Richard Smith: The NHS and the private sector: a 70 year conversation

Richard SmithWe’ve been having this conversation since at least 1945, said a member of the audience at this week’s Cambridge Health Network meeting on partnerships between the NHS and the private sector. The dominant rhetoric now is that partnership between the NHS and the private sector will be essential for improving health and generating wealth for UK Plc, but down in the bowels of the NHS the feeling is often different.

I’ve experienced that feeling directly by joining a private sector company. For many people I became a monster overnight, moving from being the good guy who was editor of the socially conscious BMJ to somebody who had sold his soul to the devil and was out to destroy the NHS. This narrative, which will follow me beyond the grave, amuses me but upsets my wife. Some old friends don’t talk to me. Many others have experienced the same opprobrium on moving to the “dark side.” It’s seen as betrayal.

Then as I travelled to the meeting I saw the NHS culture reflected in a word in the BMJin a news article on how NHS spending on the independent sector is increasing, the journal reports that some parts of the country have seen no increase in DEPENDENCY on the private sector. Dependency is a bad thing, but I don’t think of myself as being dependent on British Airways when I fly to New York or being dependent on Prêt a Manger when I buy a sandwich. But for many in the NHS buying from the private sector is seen as a failure: we couldn’t do it ourselves.

Economic man or woman would say that it makes perfect sense to buy rather than try to make what you can’t do yourself or what others can do better or cheaper or ideally both. In fact it makes such sense that we do it every day. And the NHS does it every day in that it doesn’t make its own drugs or X-ray machines, but when it comes to purchasing surgical or laboratory services or, God forbid, commissioning then hackles rise.

As I listened to the conversation that we’ve been having since 1945 I reflected on how the words the NHS uses go in and out of fashion. Leadership was going to save us, but seems to have slipped down the hit parade—perhaps because THE leader of the NHS is so beleaguered. Integration also seems to be sliding down after a long time at the top, giving way to culture and innovation. Famously “culture eats strategy for breakfast,” explaining the NHS reluctance to commission from the private sector despite encouragement from the top, but I couldn’t help thinking of the quote wrongly but persistently attributed to Herman Goering that “When I hear the word culture, I reach for my revolver.” I didn’t have a revolver, but I did have a pen.

People in the NHS and the private sector should put aside stereotypes of each other and recognise the value of partnership, said Sir Ian Carruthers, chief executive of NHS South of England, survivor of 16 NHS reorganisations, and chair of the group that produced the report “Innovation: Health and Wealth: Accelerating Adoption and Diffusion in the NHS.” The report aimed to encourage innovation both to improve outcomes for patients and to generate wealth for the UK.

Sir Ian sees two parts to innovation—discovery, where Britain doesn’t do badly, and spread of the innovation, where the NHS does poorly. Some of those from the private sector who gave evidence to Sir Ian and his team saw the National Institute for Health and Clinical Excellence (NICE) as part of the problem in blocking the spread of new drugs and devices, and Sir Ian conceded that the NHS lacked data on how well advice from NICE was followed. Now there are better data, and an innovation scorecard records how well different parts of the NHS are doing at taking up innovations approved by NICE.

One of the answers to the slow spread of innovations has been the introduction of Academic Health Science Networks across the NHS. Built around medical schools their job is to encourage research, spread innovation, and work with industry. Many small and medium sized enterprises (SMEs) and start ups find it impossible to penetrate the NHS, and it is hoped that the Academic Health Science Networks, which are just beginning, will provide an entry point.

A chair of one of the networks in the audience was worried, however, that the money was elsewhere—with the Clinical Commissioning Groups. And they, somebody else in the audience pointed out, are “guardians of public money.” They are likely and rightly to be risk averse about funding innovations, particularly as public bodies have a poor record of “picking winners.”

It’s all about appetite for risk, agreed Sir Ian, and risk can mean failure. And failure is not well tolerated in public politicised services like the NHS. It’s more important not to fail than it is to succeed. Indeed, said somebody in the audience, it’s so important not to fail that having picked a loser the NHS will throw money at it to try to make sure that it doesn’t fail.

(I remember years ago being asked at a Unison meeting what the private sector could do that the public sector couldn’t do, to which my first answer was “fail.” It didn’t look so smart when subsequently reported in a newspaper.)

When private sector companies that work with the NHS come together their biggest complaint is around the broken procurement process, and Simon Scrivens, managing director of Sodexo, pointed out that the European procurement process took six to nine months in Britain, but only six to nine weeks in Germany or France. And he told us of a possibly apocryphal story of a two year procurement process for a three month contract.

While a big company like Sodexo can tolerate a long wait, a start up can go out of business waiting for a contract. So the problem is not simply getting customers but the time it takes to get them, which means that many start ups will go abroad. Yet SMEs and start ups are very important, said Scrivens, because they are the people who produce innovation. Nina Nashif, founder and chief executive of Healthbox, an accelerator of health start ups, quoted Eric Schmidt, the chief executive of Google, as saying that “Innovation never comes from established institutions.”

Scrivens urged those in the audience from SMEs and start ups to think about entering the NHS not through direct contracts with the NHS but by partnering with larger companies like his. (We didn’t discuss the downside of this strategy, but clearly the smaller company may have much of its potential value snatched by the bigger company.) Scrivens main message was about the importance of adaptability, reminding us of Darwin’s message that it’s not the smartest or biggest animals that survive but the most adaptable. Private companies need to adapt to the ways of the NHS and vice versa, meaning that there can be some meeting of minds in the middle.

Penny Dash, one of the leaders of the Cambridge Health Network, ended the meeting by asking four questions. Will Clinical Commissioning Groups be willing to commission more from the private sector? Will private providers be willing to develop new business models? Will Academic Health Science Networks deliver? And will the system be willing to open up commissioning to new, private sector commissioners?

Will we still be having the same conversation 50 years from now?  Most of those at the meeting probably thought that there will be no NHS if it can’t work more effectively with the private sector, but there are people marching in the streets to keep the private sector out. Who will prevail?

You can see Tweets from the meeting at #CHNExpo

Competing interest: RS works for the UnitedHealth Group, and UnitedHealth UK is a sponsor of the Cambridge Health Network. RS has no responsibility for UnitedHealth UK. RS is also the chair of Patients Know Best, a start up that has many contracts with the NHS.

Richard Smith was the editor of the BMJ until 2004 and is director of the United Health Group’s chronic disease initiative.

  • andyfisk

    That is some competing interest the author has.