumers, rather than being inward-looking. Around the world, countries are using insurance as a way to complement universal coverage. The reason insurance is so powerful is that it forces you to think about what is in your customers' interests, how you can keep health costs down in the longer term, and it forces you to be proactive rather than reactive.

I think it is about moving to focus more on the patient and the consumer. That is one thing we have not discussed; we have talked about industry and the NHS, but how do we get patients demanding better health care, or families, say, spreading public-health messages? That is where the real transformation can come, through the community.

Claudia Hammond Can patients demand innovation? Do they know what's there?

Patrick Nolan Of course. They demand innovation in every other realm of life. It's not like you suddenly go into the health system and suddenly lose all will and desire to have better treatment.

Paul Corrigan People are saying, “My hairdresser texts me about my appointment, but my doctor doesn't." If doctors understood that phones could be used for phoning out and not just for people phoning in, and that you can actually contact patients on them, that would be transformative!

Jim Easton There are huge layers of arguments about insurance-based systems that I do not necessarily accept, but one of the things we are doing is trying to up the ante on information in the public domain. We are increasingly immolating ourselves by making sure that there is a growing public awareness about disparity in quality - why hospital X is excellent but hospital Y is mediocre or poor. Although that causes us short-term pain, as we have seen in the past two weeks when Dr Foster produced its report [How Safe Is Your Hospital?, November 2009]. We funded that report because we are trying to create the drivers for patient-led awareness and change in what excellence is. I would not make an argument that we are even halfway through that journey, but I am more optimistic with the mood of those round this table that we have started an inescapable journey away from that kind of deep, 1970s public-service culture.

Richard Blackburn We see a lot of patient bodies demanding access to medicines, new technologies and so on. One of the concerns which my industry has is that their sources of information may not always be the best sources of information.

Jim Easton Sometimes including you.

Richard Blackburn Yes. I am not about to go into a plea for the ability to advertise medicines to the general public - that is not something that we would argue for - but the difficulty in providing good, balanced, scientific information about our discoveries to patients is a problem.

Jim Easton My personal view is that the NHS has sought to continue to nationalise information. I think we have to liberate information and allow it to flow from a multiplicity of sources, not believing we can or should control it. That is a great engine to liberate change.

Chris Toumazou In my recent experiences looking at focus groups from a number of hospitals, middle clinical staff and middle management are completely sold on it. Nurses, technical and clinical staff love it. However, how do you get across to the system that, if you can save one person from going into intensive care using this technology, the business case is already there? The economical value doesn't seems to get across very effectively. If you can get that patient out of hospital and back into their home, then you have saved that bed.

The technology we have developed, which we are bringing to market through a company called Toumaz Technology, is something that sits on your chest. You can dispose of it after three or four days; it is a "digital plaster" that measures your full ECG, heart rate, respiratory information, accelerometry and temperature, wirelessly and continuously, 24 hours a day. It replaces the big halter monitor that you have to go into in intensive care to get. We believe it is the perfect technology for early-detection, vital-sign monitoring.

If a nurse can detect something that she would not otherwise have done without this, it becomes preventative medicine. If you can save somebody from intensive care - great! If you can get them into their home and they can continue to use this technology, then the clinician will only need to call them in if there's a problem.

We see this as a disruptive, transforming technology, and a lot of the middle-layer people are sold on it but, economically, why would you replace the cost of a thermometer - which is a lot cheaper - with this? But a thermometer only takes a spot measurement. It is about changing the culture of the environment.

Jim Easton I recognise that we need to change - and are changing - a couple of things. One is that the economic drivers in the system are currently set up precisely to stop innovation being adopted. We set up incentives to generate growth in acute hospital care because we needed to tackle horrendous backlogs of patients in acute care. Currently, the incentive system rewards sending people to intensive care (ICU) - you make money if they go to the ICU.

All that is about to change. Yesterday, we made a series of announcements about the pricing system, so hospitals will understand that they need to make margin on reduced activity [NHS 2010-2015: from Good to Great. Preventative, People-centred, Productive, December 2009]. The ICU is where they absolutely must have those technologies, because it is expensive to run. It is OK if you're paid per diem for patients to go in, but if you are not then you need those technologies.

Claudia Hammond How can you make it easier for someone such as Chris to come forward with his innovation?

Jim Easton So, the second thing to sort out is the system for identifying and adopting change. I do not know the complete answer. The idea that the Department of Health can magically control all this from the centre would be absolutely appalling. I think there are some things we can do in terms of overall relationships, making sure that there are systems to promote the great ideas that are around, promote awareness and so on. What we can do is change the incentives, structure and leadership in the system in a way that rewards the type of innovation that we need.

Chris, your innovation is unusual, in that it is both a quality gain and a cost reducer. I still think there is a broader problem of how we address things such as scanners, for example. Scanners are a fantastic technology, but we don't exploit their cost-gain benefits because we do not change the structure of the way people work. For example, most hospitals with the capability to do digital endoscopy on their scanner will still be using traditional endoscopy. I do not know the clinical arguments both ways, but I know that you have to resolve this to exploit the value of that technology.

Paul Corrigan Claudia mentioned that the two big drivers that make developed health-care systems go bust are ageing populations and new technologies. But, in every other industry, new technology seems to make businesses become more solvent rather than go bust. That is partly because we introduce new technology on top of other technologies, so you have an archaeology of technologies. You have something really new and something six months old, all the way down to something that is really, really old.

What we don't have is the management change and incentives to push through new technologies. It is as if we had in this room a variety of listening devices, rather than the most advanced listening devices. That is to do with the incentive structure for change. You can compare it with bank tellers, where ATMs got rid of bank tellers, or shop assistants . . .

Jim Easton Our front-line people are powerful people.

Paul Corrigan Exactly. If doctors and nurses have been doing something for the past ten years and it has worked, and then you come along and say, "Here is some new gizmo that will change the way you work", there is a real problem. This is intrinsic to health-care systems, not just the NHS. Like a lot of folk, doctors are in a tension between science and habit. If you are quite a high-status person, to be able to say, "It's always worked for me, it's in my contract, this is what I do", presents us with a real problem. How we make the new destroy the old is the issue.

Jim Easton This is a sweeping generalisation, but my view would be that they are excited about the technology and intensely bored by the process of driving the gain through the system. For example, some places have introduced digital dictation and yet we still see medical secretaries. The reason for this is that people like their medical secretaries.

Richard Blackburn It is also politically difficult to make the savings. To pick up on your example, Chris, the real saving from your technology comes when you can reduce capacity in terms of beds, and that is difficult to do. The public does not like it.

Jim Easton Yesterday, we set out the change that is needed. Our vision for better care means that we should have thousands fewer beds across the country, and that is the right thing for patients. People are very clear that they do not want to be in a bed when they are patients.

Richard Blackburn However, it is difficult for you to close a local hospital without there being a huge outcry.

Jim Easton You have raised a different question. It is difficult to close a local hospital; it is not necessarily difficult to close beds within a hospital and reduce costs.

Richard Kaplan Patients in this country really are very conservative in their expectations. After years of experience of the NHS, they are at least as conservative as the doctors are. They are usually wedded to the concept of a local hospital, and are not at all happy with the concept that really fine medical care requires multiple disciplines and a critical mass of experience, which means larger major centres instead of local hospitals. There has been enormous resistance to that, but it is part of the excellence and financial cost savings in the system that we have to bring about.

Chris Toumazou Related to what Paul was saying, all the innovation I have come across has been an evolutionary step to existing technology. What we really lack is something that is very revolutionary, the end-to-end systems that can really disrupt.

We mentioned early detection earlier on, and some of the pharmacogenomics that are an issue for some of the big pharma companies, such as Pfizer or Glaxo. They want to sell their blockbuster drugs to everybody, but pharmacists know that there are issues of patient safety when patients are given cocktails of drugs that are not targeted, particularly in the ageing population. We are working with Pfizer now on little chips called companion diagnostics. Every drug could have a companion diagnostic, so we could tell you whether or not you can metabolise warfarin,
for example. Then you could go to your clinician and they could give you the right drug; the ramifications of that, and the cost savings, are enormous.

Claudia Hammond We have talked quite a lot about technology, drugs and so on. What about innovations of doing things differently? There must be members of staff that come up with ideas of how you can change systems. Does the NHS allow them to come forward with those ideas?

Paul Corrigan As an industry with a high proportion of scientists, compared to other industries, it is not bad at listening to them as they do their science bit. It has got better now at turning those into products. We do have innovation hubs that are quite good at getting a fund of ideas and products out at the other end. However, the problems we are talking about seem to be that real innovation is a set of step changes. When talking to staff, many of us like to say things such as, "The answer to the problem lies in the room." But often the answer to the problem lies outside the room, by thinking something completely different. If you say to staff that the answers to the NHS can be found within it, then you get more inward looking.

I think we have got better; there are things that sound quite small, for example, the "productive ward", which has been used in hundreds of wards. Nurses are empowered to drive improvement in productivity, and that has had an immense impact.

Jim Easton The NHS is regarded internationally as world-leading in terms of changing practice on wards. I know it is antithetical to say it, but the UK is seen as high-performing internationally in the service change that we have done. That is different from revolutionising health care in this country through the application of technology.

Claudia Hammond What sorts of things have they done on the wards?

Jim Easton In effect, the adoption of quality-improvement techniques of long standing in manufacturing and service industries: combinations of "lean thinking", Six Sigma and so on, specifically redesigned to work in the health-care environment.

There have been practical things in terms of restructuring the flow of time on the ward so that the application of the drug round is protected time, for example. There is nothing magical in it, simply applying techniques successfully to health care. I would make the international point again: this has not been done with health care - whether it is because of the drivers or other interests - as it has in other industries. It is about fine-tuning the current system, not transforming the health-care system through groundbreaking technology.

Richard Blackburn Is there too much of a desire for the answers to come from within the NHS? I think we have a growing number of examples now of some quite innovative partnerships between the NHS and various industry sectors, but they are still the exception rather than the rule. I sense a real cultural resistance among many in the NHS to deal with private providers.

Richard Kaplan I absolutely agree; I think everybody here, including myself after five years, thinks that we have to demonstrate the success or value of innovation within our own system because that system is different in many respects from others around the world. That is not a reasonable hypothesis. We should be able to take advantage of innovations that have been demonstrated economically and practically in other locations and apply them here.

Patrick Nolan I think we are presented with an opportunity in having such poor public finances, in a way. In a sense, the way it has to be done is by requiring people to face some of the costs of their decisions. People in the UK are protected from the costs of their health decisions by a very unusual amount. I am from New Zealand, which charges for GP visits. Nor has this just generated revenue; it means that people treat their GPs differently and think in a different way. They do not miss appointments, they think more carefully about going, and they use their chemist a lot more. Now that we face this funding shortfall, maybe we have to challenge some sacred cows about whether people should face some of these costs, because that is the only way that we can get real pressure for change in the system.

Claudia Hammond Will the funding shortfall make it harder for technologies such as yours, Chris, because you need investment in the short term in order to get the long-term savings?

Chris Toumazou Yes, that's the point I am trying to make. When we talk about this technology, we must not forget that the key user will be the nurse, eventually. Nurses are a very significant part of this. It is much better to have a qualified nurse with a degree sitting in front of good technology that they can understand and use to detect a problem with a patient, and have a less-qualified nurse go in to comfort the patient and take their vital signs. There will be a distribution of different value propositions within the system. Within the budgets, things can be done more efficiently to adopt these sorts of technology.

Patrick Nolan You have used the expression "disruptive" three or four times and, as we have discussed, this is actually incredibly difficult to do. We have been discussing innovation as if it were something that is incremental and people are going to be happy about it, but it is really very challenging to tell people, "You have been working this way for ten years, but now you have to do it differently", or "You have been doing this job, but it does not exist any more." That is really what innovation is.

Claudia Hammond Could financial pressures then make that easier, as it would give people the driver to have to do something differently?

Patrick Nolan Absolutely, but it also requires some very difficult decisions. For example, we need to think about the front line of these services. Is the front line currently providing services in the way it should? Should we be thinking about changing our workforce costs, the way we work, shutting down acute-care settings? These are all difficult decisions.

Jim Easton Again, I point you to the document we published yesterday, in which we signalled exactly that direction. We do not want the acute-care businesses. They are set up to do the wrong thing. We want care businesses with a new pattern of incentives that, from a lower income base, can still make a return by making savings out of the whole pathway of care. If you have that proposition, all of a sudden innovative technologies become life and death in terms of the viability of your business, rather than a vaguely interesting side issue.

Patrick, I think you overstate a bit how the macro decisions you take can drive some of this stuff, but I do agree that they are important. They are currently set up both explicitly and implicitly to deliver a different phase of the NHS's development, and that set-up is wrong for this phase. We need, and we have started, to restructure completely the process to be able to drive it. The question about whether you need to build some kind of infrastructure to support innovation is a very interesting one, but I do not know the answer.

Chris Toumazou One thing that happened last year that speaks to Patrick's point was that the Food and Drug Administration in the US, which approves all these technologies and innovations, came up with a new regulation called "human factors". This is not about the technology and how it works, but the usage. It means that the nurses and how they will adapt to these technologies are now a fundamental part of getting these medical devices approved. This shows that that sort of thinking is now in the process.

Richard Blackburn It is difficult to characterise the funding challenge facing the NHS as a positive thing, but it does provide the opportunity for a degree of change that we have not seen before.

Claudia Hammond Do you think it will drive innovation rather than hinder it?

Richard Blackburn I think it brings the opportunity to do so. My worry is that, in my experience, when budget is squeezed in companies, the easy thing to do is to target the variable spend - to trim the research and development (R&D), the marketing budget, the drug budget - the easy stuff. The more difficult thing is to drive through structural change in the NHS, which Jim has talked about, that reduces the cost base.

Jim Easton I think you have described two different things there, Richard. In answer to the question about the impact of the economic situation on innovation, it is not overstating it to say that, unless we do harness innovation, the NHS will go into a period of failure.

Normally our life is dictated by politics, but our life is now dictated by economics, so the drivers are fundamental and cannot be avoided. We are seeking to increase our spend on innovation, but we must not fall into the trap of equating spend with effectiveness. The way we spend our money on innovation and R&D has not been designed to achieve the ends we want, and we need some creative thinking in a large, diverse and complex system about how you decide to back maybe some innovations of scale. Perhaps there are things we should decide to do for big parts of the NHS,
or try to encourage adoption of through an incentive system.

We should at least contain our expenditure on drugs; the point is that there is a lot to go at. Our waste, our inefficiency on drug spend, is pretty significant. The impact on the business model of the industry is quite a difficult issue because we also have a responsibility to the wider economy about the value of pharma to UK plc. However, that is a mature debate that we have started, I think, much more productively with the industry.

Richard Kaplan It is worth pointing out that the NHS is better set up to integrate clinical research into service delivery than any other health service in the world. In many areas, cancer being one of them, we actually lead the world in terms of the scope of our clinical research. Potentially, the NHS provides a very good platform for bringing about or testing the innovations that we have been talking about here today. There is the challenge of rolling them out on a large scale, which is difficult for all the reasons we have talked about, but we do have a system for rolling them out on a modest scale and beginning to collect the data that is required. That itself requires some expense in terms of resources to make it happen, but there is a middle ground readily available to us to be able to accomplish just that.

Claudia Hammond Paul, do you think there are some innovations that will be halted by the financial pressures?

Paul Corrigan I think that what we have been talking about is the mindset of the leaders of the industry - significantly, about how they will approach what is a long-term financial issue. If they approach it as a short-term financial issue then the industry is in really big trouble. There will be bits where people say, "No, we cannot afford that", but the economics that says, "New technology costs will bankrupt us" is incredibly childish. It says, "That is what we spent last year; if you put this little bit on top of it, it means we go bankrupt", rather than saying that it is the totality of the economics, and its overall effect.

In the NHS, we have got better at accountancy, but we are lousy at economics. We can add up the numbers at the end of the year and generally get them to the same numbers, but if you use some of that number to drive much less expenditure, that is a very different form of thinking. That is what we need finance directors to think about now. You come along and say, "Here is big piece of expenditure", and they will say, "No". They need to start thinking about how that expenditure drives change.

Chris Toumazou If you consider the economics of the big innovators, for example Microsoft, Pfizer or Intel, they have been spending a huge amount of money in the health-care arena. The big problem for them is that the component business they were in is one sector in the consumer world but, in the health-care world, the value is in the solution and service. "I can give the semiconductor away; it is just the enabler to the solution." The value is in the solution, and that is where they are going to make their margins. That is how they are going to disrupt. We are all going to have to ride on the backs of those sorts of people. The time will come - and we are getting there - but when it happens, I think we will see the gateway for a lot of this innovation coming through.

Claudia Hammond Which cost-effective innovation would you each bring in if you were in charge of the NHS?

Paul Corrigan One of the interesting things Richard Kaplan said - and it is generally thought to be true - is that the public is quite conservative about health care. We have 17.5 million people with long-term conditions, and 70 per cent of our spend is there; let us concentrate on that. When you talk to the organisations that bring those people together - Diabetes UK, Asthma UK - they are not conservative. They are intensely critical of the current sets of services that yank people in and out of hospital because of the failure of primary care and self-care. We have these organisations that are progressive and understand what it would be like to take on a year of care, not just episodic care. We have a number of commissioning organisations that want to commission for a year of care, and the end result of that year of care should be that people with diabetes keep themselves out of hospital and close down those wards. It will transform the economics of that.

My answer, although it is quite hypothetical, is that the value comes from patients. The richest part of this country is those patient organisations, because they have entirely unrealised value. How you commission them, rather than a diabetician, so that they can commission the diabetician, seems to me to be where you can drive different value propositions.

Chris Toumazou I think it is going to be very much around personalised health care: out of the hospital and into the home as soon as possible. It is not just about making sick people better; it is also about making unhealthy people healthier - early detection. We are on the verge of a revolution where diagnostics and therapy are coming together. If we can use those technologies in a home environment, and camouflage it with consumer technologies - hide the stigma that it is a medical device, bring it into this consumer domain - I think that that will be a very important way of keeping hospitals as intensive-care-type places.

Patrick Nolan Rather than going for technology, the innovation I would maybe introduce would be user charges for visiting your GP. That could be quite transformative, because it would force people to think about the costs of what they were doing, making people understand that health services are not free, and that the decisions they make have an important cost. It would also mean that the system would be forced to focus much more on the patient, and look outward rather than inward.

Richard Kaplan For me, the challenge is to try to integrate the research and various innovative techniques into the NHS. Right now, we have a dichotomy between things that have really not been tested at all and other things that have been well proved. However, there is a transition period in which things have to be tested and, right now, the commissioners do not want to take on the costs of that testing. To the extent that we can build that into a specified role for the commissioners, we can take advantage of the system we have to demonstrate the efficacy and long-term economic benefits of new technology in the NHS.

Richard Blackburn You probably expect me to say something such as "lots of drugs", or "reform NICE" or whatever, but I am not going to say that. I am going to say that I hope that what we will see is the emergence of a more co-operative working relationship between industry and the NHS. In addressing some of the challenges that Jim has described, I would like to see companies working together more, sitting down and pooling their thinking and expertise with people in the NHS to come up with new ways of managing services that are good for industry and good for patients.

Claudia Hammond That is five ideas for you, Jim; what would you say to them?

Jim Easton With the exception of Patrick's suggestion, with which I profoundly disagree, I think the positive news is that those are the blueprints that we are trying to set out and are publishing. We made a commitment yesterday to the transformation of care for people with chronic diseases, using Diabetes UK and those organisations as the driving force. I think that is incredibly exciting. As part of that, we will try to identify and put in place, at scale, those technologies that we know exist. I am absolutely persuaded that these are key to unlocking the structural transformation of care. At the moment, when we shut hospital beds and tell people that we are going to provide fantastic alternatives, in reality the alternatives are not fantastic. They are actually pretty ropey and involve lots of people coming to your house at different times, doing ill-coordinated things. I think that, as we build those technologies, we will unlock the public perception of what happens.

I strongly agree that there is stuff to be done on the leading edge, the whole movement around creating academic health science centres (AHSCs), and trying to exploit our unique benefit as a system. Many great guys in the US look across and say, "I wish we could have a system benefit, but you guys do not exploit it in the UK." The AHSCs are a great statement that we are determined to exploit our system benefits and compete internationally at the leading edge of research. We have had some productive discussions with pharma to say, "We are currently set up to fail; why don't we change it?"

Claudia Hammond If we were to sit here in five years' time, do you think the NHS will be very different? Do you think there will have been a lot of innovation?

Jim Easton It will be different. There is no escaping that: this is a fork in the road. It will either be - and I completely reject this option - a downsized, less-good version of its current self, lacking in public confidence, or we will have taken on and begun to show deep structural change in a system that currently still comes out of the 1940s and 1950s in terms of its deep structural elements, such as GPs and hospitals. And that looks like patients, care, technology, and it is really different. I think the choice is pretty stark.

Ironically, we have been going round talking about £15bn-£20bn of cuts or pressures in our budget. It has raised energy, because we have bright people who care about what they do. We are a million miles away from converting that to the solutions of the people round the table, but we should be optimistic about what needs to be achieved, and we had better do it.

Claudia Hammond Thank you very much to everyone.




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