NCPA - National Center for Policy Analysis

Innovation Unable to Thrive in U.K.'s NHS

July 12, 2012

Queen Elizabeth Hospital in Birmingham, England, has enacted a truly innovative approach to patient care. Inspired by the precision and exactitude of a BMW factory, the hospital's administrators purchased and installed the Prescribing, Information and Communication System (PICS for short) in each patient's room, tracking patient care and health outcomes and looking for instances of neglect, says The Economist.

The system encourages the hospitals workers to be more precise and efficient by paying greater attention to small details. Years into the health care experiment, the implementation of PICS is being lauded as a boon to patient care.

  • The system has allowed hospital workers to more quickly assess the benefits of treatment, cutting down on readmissions and wasted prescriptions.
  • A report by the Journal of the Royal Society of Medicine concluded that mortality rates had fallen, and noted that the new system had helped reduce the sort of errors that lead to poor patient care.
  • Attracted by its results, some hospitals with poor outcomes in fields like esophageal cancer have contracted out their treatments to Birmingham.

It is at this point, however, that the implementation of a potentially lifesaving technology comes to a screeching halt. By removing rewards for innovation and undercutting the benefits of competition, Britain's National Health Service squelched the growth of PICS before it began.

  • The NHS is preoccupied by austerity: it must find £20 billion (about $30 billion) worth of efficiency savings by 2015.
  • Further, the health service is still reeling from a failed central-computer project that has ended up costing over £12 billion (almost $19 billion).
  • Most importantly, innovations do not spread in Britain's health sector because the NHS has no mechanism for ensuring they do, or for rewarding the inventive.
  • The service is centrally funded and emphasizes the universality of its care rather than its results.
  • As a result, the system is likely to prove better at controlling costs than at encouraging good ideas to thrive.
  • Additionally, because hospitals do not directly compete with one another (nor are they allowed to acquire one another unless they are in dire financial straits), PICS is not likely to be unilaterally adopted by other institutions.

It is the motivation for a competitive advantage that spurs innovation in other health systems, and it is the absence of this motivation in Britain that will harm health outcomes.

Source: "From Petrol to Prescriptions," The Economist, June 16, 2012.

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