Could the private sector save the NHS?

Paul Tunnah


So I’ve dared to mention the dreaded “p” word in reference to the UK’s National Health Service (NHS). If you can keep your hackles in check for a moment, I’ll try to justify myself.

The NHS has long been regarded as the untouchable pride of Britain since its inception in 1948, working to a noble mantra that good healthcare should be available to all, regardless of wealth. It is a unique system found nowhere else in the world and one that governments interfere with at their peril.

Despite that, the UK Secretary of State for Health, Andrew Lansley, is driving radical changes that aim to hand power back to the GPs and away from higher level regional decision making authorities. All eyes are now focussed on the outcome of the coalition government’s White Paper on NHS reform, which is moving ahead full steam with a plan to abolish the Primary Care Trusts (PCTs) by 2013 and return their approximately £70bn spend to new GP consortia.


“The NHS has long been regarded as the untouchable pride of Britain since its inception in 1948…”

As you might expect, the policy has attracted considerable attention from the local media with many observers suggesting the changes are too much, too soon or simply in the wrong direction altogether. Recent headlines in the UK such as “Cameron should halt this NHS gamble” (The Observer), “A manifesto for NHS civil war” (The Independent) and “Centralised bureaucracy will continue to bedevil the National Health Service” (The Telegraph) must make uncomfortable reading for Lansley, however strong his conviction.

But how will the NHS really look on the other side of these changes and could the private sector have a key part to play in helping it succeed?

Managing the patient versus all patients

Attending the UK PM Society’s recent evening event entitled “The Implications of the NHS White Paper” I was able to hear the perspective of two people who are very close to these proposed changes. First up was Dr Joe McGilligan, a practicing doctor at Greystone Medical Practice in Redhill and also Chairman of ESyDoc, a commissioning body that brings together 20 GP practices in Surrey. At the time of his presentation ESyDoc had been vying to be one Lansley’s initial “Pathfinder” groups for GP clinical commissioning, but earlier this month discovered it had not been selected in the first wave and is now pushing for selection in early 2011.

Dr McGilligan outlined the simplicity in principle of the White Paper proposal, which aims for a healthcare system of just three layers: Secretary of State, an NHS Commissioning Board and the GP Commissioning Consortia. However, the interim steps to this are less clear with the precise timing of abolition for individual PCTs uncertain, as is the exact composure of the NHS Board.

One key aspect of the reform is that the patient will have the right to choose their GP practice (expected from 2012), although practically this could create challenges. For example, how will good practices cope when there is a massive influx of new patients choosing them and what will happen to the bad practices that end up with low patient numbers? And, of course, the challenge doctors face is that doing the right thing for the patient sat in front of them may not equate to the right thing in terms of appropriate spending across their consortium. This raises the risk that patients will simply select those GPs who give them what they want, even if it’s not what they need or in the best interests of a national budget.


“…surely GPs are going to remain busy enough with the day job of looking after patients?”

The challenge therefore, as Dr McGilligan explained, is for doctors to take a longer term view of what is right for the patient and ensure that they are applying the principles of the Quality, Innovation, Productivity and Prevention (QIPP) framework in everything they do. So how can all this be managed and coordinated – surely GPs are going to remain busy enough with the day job of looking after patients?

Well, here’s the first hint of where that “p” word comes into play.

Value driving all decisions

The second speaker on the day, Omar Ali, currently works as Formulary Advisor to Surrey &amp, Sussex Healthcare NHS Trust and leads the regional Joint Drugs &amp, Therapeutics Committee. He is a renowned author and energetic speaker on implementation of guidelines from the UK’s National Institute of Health and Clinical Excellence (NICE) and a key proponent of the new value-based pricing system.

Value-based pricing is going to have a big impact on the NHS, irrespective of the White Paper reforms, as it aims to focus everyone’s thinking, pharma, prescribers and payors, to take a close look at treatment value based on the outcome. A full explanation of value-based pricing is beyond the scope of this piece, but based on Ali’s commentary it should be visible in a number of areas as we move towards a more pay-for-performance culture, including:

• Non-fixed tariffs for hospital procedures, but instead moving to a system of a lower fixed cost supplemented by additional payments to the hospital based on longer-term successful outcomes of the procedure (e.g. low incidence of readmission following an operation, or penalties for prolonged hospital stay due to complications).

• NICE to play a role in actually setting the price for new medications based on outcomes-based evidence. Where pharma and NICE disagree, additional head-to-head trials could be commissioned to resolve the situation, or the medicine could only be reimbursed at a lower price with the balance to be paid by the consortia, patients or insurers (more akin to the US system).

So what does this mean for prescribers, the pharmaceutical industry and the patients?

Well, the move towards more local decision making combined with value-based pricing is going to inevitably create some differential treatment patterns and success rates, so don’t be surprised if postcode prescribing rears its head again to some degree.


“…pharma and the GP consortia will need to think and behave much more commercially, ensuring the needs of patients and budgets are carefully balanced.”

However, it will also create competition between different healthcare providers such as GP consortia and hospitals. In order to stay competitive and succeed in such an environment, both pharma and the GP consortia will need to think and behave much more commercially, ensuring the needs of patients and budgets are carefully balanced.

Can we mention the “p” word yet?

If we play this scenario forward, we end up with GP consortia that are making more local decisions in the interests of their patients, but under pressure to manage tight budgets and lacking some of the essential commercial skills to do so.

This creates an ideal space for the private sector to support the provision of local healthcare through managing services on behalf of the consortia, or even acting as the interface with the commercial world of the pharma industry itself. Imagine a world where BUPA, AXA and Virgin Healthcare are all competing to provide pharmacist trained medicines managers to the NHS. If you think this sounds a long way off, then you may want to take heed when Ali points out that they are hiring qualified pharmacists right now.

And the implication for the pharma industry? Well, here Ali makes a very clear statement: “joint working is driving the industry backwards.” In his vision of the future for the NHS, it is these private companies that will be the interface with pharma and they won’t be talking softly about joint working or collaboration – they will be talking about commercial business to business relationships.

Will healthcare for all survive?

No-one is suggesting that we’re on the way to the American system where the credit card comes before the treatment – the concept of state-subsidised healthcare as a core tenet of the NHS is safe for the foreseeable future.


“…private sector intervention in managing budgets and key services could be the only way to make it work…”

However, in the drive to balance the needs of the individual patient with those of increasingly restricted local and national budgets (or the needs of all 60 million potential patients in the UK), the private sector could play a key role in efficiency, productivity and delivery of value. In fact, private sector intervention in managing budgets and key services could be the only way to make it work without the system breaking. Competition between multiple private sector companies operating in this space would force costs down much more than any government targets on the consortia.

And for pharma, this means the question should be less around how many consortia will there be and who will be the key customers within them. Instead, the critical success factor moving forwards will be whether pharma can engage in business-to-business conversations with these private companies working within the NHS and move away from the softer “business-to-consumer” conversations of the doctor detail.

So can the NHS prosper under Lansley’s plans? This author certainly hopes so, but suspects it might need a little help from its private sector friends.

About the author:

Paul Tunnah is Founder and Managing Director of pharmaphorum, the online information, discussion and networking site for pharma executives. For queries he can be reached through the site contact form.

This article was inspired by the presentations of Dr Joe McGilligan and Omar Ali at the recent PM Society event entitled “The Implications of the NHS White Paper”. For the official PM Society summary of the event please visit this link or for more general information on the PM Society visit

Whilst the article is intended to fairly represent some of the key points made by the two speakers, please note there is also a degree of interpretation by the author.

Is the future joint working or B2B partnerships?