Can the NHS invest in its future?

In the last couple of days I have attended two events where smart people have discussed the future of the NHS - and come away worried about the scale of the challenges it faces. 

On Wednesday evening around twenty people gathered at the Swiss Embassy for a roundtable discussion on speeding up the adoption of digital diagnostics and therapeutics, technologies seen as vital to the future of a modern health service.

I was the moderator in an event organised by the Swiss software business Zuehlke, which built England’s contact tracing app during the Covid pandemic, and attended by giant pharmaceutical  companies, scrappy healthtech startups and senior figures from the medical regulators.

As the event took place under the Chatham House rule, meaning nobody can be quoted directly, conversation flowed freely and frankly.  Everyone seemed agreed that the UK had some very good medtech companies, and while there was some grumbling about the slow pace at which medical devices clear the regulatory hurdles, nobody wanted the MHRA to lower its high standards.

Where there was real concern was about the lack of a business model for companies wanting to sell innovations such as virtual wards and remote monitoring systems into the NHS. We heard that the health service liked these ideas but, bluntly, was not prepared to put its money where its mouth was. The most startling moment was when one of the U.K.’s leading companies in this field revealed that it had virtually abandoned its home market - and, to be fair, Germany - in favour of the United States, where it was so much easier to set up business and get paying customers on board quickly. 

While the big pharmaceutical companies have a clear path to profit with new drugs - even though they grumble about the prices the NHS pays - medtech companies say it is very hard to negotiate large scale deals rather than short-term trials with one hospital trust. Bring out the world’s smallest violin, I hear some of my readers say. Yet if the UK wants to be at the cutting edge in areas like the use of AI in healthcare it has to offer companies more than warm words if they’re not to go elsewhere.

The following day I heard a lecture about what the NHS might look like on its 100th birthday in 2048 . The think tank the Health Foundation began the event by asking the audience to say using an online tool what the health service might look like at100 in a few words. In the word cloud generated by this poll, ‘broken’ was right at the centre. A downbeat note then, on which to introduce the speaker, the leading UK economist, Cambridge University‘s Professor Diane Coyle – who happens to be my wife.

Diane began with a scary number - the 25% fall in NHS productivity during the pandemic as the health service responded rapidly to Covid but other areas were neglected. She reassured us that this was a blip and NHS  productivity had been increasing over many years - but then brought us down again by introducing us to what is known as the Baumol effect. This theory, named after the economist who formulated it in the 1960s, says that health service spending is something that increases as a share of the economy over time because there are inherent limits to the growth of productivity.

This applies in all wealthy countries but the UK has another problem – vanishingly low levels of investment in the health infrastructure which might help increase productivity. As Diane put up a graph showing that with a brief exception, UK spending on capital investment had been about half the average rate in OECD economies, I thought back to the seminar the previous evening. If this under investment continues then there is little hope of the NHS getting the digital therapeutics it needs to future proof itself.

Professor Coyle also identified problems with NHS management and culture which mitigated against improving productivity. She said the lesson from the private sector was that creating and using data, then empowering people to use that data was vital, but the hierarchical nature of the health service made that a huge challenge.

 But the Professor thought it unlikely that we could continue on the current path:”The bottom line is, if something is unsustainable, it's not sustained.”

And she outlined her recipe for change, starting by demolishing the idea that the NHS has too many managers:

“It seems to me that there are too few strategic senior managers and too many people engaged in all of the administration and procedures that we label management but is actually a different kind of beast.”

Second, she talked of the need to control demand for health services through wider societal changes - everything from cutting air pollution to regulating a food industry which is boosting rates of obesity and diabetes.

And finally, admitting to some trepidation, she talked of shifting the boundary between public and private provision of health care. She questioned why the cleaning of hospitals, something vital to patient safety, had been contracted out. Better she said to hand over routine treatment like cataract operations to private sector suppliers who could be carefully monitored. With evidence that growing numbers of elderly people are dipping into their savings for private provision of operations the NHS won’t deliver in timely fashion, she floated the idea of a savings product much like basic pension provision: 

“I don't have a strong view about this myself, but I think it's a conversation worth having. I think it's really important to make sure that private demand isn't driven by desperation because the NHS is letting people down. So let's think about it more systematically.” 

In the Q&A session which followed the lecture there was general agreement that policymakers needed to think beyond immediate firefighting and look at how to transform the NHS over the long term. But as I write, the radio news is reporting that waiting lists have hit new record highs. Good luck at getting politicians of any party to focus on anything but getting those numbers down.