Health Business

Making the most of investments
Investment in technology requires a team based approach if the full benefits are to be realised. Emerging technologies can transform care pathways bringing profound shifts in organisational structure and sites of care. This can only be achieved by clinical, management and procurement professionals working in concert. Significant benefits are reaped in terms of costs eliminated elsewhere in the continuum of care.

To realise the benefits of wider access to innovative medical technology requires efficient and effective evaluation of new devices and procurement processes designed to consider long-term value, not just purchase price. Current procurement practice which focuses on aggregation of historic purchasing patterns and driving prices down promotes inertia and eliminates incentives for innovation in either the NHS or industry.  Ultimately this acts as a further drag on service-delivering reform and discriminates against patients in the UK by acting as a powerful force for the maintenance of old and out-dated clinical practices.

Long-term planning
Technology investment may be significant and it is often, understandably, challenging for healthcare managers and policy makers to make long term planning decisions in the face of looming financial deficits. However, anticipating the ever-escalating healthcare needs of an aging population requires intelligent and efficient health service planning over the next several decades, not just through the end of the fiscal year. In evidence to a health committee inquiry in April 2005, ABHI Director General John Wilkinson pointed out that an NHS orientation towards ‘short-term savings’ could prevent access to treatments and technologies benefiting patients in the long run.

Experts at NERA have concluded that national tendering and contract aggregation generally under value non-price characteristics of the product such as cost effectiveness, clinical effectiveness and value added services provided by many device manufacturers. Central procurement processes assume that high volume contracts will limit spending. According to NERA there is no meaningful analysis to suggest centralised approaches will generate savings in the market.

Undue focus on cost-minimisation leads to the purchasing of older and/or lower quality products. The OFT’s September 2004 research into the impact of public procurement on competition has found that public procurement can restrict competition with “excessive contract aggregation” and “excessive focus on short-run price competition at the expense of non-price, long run competition”. ABHI contends that national procurement of medical products and devices will inevitably be market distorting.

The diagnostics industry
The worldwide diagnostics market alone was estimated to be $28.6 billion in the 2005 Lewin report. In 2003 the size of the UK medical device market (calculated as UK sales plus net balance of imports over exports) was estimated at a total exceeding £6 billion. It is in the best interest of not just patients and clinicians but the wider UK economy to maintain a dynamic environment for manufacturers, which represent an important employment sector, and consistently delivers a positive trade balance.  Total value of products exported from the UK in 2003 was estimated at £3.5 billion, a trade balance of £578 million that is an increase from 2000 estimates of £2.4 billion in exports.

The diagnostics industry is estimated to employ close to 30,000 people across Europe.  As a whole, highly conservative estimates of the medical device industry in the UK approximate 47,000 employees excluding employment in sales, marketing and service operations of companies manufacturing outside of the UK but distributing and selling in UK market, to the NHS. These figures also excluded a large portion of SMEs which characterise the sector and are key drivers for innovation.

Technology and procurement processes designed to consider true product value encourage a dynamic industry with significant benefit to the UK as a key player in the global knowledge economy. A competitive healthcare technology industry attracts R&D investment and incentivises an innovative sector typified by SMEs.

As the leading trade association in the UK for the medical technology industry, the ABHI represents over 200 member organisations including leading corporations in the medical technology sector as well as many small independent companies that operate in the UK. These members produce everything from life support machines to latex gloves and are vital to the functioning of the NHS.

Further information
Tel: 020 7960 4360
Fax: 020 7960 4361
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www.abhi.org.uk