The Conference Board builds leadership capacity for a better Canada by creating and sharing insights on economic trends, public policy, and organizational performance.A joint initiative of the Conference Board of Canada and the Canadian Health Industries PartnershipTeaming up with industry, government, academia, and health care leaders to foster a national innovation mindsetDesigning and implementing a research work plan around key health innovation action areas Reaching out to key stakeholders to raise awareness and engage in policy discussions
Innovation is one of the most abused buzzwords of the past decade. It is a term with enormous appeal, suggesting (without having to deliver) breakthrough thinking and new ways of approaching problems. It implies action where, as we have seen time and again, none exists.Innovation is not invention, nor is it the result of a eureka moment.Why is this important? It increases competitiveness and development, which translates into improvements in standard of living and quality of life
We use a total of 12 indicators to measure innovation performance. The indicator choice was guided by the Conference Board’s definition of innovation as “a process through which economic or social value is extracted from knowledge—through the creation, diffusion, and transformation of knowledge to produce new or significantly improved products or processes that are put to use by society.” Knowledge production is captured by indicators measuring the number of scientific articles, patents (patents by population and share of world patents), and trademarks. The transformation of knowledge is gauged by indicators examining technology exchange (the technology share of total exports and imports), the share of gross domestic product produced by high- and medium-high-technology manufacturing, and the share of GDP produced by knowledge-intensive services. Market shares of selected knowledge-based sectors (aerospace, electronics, office machinery and computers, pharmaceuticals, and instruments) examine, for example, the share of Canada’s aerospace exports in total 17-country aerospace exports relative to the share of Canada’s total economy exports in total 17-country exports. The trademarks per million population is a new indicator this year. This is a useful indicator of innovation because it allows us to benchmark services sector innovations and non-technological innovations not captured by data on patents.Despite a decade or so of innovation agendas and prosperity reports, Canada remains near the bottom of its peer group on innovation, ranking 14th among the 17 peer countries. This does not mean that Canadian inventions are themselves inferior. In fact, Canada produces some great inventions and inventors. Canada’s low relative ranking means that, as a proportion of its overall economic activity, Canada does not rely on innovation as much as some of its peers. Overall, countries that are more innovative are passing Canada on measures such as income per capita, productivity, and the quality of social programs. improving steadily but not enough to change their relative positions.
As the population ages, health expenditures increase Canada’s population aged 65 and over (13.2%) in 2006 consumed 44.4% of total health care expendituresBy 2030, 22.2% of the population will be over the age of 65
Government procurement, in trade policy terms,is defined as contractual transactions to acquire goods, services or construction services for the direct benefit or use of the government. Often found in EU and leading OECD policy papers encouraging the leverage of billions of public dollars on products and services that are spent by governments each yearSeen as a tool to foster demand (pull) through purchase of innovative products and servicesAim: to improve performance and functionality of public services and/or solve important socioeconomic challenges.
Three categories of policy action:Public procurement of R&D (Pre-commercial procurement): there is a perceived need without a commercially available solution). Procurement is an R&D service contract with multi stage process from exploration & feasibility to prototyping field tests with first batches and finally commercialisation. Key that WTO Agreement and EU Procurement Directives do not apply.Innovative Procurement: specifying a requirement that cannot be met by an off-the-shelf solution but it can be developed within a reasonable period of time. It stimulates innovative private procurement by catalysing private demand – lead user.Procurement of innovation: when an innovative product already exists but is not widely adopted, driving a need to install a system management to speed up adoption and diffusion.
Role of innovative procurement has been recognized by the UK government
A new Commercial Operating Model (was designed to organize and apply new commercial skills across the NHS. Creating regional commercial support units (CSUs) which offer services to, and are owned by, the NHS locally. “CSUs will provide commercial support to commissioners to ‘stimulate the market’ where this works in the interests of patients, manage contracts effectively and work in harmony with NHS Supply Chain to secure better value for money for goods and services procured.” Making the 10-year NHS Supply Chain contract work harder and smarter to deliver greater efficiencies for providers. This will be achieved through “ . . . more transparent pricing, increased responsiveness and better strategic management.” Transferring the NHS Purchasing and Supply Agency’s (NHS PASA) functions to organisations that can add greater scope, scale and impact to the procurement of goods and services. The NHS PASA activities will be transferred to Office of Government Commerce (OGC) buying solutions to aggregate public sector spending power, while other PASA functions will be transferred to CSUs to build regional capability.Creating a new DH commercial centre—the Procurement, Investment and Commercial Division (PICD) “ to strengthen commercial and procurement support for DH itself and to ensure alignment of the wider commercial landscape.” The leadership and commissioners support in market analysis will be done by new Strategic Market Development Unit (SMDU).Ensuring that the World Class Commissioning programme encourages primary care trusts (PCTs) to develop regional CSUs with provider partners. In order to advance in their procurement and management skills, PCTs will need to demonstrate capabilities similar to those that CSUs will offer. Ensuring that the third and private sectors have a clear and visible point of commercial contact in each region. CSUs will be a point of contact for the private sectors that will provide NHS funded services.Contributing to innovation, research, regional development and local regeneration. The new commercial model will be contributing around £20 million to attract entrepreneurs to regional CSUs in order to stimulate local economies.
Involved a revision of supply chain and the development of a system of innovation where each key stakeholder became responsible for changing aspects of purchasing processes and the technology . The RNID (Royal National Institute for Deaf People) was keen to address the fact that new technology was not reaching up to 2 million NHS hearing aids users. People who wanted digital hearing aids (Digital Signal Processing or DSP) were paying as much as £2,500 to purchase them privately. RNID identified the potential of the NHS to use its bulk purchasing power to drive down the cost of digital hearing aids and supply them to NHS patients. Prior to modernisation, people in need of hearing aids were fitted with analogue models that had developed little since the 1970s. In addition, lack of technical expertise and patchy follow-up support meant that at least one third of patients fitted with old analogue hearing aids did not use them because they offered little benefit. The RNID argued that there was no existing opportunity in the NHS to change so many lives so radically at such a low per capita cost (£75 ; less than a day in hospital or a week in care).The RNID proceeded to launch a large scale lobbying campaign to encourage the Government to provide more funding for audiology services, and particularly for the development and provision of advanced digital hearing aids. They used national and local press and direct mail appeals to 300,000 supporters. 50,000 postcards and letters were sent to Ministers and MPs, and efforts generated major media coverage on the long waiting lists for poor hearing aids, provoking questions about the issue during two parliamentary debates. Through negotiations with the Department of Health (DoH), RNID succeeded in securing £125 million to ensure large scale modernisation of services over a five-year period.The next step in this initiative was very unusual; RNID was asked by the government to manage the process of modernisation, alongside the DoH. This was the first time a voluntary organisation had been asked to co-manage such a large-scale project with a government department. The Modernising NHS Hearing Aid Services (MHAS) programme was launched by the DoH in the spring of 2000. The cost of digital hearing aids at the time was £2,500 per unit – a prohibitive cost for most patients that prevented widespread public provision. More efficient procurement methods implemented by the RNID resulted in a substantial cost reduction to as little as £55, which meant that digital hearing aids could be provided free of charge through the NHS. This was a major achievement but it became apparent that wider changes were needed to maximise social impact. Providing the hearing aids required significant staff training in fitting and supplying, and investment in technology to support the aids. This, in turn, exacerbated the need for greater capacity to meet increased demand for the new hearing aids in a timely manner, and waiting lists grew significantly. Similar audiology modernisation has taken place in Wales and Northern Ireland and the process in Scotland will be complete by the end of 2007.Modernizing Children’s Hearing Aid Services (MCHAS) was the title of the research and training programme which introduced digital signal processing hearing aid technology into the NHS. The programme ran from 2000 2005 and during this time all Audiology departments in England, received training and children are now routinely fitted with digital hearing aids. Alongside the introduction of new hearing aid technology, new fitting procedures and working practices were introduced. Guidelines covering these procedures were written and are now accepted by the profession as standard quality practice.
NHS Yorkshire and the Humber was formed in July 2006 following the merger of the three former SHAs of West Yorkshire, South Yorkshire, North and East Yorkshire and Northern Lincolnshire. Our region has a population of 5.12 million and covers an area of 15,510 square kilometres. Our long term aims are to improve health, reduce health inequalities and improve service quality for our region. Focus has been on: developing partnerships, promoting a culture of innovation, and maximizing use of Innovation Funds to promote adoption and spread innovations . Medipex assists NHS organisations and their employees (doctors, nurses, R&D staff, supporting functions et al.) in the region to recognize the true value of their ideas. Guidance and practical support is provided from the idea stage through to development and final product launch in the marketplace. This ensures that the innovations and Intellectual Property (IP) within the NHS are identified and developed in the interests of improved patient care and also for the benefit of the NHS and the inventors.Every SHA has a legal obligation to promote innovation in the commissioning and provision of healthcare. Through our regional strategic plan Healthy Ambitions, published in May 2008, we set out the framework for improving healthcare in our region. Primary Care Trusts play an important new role in promoting innovation through the commissioning of innovative world-class services. We believe that innovation is the successful invention, piloting and diffusion of good ideas into mainstream practice. It is a broad concept that encompasses not only research, but service delivery and redesign. The most successful organisations are those that encourage employees to innovate and reward them for doing so. If the NHS in Yorkshire and the Humber is to realise the full potential of its 140,000 employees it must do the sameWe have one of the UK’s highest concentrations of medical device companies, superb specialist skills (especially in surgical instrumentation, orthopaedics and advanced wound-care), exceptional access to clinical trials, pioneering R&D, and Europe’s largest teaching hospital. Our region has a real opportunity to make the most of the collaboration potential and resources held within businesses, the NHS and our universities. Creating an environment where businesses can innovate and increase their competitive advantage will bring real economic benefits to the whole region. It will help to create high levels of added value in engineering, biological research and manufacturing, as well as in other rapidly developing areas such as ICT. In classifying healthcare technologies as a priority sector, we are supporting growth, innovation, productivity and competitiveness within Yorkshire & Humber. Zilico Ltd Cancer Diagnostic Spin out company. Zilico Ltd was the first spin out company from Sheffield Teaching Hospital NHS Foundation Trust and initially set up by Medipex. Diagnostic probes for cervical cancer screening. 2 new products are being developed to provide “real time” results for women undergoing cervical cancer screening which will remove weeks of waiting for a diagnosis. Tests are safe, painless, and accurate. Reduces false positives and need for diagnostic biopsies. Estimated annual savings to the NHS between £28M to £30M.
PORTER’S CHAIRMinima with VernacareThe majority of Minima’s design work is dedicated to health care, from high-tech devices like an ultrasonic cane for visually impaired users to medical packaging. It was the manufacturer Vernacare, a longtime Minima collaborator, that focused on a better porter’s chair. “They haven’t really changed since the 1950s,” says Minima’s design director, Nick Field, who took over the Design Bugs Out project from Alastair Kingsland, the former design director, when he joined the company last summer. “In the last ten years, as infection control has become an issue, they’re seen as prone to directing germs from one hospital ward to another. This year alone I’ve worked on five infection-control projects.”Vernacare Group“It’s a demonstration of how design teams can really play a part in health-care efficiency and how innovation can engage people on the front lines, like nurses, janitors, and porters.” He forecasts that the products could usurp their Supply Chain competition within six months. Here the designers navigate the germ-busting features of four reconsidered objects.Patients go into hospitals to be cured of what ails them, but the ugly truth is that some get sick from being there. In 2007, around 9,000 people in the United Kingdom died from hospital-borne infections. In July 2008, the DH turned to the Design Council for solutions. The resulting program, called Design Bugs Out, began with a team conducting interviews for a month with patients and caregivers in NHS hospitals in Huddersfield, Manchester, and Southampton. From that research, health-care experts determined 11 categories of products in which redesigns could drastically reduce infection-related fatality rates.
Steady commitment to innovation from the central government: The U.K. has enthusiastically followed directives from the European Union regarding the use of innovation procurement to leverage innovation. The role of innovation procurement for improving the health system has been recognized by the central government, and innovation has been clearly articulated in key procurement policy and strategy documents. The central government established the vision, and along with it, a series of policy reforms and incentives to support the implementation of this vision. Regional mandate to advance innovation agenda: Key to the transformation to date has been the creation of new legal accountability framework that gives the responsibility for leading innovation to the strategic health authorities. This new regional innovation model has reinforced innovation hubs and is resulting in bottom-up approaches to health innovation that provide direct healthcare and economic benefits to the region, which aligns well with the overall goal of the central government. Targeted funding for health innovation: More than $350 million have been made available to encourage people working inside and outside the NHS to suggest and implement innovation and to support the strategic health authorities in their health innovation efforts. This additional funding has been important in creating excitement, encouraging new and innovative ideas to solve health-care challenges, and supporting the development of innovative health-care products that can significantly enhance the safety and productivity of health care services. Strategic development of talent at all levels: Significant efforts have been made to increase the knowledge, skills, and capacity of the NHS staff and commissioners to improve their collaboration and research skills, to enhance their innovation user-readiness, stimulate their scientific curiosity and critical thinking, and to upgrade their business and commercial skills. Through this, the U.K. is creating a critical mass of talent empowered with the skills to create value for the NHS. The end result is a cultural transformation within the NHS. In 2002, a landmark report by Sir Derek Wanless identified the NHS as a late and slow adopter of new technologies. Since then, the NHS has come a long way. Through the implementation of an innovation agenda focused on innovation procurement driven by strong regional focus and new investments, The NHS is boosting the behavioral and cultural changes that Wanless called for. Wanless, Derek. Securing our future health: Taking a long term view. HM Treasury 2002.
The survey results illustrate this disconnect. Respondents were almost unanimous in agreeing that innovation is essential for improving organizational performance in the health sector and for the sustainability of Canada’s health care system. They were much less likely to say that innovation is a recognized priority within their organizations or to see procurement as a lever for innovation.
Strikingly, although 60 per cent of respondents agreed that innovative products and services were very important or important in achieving their organizations’ goals, over half said that procurement approaches in their organization do not support the development and uptake of innovative products and services.
there is evidence that procurement processes that foster price competition likely lead to the minimization of resources rather than performance enhancement. In order to accommodate other important elements that more directly support innovations and lead to better quality, governments are considering alternative evaluation processes, including most economically advantageous tender (MEAT), which might include assessment of whole-life costs, technical merits, innovative functionalities, and user-centred design in relation to the price. EC, Guide on Dealing with Innovative Solutions in Public Procurement.
If public procurement practices require a high degree of evidence of long-term efficacy, public agencies are effectively precluded from being early adopters of innovative products. And the lowest rate of agreement in the survey was to the statements that health care organizations communicate their innovation plans to the market and have mechanisms in place to determine user readiness for innovations, two fundamental elements in the life cycle of innovation procurement.Our survey findings suggest that the driving force behind procurement practices in health care in Canada continues to be cost control rather than value generation. This research indicates that the prevalent mindset in Canada’s health care system has not yet shifted to embrace the concepts of innovation systems and innovation procurement, even though there is recognition that innovation occurs most readily in systems that involve active participation and strong collaboration across a network of stakeholders. This suggests that culture and attitudes toward innovation within Canada’s health-care system may be an even greater barrier to innovation than our complex jurisdictional structure. Sharp increases in health care costs and the growing demand for health services have made Canadian governments and health care administrators cautious about health innovations. The main concern is that decisions that lead to the inclusion of innovative technologies and increase use of these technologies will contribute to a sharper rise in expenditures. This mindset has affected major health care policies and strategies over the last decades. However, this view might be counterproductive in the long term, as procurement processes that primarily focus on price competition provide incentives to vendors to decrease production costs, which typically affects research and development expenditures and, therefore, innovation.
The Canadian survey findings offer a striking contrast with the experience of the United Kingdom. The Canadian division of responsibilities between the federal, provincial and territorial governments makes implementation of the UK’s top-down approach to driving change more difficult. However, Canadian efforts over the past decade to revamp primary care demonstrate that it is possible for jurisdictions to work together, and the key lessons from the UK’s experience with innovation procurement could be adapted to the Canadian context.
Innovation through procurement offers a compelling opportunity for Canada to generate better value for public health-care spending. To capture this opportunity, action in four fronts is required: Federal leadership. The expiry of the current federal-provincial health transfer agreement in 2014 provides an opportunity for the federal government to ensure that the next agreement is structured to encourage innovation. In addition, as seen in the UK, a central department overseeing progress and being accountable for results would also be fundamental to advance health innovation in Canada. A National Health Innovation Office, potentially housed within the Ministry of Finance or Industry, could be created for this purpose. Regional implementation. While there is a need for a coordinated federal and provincial policy framework for innovation procurement, the UK experience suggests the need for a strong regional focus. Governments should give health regions an explicit mandate as health-care innovators and should support the development of regional innovation hubs. By tying regional health funding to the achievement of innovation goals, governments could quickly drive the kind of progress that has been seen over the past decade in the UK. The legislative mandate for innovation used in the UK could be considered in Canada. By setting innovation goals in health regions’ accountability agreements and tying a percentage of their funding to the achievement of their innovation goals, health regions will have strong incentives to implement innovation procurement. The Excellent Care for All Act in Ontario demonstrates that this approach can be successfully employed to advance innovation in health care.Culture and attidudes. Funding arrangements can provide important incentives, but the survey responses in this study suggest the need for a more fundamental shift in the culture of Canadian health care. A more innovative and entrepreneurial culture would drive a higher-quality and more cost-effective health-care system and could make the health-care sector a key factor in building a more competitive Canadian economy. Changing the culture of individual organizations and of the health-care system as a whole will not be easy and will require sustained effort at all levels, but the UK experience suggests that significant progress can be made quickly and that the payoff for all Canadians could be substantial. Empowering members of the health care system with the knowledge and tools they would need to think in terms of seeking value for money, rather than the lowest price, will be fundamental to achieve the changes in culture that are required. Governments could consider training and development (e.g., online courses, workshops, conferences) to raise science and technology literacy and to improve understanding of innovation procurement, its potential in health care, and the challenges and opportunities for its implementation in Canada.
Dr. Gabriela Prada
The Potential Social and Economic Value of <br />Innovation Procurement <br />Dr. Gabriela Prada<br />Director, Health Innovation, Policy and Evaluation<br />Medical Technology Innovation Conference<br />London, June 11th, 2011<br />
Overview<br /><ul><li>About The Conference Board of Canada
The Conference Board<br />www.conferenceboard.ca<br />Independent, not-for-profit, applied research organization<br />Specialists in economic trends, public policy, and organizational performance<br />Several initiatives in health:<br />Centre for the Advancement of Health Innovations<br />Canadian Alliance for the Sustainability of Health Care<br />Six other research centres focusing on health and healthcare <br />Multiple customized research projects <br />
www.conferenceboard.ca<br /> Innovation: a process that extracts economic and social values from knowledge using the generation, development, and implementation of ideas to produce new or improved products, services, or processes.<br />Source: The Conference Board of Canada<br />
Canada’s Innovation Performance<br />Ranking has not improved since the 80s. <br />The "D" grade underlines Canada’s relative weakness in developing inventions (patents and trademarks) and in translating publicly supported research into products with high levels of global market penetration.<br />www.conferenceboard.ca<br />
Average Productivity Growth(per cent)<br />Sources: The Conference Board of Canada; OECD.<br />www.conferenceboard.ca<br />
Innovation Is also Critical for Healthcare <br />www.conferenceboard.ca<br />
Average Per Capita Public Health Expenditures by Age Category<br />www.conferenceboard.ca<br />
Health Care Costs as a Share of Provincial Revenues<br />www.conferenceboard.ca<br />
Federal and Regional BalancesNational Accounts Basis ($ billions)<br />Sources: Statistics Canada; The Conference Board of Canada.<br />
www.conferenceboard.ca<br />Innovation Procurement <br /> Innovation procurement involves the development of innovations and/or the purchasing of existing innovative products or services to improve the performance and functionality of public services and to solve important socio-economic challenges. <br />
www.conferenceboard.ca<br />Innovation Procurement in the United Kingdom<br />
www.conferenceboard.ca<br />The UK Has Effusively Embraced Innovation Procurement in Health <br />Innovation and innovation procurement have been clearly articulated in key policy and strategy papers<br />Efforts to implement innovation procurement have resulted in massive transformation of the health system:<br />New accountability frameworks<br />New governance structures<br />Structural changes are shifting the mindset: innovation systems, need for alignment, focus on creating value <br />
REGIONAL APPROACH TO TECHNOLOGY-LED INNOVATION<br />NHS Operating Framework<br />SHA 10 year vision <br />IDENTIFY NEEDS<br />Quality & Productivity<br />PCT priorities<br />REGIONAL PRIORITIES<br />Identify new opportunities for innovation<br />Identify existing innovations that are not being taken up<br />NICE MTAC CEP Innovation Fund Medtech roundtable NTAC<br />NIC Innovation Hubs NIHR SBRI<br />Innovation Lead & Stakeholder Group<br />DH Guidance<br />COMMERCIAL SUPPORT UNIT<br />Innovative Procurement<br />Mobilise procurement landscape to speed adoption<br />Develop pre-commercial procurement programmes<br />Government Strategy and life groups, including NHS<br />Procurement<br />Industry<br />Pre-commercial procurement<br />
www.conferenceboard.ca<br />Successes: Adoption of Digital Signal Hearing Aids<br />Royal National Institute for the Deaf (representing patients) acted as the lead organization and project manager<br />Within 4 years the NHS went from no prescribing digital hearing aid to prescribing the technology to all appropriate users<br />
www.conferenceboard.ca<br />Successes: Innovation Outcomes at Yorkshire and Humber SHA<br />Over five years: <br />Received 846 new ideas, assessed 408 and supported 58<br />Supported the development of 50 technologies with a market value over $81 million<br />Supported the development of five spin-off companies <br />Raised close to $3 million venture capital funding <br />Partnered on R&D contracts to the value of $55 million<br />
Support UK innovation </li></li></ul><li>www.conferenceboard.ca<br />Key Success Factors for These Achievements<br />Steady commitment to innovation from the central government<br />Regional mandate to advance innovation agenda<br />Targeted funding for health innovation<br />Strategic development of talent at all levels<br />
Importance of Innovation<br />www.conferenceboard.ca<br />
Importance of Innovative Products <br />% Reporting that Procurement Approaches in their Organizations Support the Development and Uptake of Innovative Products and Services<br />www.conferenceboard.ca<br />
www.conferenceboard.ca<br />Barriers for the Uptake of Innovations <br />Rigid procurement processes and rules<br />Lack of appropriate skills among the staff<br />Lack of organizational interest in innovations<br />Too much focus on cost reduction and standardization<br />
Top Three Most Important Elements for the Evaluation and Selection of Tenders <br />www.conferenceboard.ca<br />
www.conferenceboard.ca<br />Innovation Procurement Processes: Areas for Improvement<br />Engagement of patients and providers in pre-procurement stages<br />Communication of innovation plans to the market<br />Determination of organizational readiness for innovation<br />Ability to assess capabilities of suppliers to take advanced products and services forward<br />Designing evaluation frameworks that take into account innovative performance and spill-over benefits<br />Design and implementation of contracts that don’t restrict innovative developments <br />
www.conferenceboard.ca<br />Key Lessons<br />The concepts of innovation and procurement are still poorly connected in Canadian health care.<br />Responses showed both a reluctance to take advantage of the supply of innovative products available in the marketplace and a poor ability to express the demand for innovative solutions to the market.<br />Innovation requires risk-taking, but survey responses suggest that public procurement practices in Canadian health care remain highly risk averse.<br />
www.conferenceboard.ca<br />Where do We Go from Here? <br />
www.conferenceboard.ca<br />A Paradigm Shift is Needed in Healthcare<br />From variable business practices to optimized, continuously improved business processes<br />From episodic to continuous care<br />From cost control to value generation <br />
www.conferenceboard.ca<br />Innovation Procurement Needs To Be Part of a National Health Innovation Plan <br />To advance Innovation Procurement, action is needed in four areas:<br />Federal leadership:<br />Set a national health innovation plan<br />Establish a National Health Innovation Office<br />Targeted funding to: <br />Encourage greater risk-taking<br />Shift the focus of procurement to value generation <br />Invest in the development of the skills needed to manage a more innovative process <br />Regional implementation<br />Give health regions an explicit mandate as health-care innovators<br />Support the development of regional innovation hubs<br />Culture and attitudes<br />Empower members with the knowledge and tools they would need to think in terms of seeking value for money<br />
For more information about <br />the Centre for the Advancement<br />of Health Innovations and <br />CBoC’s research on <br />health innovation, please visit <br />www.conferenceboard.ca or <br />email@example.com<br />Thank you! <br />www.conferenceboard.ca<br />