Looking ahead

1. Looking ahead wellards.co.uk January 2010

2. Expect significant NHS change to continue through 2010/11 • This year’s general election may only slightly deflect the direction of travel • Higher quality, productivity and efficiency gains will remain important drivers • Technically, the arctic winds of healthcare recession only begin to bite in April 2011 • Environmental drivers need to be factored in by pharma • NHS changes need to be fully understood to take advantage of opportunities and counter threats • Many companies are still restructuring Looking ahead Opportunities from change

3. Looking ahead • High quality care for all • NHS 2010-2015: from good to great • NHS operating framework for 2010/2011 New directions in England

4. Looking ahead • The 10-year NHS Plan was published in 2000 • Greater integration of care is seen as crucial and prevention is central • Disinvestment from secondary care • Payment systems and incentives to change to allow disinvestment • Asks for a reduction in non-essential costs NHS 2010 -15: from good to great 'This five-year plan maps out how the journey of improvement in our NHS will continue in a new financial era… The pre-Budget report has confirmed future funding increases which will be locked into frontline budgets... But savings will have to be made in every part of the NHS... Our vision will require significant transformation in the way in which care is delivered in the future... ' NHS 2010-15: from good to great, December 2009

5. Looking ahead 'We are at a critical juncture in the history of the NHS. After a decade of investment and reform that has helped drive real improvements for our patients, the NHS, along with other public services, is about to enter perhaps the toughest financial climate it has ever known… 'NHS 2010-2015: from good to great sets out a five-year strategy and 2010/11 is the first year of this new strategy... This operating framework sets out a number of new and powerful shifts in national policies and levers to support this strategy... The NHS operating framework for 2010/11 also challenges all NHS organisations to reduce overheads and management costs…' Foreword by Sir David Nicholson, December 2009 Operating framework for 2010/11

6. Looking ahead • Payer priorities for the NHS financial year • No new targets but still a long list • Inequalities and access to healthcare figure highly • 'Vital signs' for PCTs and health outcomes targets stay • Significant changes to PBR > marginal tariff • The reduction in management costs will lead to a falling number of PCTs • And the vision is also for a smaller acute sector • Integration is an important theme Operating framework for 2010/11

7. Looking ahead • Financial pressures • Targets and levers • Secondary care • Primary care • Public health • Markets • Structures and customers • Commissioning • NICE • Quality • Partnerships • New government Environmental drivers

8. Looking ahead Financial pressures 'It would be a grave mistake to underestimate the challenge ahead. The politicians may want to talk about protecting the NHS, but the reality is that even with some protection there will have to be very tough choices… We may see the vultures circling again, questioning whether we can sustain a free comprehensive system funded out of general taxation’ Niall Dickson, chief executive, King's Fund, commenting on a joint report with the Institute for Fiscal Studies: How cold will it be? Prospects for NHS funding: 2011-17 ‘The heath service is about to enter a new era. After years of unprecedented growth, it faces the prospect of unprecedented austerity... Windmill 2009 provided little confidence that the cushion of recent significant funding increases by the health sector has put it into a strong position to weather the coming storm…' Windmill 2009: the storm scenario, December 2009

9. Looking ahead McKinsey report • The NHS should 'slash' the workforce by 10 per cent • £1.5bn is wasted on ineffective interventions • Hospital managers should be more accountable for unacceptable variations > readmission rates • Variation in PCT prescribing should be reduced > £600m could be saved • Economic climate > more efficiency • > operational (lean and supply chain) > procurement • > allocation (mergers, configuration)

10. Looking ahead After seven years of plenty • The next two years: tough but manageable • 2011 and beyond: unprecedentedly difficult • Learning from history: bad ideas • Responding to the challenge NHS Confederation, Dealing with the downturn, June 2009

11. Looking ahead • Operating framework 2010/11 priorities • PCT 'vital signs' • NHS performance management framework • Care Quality Commission and registration • Annual health check results for 2008/09 • Core standards • NHS Constitution • Changes to PBR Targets and levers

12. Impact of PBR > 2.2 per cent v 6.5 per cent > a 'cap' in 2010/11 • Impact of the recession > cuts in pay and staff? • Around 125 foundation trusts > function on a clear business footing • 2013/14 is now the new date for full 'conversion' • See www.monitor.nhsft.gov.uk > account management • Academic health science centres (Imperial College NHS Trust) • City Hospitals Sunderland NHS Foundation Trust to acquire a medical practice in ICO pilot > vertical integration • NE London NHSFT to take over Barking & Dagenham's PO. Plus CFTs • FT: foundation trust ICO : integrated care organisation PO : provider organisation CFT: community foundation trust Looking ahead Secondary care

13. Looking ahead • Care closer to home and self-care increasingly emphasised • Primary and community care Darzi vision – impact on general practice? • Will GMS be renegotiated? • Focus on commissioning primary and community care services > practical guides and toolkits from NHS PCC • NICE is managing some aspects of the QOF programme • Integrated care pilots launched • Pilots for individual health budgets launched • New private primary care providers and APOs • GMS: general medical services QOF: quality and outcomes framework PCC : Primary Care Commissioning • APOs: autonomous provider organisations Primary care

14. Looking ahead • The operating framework 2010/11 emphasises full implementation of OHOCOS • Disease prevention is a major part of QIPP • NICE's Centre for Public Health is increasingly examining primary prevention in areas like obesity • The new strategy for mental health, New horizons, focuses on public health issues • Reducing health inequalities remains an important focus • OHOCOS: Our health, our care, our say • QIPP : quality, innovation, productivity, prevention Public health

15. Looking ahead • The 'managed market' continues in England • ISTCs have offered a new market for private providers in secondary care • New market entrants in primary care (UH, Care UK, Capio, Assura) • New market entrants in WCC & PBC (UH, Humana) • Labour has ruled that the NHS is the 'preferred provider' • The Conservatives say they will extend the use of private companies in the NHS • ISTC: independent sector treatment centre UH: United Health • WCC: world class commissioning Markets

16. Looking ahead • Constant change produces new organisations and customers • Reconfiguration continues in Northern Ireland and Wales • New organisations in England > SCGs, ICOs, APOs • De facto PCT mergers already beginning > NHS North of Tyne • PCT and social services mergers > Waltham Forest • PCTs provider arm mergers > Richmond &Twickenham PCT and NHS Hounslow • PCTs as clinical network managers (eg, cardiac) • PCTs as payers > account management • Under the Tories, SHAs and PCTs may merge to form about 40 strategic commissioning bodies Structures and customers

17. Looking ahead • World class commissioning is still the 'main game in town' • But now commissioning in a cold climate • Specialist commissioning groups as new customers • National specialist commissioning is now under review • Some form of PBC is here to stay so formation of PBC consortia should continue to be tracked Commissioning 'The corpse of PBC is not for resuscitation… The uptake of the policy has not been what the government had hoped for. We’re struggling to make it systematic... and it's not really taking off out there… Clinicians should have some degree of control over the purse strings in order to renovate and improve clinical care' David Colin-Thome, Wellards Conference, October 2009

18. Diagram from the commissioning framework documentA good understanding of this is vital to 'speaking the payer language' Looking ahead TITLE

19. WCC year two assurance handbook > opportunities • WCC competency five > assess needs > public health observatories? • PCTs also being assessed on outcomes in 2010/11 > local working • Appropriateness of spend now a core competency • CQC will examine value for money > NAO and Audit Commission? • Programme budgeting data > spend versus outcomes • Changes in procurement • DH to pilot PROMS in six long-term conditions • PROM: patient reported outcome measures NAO: National Audit Office Looking ahead Commissioning

20. Looking ahead • Now over 180 TAsand over 90 CPGs • Some 55 per cent of TAs 'optimised' • NICE is being transformed post Darzi > QOF, NHS Evidence, clinical standards • Cooksey report > scientific advice service • OLS Blueprintand the innovation pass • Kennedy review > innovation and value > QALYs • Patient access scheme liaison unit (PPRS and pricing) • CSAS > PCTs will become more influential • Local decision-making > NPC guidance to 'exceptional funding' • NICE is a Labour creation • And the Scottish Medicines Consortium and the All-Wales Medicines Strategy Group continue to cause problems • CPG: clinical practice guideline TA: technology appraisal NICE

21. Looking ahead 'All NHS organisations will have to register the services they provide… and demonstrate that they are meeting the standards required. If it is shown that an organisation is not providing safe and effective care, as a result of not implementing NICE guidance or complying with technology appraisals, the CQC will take the appropriate action proportionate to the risk posed to people who use the services...' How to use NICE guidance to commission, December 2009 (p19) NICE and the CQC

22. Looking ahead NICE and the NHS Constitution • From January 2010, following the Health Act becoming law, it is a legal duty for all NHS bodies to take account of the NHS Constitution in their decisions and actions • The DH wants it to be 'embedded' and 'ingrained' • Patients have the legal right to NICE approved drugs • Patients also have the right to expect local decisions on funding of other drugs to be made rationally > NPC documents 'PCT boards should be able to report organisations failing to 'have regard to' the NHS Constitution to the relevant regulator… SHAs could use the NHS Constitution to mobilise 'an army of agitators', taking their local NHS to task about whether their rights are being met and putting their results on NHS Choices... ' NHS Constitution state of readiness group final report, November 2009

23. Looking ahead • Quality standards (NICE) • Measuring for quality improvement programme (IQIs) • Quality observatories and quality accounts • Commissioning for quality and innovation (CQUIN) • National quality board > consultation on topic areas • PROMs and clinical dashboards • Plus new innovation landscape • Institute for Innovation and Improvement • QIPP • IQI: indicators for quality improvement The quality landscape

24. Looking ahead • Disease management providers – UH, PHS • LTLS for medicines • OLS Blueprint • ABPI initiatives • Health and social care • Voluntary and charitable sectors – the third sector • Social enterprise models • PHS: Pfizer Health Solutions LTLS: Long-term leadership strategy Partnerships

25. Looking ahead Government • A Conservative government remains the likely outcome of the general election • They say they will attack the 'army of bureaucrats' • Give more commissioning power to GPs • Abolish targets • End 'ministerial meddling' • Set up an independent NHS board

26. Looking ahead Old versus new world NSF: national service framework CQC: Care Quality Commission

27. Looking ahead 'Some payers are still wary and cautious of pharma and remain deeply suspicious of its motives… In the eyes of payers, partnership can no longer mean ''prescribe my products''…The industry will need to demonstrate its commitment to improving health outcomes through investing in more than just medicines... ' Carsten Edwards and Sarah Giles Pharmaceutical Marketing, September 2009 (pp24-6) Marketing needs

28. Looking ahead Payer perspectives • Some companies still do not get it! • Ill-informed and poorly trained pharma representatives • Still too much focus on clinicians • A product-only focus with PCTs • Undermining of official guidelines • Lack of understanding of commissioning • Naivety on affordability issues Pharmaceutical Marketing, September 2009 (p26)

29. Looking ahead Marketing 2.0 • Realign goals with different groups of customers • Marketing = 'value management' • Sales = account and access management • Become experts in pathways of care • Rethink the marketing mix Dr Richard Barker, Pharmaceutical Marketing, November 2009 (p19)

30. Looking ahead The view from A T Kearney 'The industry has now reached not one but three interconnected tipping points, concerning what it sells, to whom and how it must be organised. The first relates to the move from therapies to service models… For payers, the availability of marginally more effective but much more expensive treatments is far from compelling. What would be more compelling for payers is a service model that can be proven to result in fewer admissions... It would be even more compelling if this could be demonstrated in the payer's specific care system and target population – positioning a therapy in this context would dramatically increase its value…' Pharmaceuticals out of balance, July 2009

31. Looking ahead Climate change – the ice age cometh 'While the NHS barricades itself against the imminent cold front, should we be inside taking the initiative and working on solutions?... To many in the NHS, the industry is part of the problem… Costs will have to be extracted from the health service and prescribing budgets will be a target for early quick efficiencies… Companies will have to change… Coverage and frequency models that are predominantly product-specific will have to morph into innovative, holistic approaches that encompass whole system changes across treatment pathways…' Adam Knights, managing director, 15Healthcare Pharmaceutical Marketing, November 2009 (p13)

32. Looking ahead • A new government could be in place from June 2010 • Likely to be Tory • An arctic winter is coming • With shifting paradigms, companies need to continue to adapt • It is important to have NHS knowledge scattered throughout organisations • Companies will need to engage more strategically • Working creatively with NHS customers will be crucial > account management • Leveraging the opportunities will be critical Some conclusions

33. Looking ahead