Health Matters | Paul Corrigan's blog

The NHS, alongside all other health care systems in developed countries will soon run out of money. All of these systems have become used to increases in resources that have more than kept pace with the increased demand for health care caused by an aging population and increased public expectations.

This will now stop.

Of course some NHS resources can be saved by squeezing and cutting, but to ensure that there is a sustainable NHS into the future we will need to develop a new business model with a new economics.

Other industries and services have achieved this.

At the moment the NHS has an economic model which sees all value being created by medical personnel, their kit and their drugs. When the patient comes into contact with these health care staff (their kit and drugs) then value is added to the patient’s health care. That is why, if the NHS is to provide more value, it always needs to possess more medical personnel, more kit and more drugs. In this model the patient is simply a sponge on value.

As John Oldham’s excellent article in last weeks HSJ pointed out ,the reason an aging population is so threatening to the economics of health care is that, within the existing economic model, the more very old people there are the more value is taken from the only providers of value (medical staff their kit and their drugs). 

Other industries create new business models on a regular cycle. Many have achieved this by developing their customers as providers of new sources of value for the industry. I go to a supermarket to do a lot of work selecting groceries and checking them out with bar codes. As I do this I create value for the supermarket. I sit at home and do my own banking over the internet, personally unemploying several bank tellers and call centre staff. I add value to the companies who ‘provide’ my shopping and retail banking and you know I enjoy it – feel empowered by it.

70% of the costs of the NHS are spent on long term conditions. By definition the 17.5 million people who have these conditions have them for a long time. If put at the centre of adding value to their health care they have the possibility of adding considerable economic value to the economics of the NHS. But this will only work if – as with supermarkets- the economic value added by the patient is multiplied by the economic value added by the logistics and the expertise of the medical staff, their kit and their drugs.

In other services and industries the disruptive innovation that points the way to the realisation of new value usually comes from outside the mainstream of the industry. By definition the mainstream have made a success out of the existing business model, so why should they think hard about ditching that for something untried and completely new? That is why it is unlikely that the new business model for the NHS will come from inside the best of NHS institutions.

Why though the third sector as the organiser of this new value?

The third sector has an existing open relationship with very large numbers of the public. As a set of organisations it is trusted with millions of open relationships with members of the public. The public will work for free and raise money for the third sector that they would not do for public or private sector organisations. The third sector also has a goal of empowering people whilst it is working with them. It is not just good enough for them to ‘deliver’ a good service; they must ensure that the person receiving the service has more power at the end of the interaction than at the beginning.

This is why the third Sector in England will be the location from which the disruptive innovation that will change the business model of the NHS will emerge. Already sections of the third sector are creating services for the NHS which contain within them the realisation of new sources of value. The third sector now needs to size up its offering in health care and create some imaginative partnerships where the patient value is at the centre and organisations of medical staff, their kit and drugs supplement that.

If the NHS is to survive, let alone thrive, it will have to find ways of buying the disruptive innovations that will realise much better value. Through NHS commissioning they will have to encourage this new business model to work alongside the organisations that create the old business model to develop partnerships with the third sector.  .

The NHS has been talking about patient centred health care for some time. Patient centred care will only really happen when the NHS has to realise the value that patients can bring to the NHS. It is economics that will bring this change. It’s the third sector that will realise the value of that new economics and help maintain a National Health Service paid for out of national taxation and with equal access for all.

“Saving for the NHS: – The role of the third sector in developing significantly better health care outputs for the same level resource.”  Written by Paul Corrigan and published by ACEVO