Website of the Department of Health

There cannot be a more important agenda for any Government than this. The Department of Health and the National Health Service will be actively supporting this focus on innovation not just because of our responsibilities in Government.  But because we can make a major contribution to its success.

The NHS is the biggest employer in Britain. We are the biggest single employer of graduates - including science graduates -  in the UK. We make the largest investment in higher and further education. We invest over a billion pounds every year in research and development. We have the biggest annual procurement budget of any Government Department. It is in all of these areas that the NHS can make a serious contribution to the national debate on innovation.

The new Commercial Directorate in the Department of Health is now responsible for taking forward this agenda. It will benefit from the enormous extra investment going into the NHS, which will see resources increase from £56 billion this year to £90 billion by 2008 - meeting the EU average for health care spending.

Last year, the NHS performed a million more operations than it did 6 years ago. We see 2 million more outpatients. We can do this because we have nearly 20000 more doctors, nearly 68000 more nurses and thousands of other health staff working for us.  

As a result, waiting times are falling. Cancer survival rates are increasing and fewer people are dying from heart disease. Death rates for both cancer and heart disease are falling faster in England than in any other country in the European Union.   It is not true therefore to say that the extra investment in the NHS isn't making a difference. It is. 

But our focus today should be on how we can help accelerate these improvements. How we can help ensure that the NHS becomes an increasingly enterprising and innovative part of the public sector. How can we use new ways of working, different ways of viewing problems to find solutions that will deliver the results we are seeking for patients. These changes that will not only have a positive impact on our national health.  They can also increase our national wealth as well.

Our objectives for the nation's health services are clear. Greater capacity, improved quality, greater choice.  Our goal is an NHS that delivers a more patient centred experience, offering greater access and choice and uses modern technology and research to ensure we maximise opportunities for improvement in everything we do.

Realising these goals and objectives can't be achieved by the NHS alone.

As organisations that are involved in providing products and services to the NHS, you all have an important role to play in helping the NHS become the service people want it to be.

As the NHS is a service driven first and foremost by science and scientific advances, innovation should be a natural part of our business.  Sometimes this can take the form of a new treatment, or device, perhaps a new drug, software training material or a new management system.

But very often, the NHS has lost the wider benefit of innovation because it has not had a defined way of capturing Intellectual Property, and then going on to exploit these IP rights through successful marketing and successful commercial application.

Recognising this gap we set up NHS Innovations as the technology transfer arm of the NHS. Established in 2002, with funding from the Department of Health, the Office of Science and Technology and Regional Development Agencies, NHS Innovations provides services to NHS Trusts and Primary Care Trusts for identifying, protecting and exploiting opportunities and the Intellectual Property surrounding new ideas and inventions.

NHS Innovations has established a network of nine regional hubs across England that facilitate interaction and partnership between local NHS Trusts, commercial enterprises and universities. The Hubs are already creating a good stream of new ideas and innovation that once fully developed can offer positive benefits for the NHS, patients and for us all as tax payers. And there are benefits here for commercial organisations willing to become involved in these schemes, through commercial partnerships and new collaborations.  We are willing to embrace new ways of working and new partnerships with private sector organisations who can work with us to bring about long term success as well as a fair return for their effort and investment.

We also need to encourage and reward innovation, because to be successful in the global knowledge economy, the UK must encourage the growth of innovative and dynamic businesses, both large and small.

The Department of Health is also playing its part in this wider agenda with the establishment of an Innovation Centre, where new ideas for and from the NHS, can be displayed, reviewed and show cased for discussion and development.

I believe this new Innovation Centre can provide an excellent catalyst to attract interest and stimulate new thoughts and ideas around the innovative use of new products and services for the NHS.

Not only can these new ideas help us in the UK, they can become the test bed for a much wider application across the world, through spin out companies and global patents.

NHS R&D funding enables the NHS to provide a research active workforce, an effective base for high quality science in health-related research, and strong programmes of research to meet the priorities and needs of the NHS, leading ultimately to improvements in health and healthcare.

Britain has an outstanding record of scientific innovation. In health, it rests on mutual support between the NHS, universities and bodies that fund high quality R&D. NHS R&D funding strengthens this partnership to keep our research at the forefront of relevance, quality and value. As well as providing solid support for the national scientific effort, the NHS must also support R&D that is relevant to the national priorities of the NHS, responsive to the needs of those who use the NHS, its staff and decision-makers, and accessible to patients too. It must take an integrated approach to securing the knowledge we need if we are to be able to tackle health inequalities that still scar many parts of Britain today.

NHS R&D funding supports R&D that is needed - over and above that supported by other funders - to underpin modernisation and quality improvement in the services the NHS provides in its own right and in partnership with those working in health and social care. Our challenge is to ensure that health and social care is supported by the best available evidence through research and maximises its contribution to the wider economy.

NHS R&D funding currently stands at over £600 million. We have made available an additional £25 million this year and in each of the next three years to secure the necessary development of our medical research here in this country. That is an extra £100 million per year by 2008. This extra money will be used to fund research into new medicines for children, and to research new treatments for mental health, diabetes, stroke and Alzheimer's. This funding boost will bring combined government spending on medical research to £1.2 billion by 2008.

This investment reflects the high priority we attach to placing innovation at the very heart of the NHS. We must ensure we exploit every opportunity to improve the service to patients And in the process, ensure that the experience of using the NHS matches our own individual aspirations for a 21st century health service that offers faster, more convenient higher quality care. 

A lot will depend on the way the NHS procures the goods and services it needs - everything from hospital buildings to bandages, medical equipment, food, clinical services, IT and everything else.

The NHS must use this purchasing power effectively. We recently commissioned a thorough review of the NHS purchasing and supply chain functions, where we spend some £13 billion per year on non pay goods and services. As a result we instigated the Supply Chain Excellence Programme, which has been designed to increase efficiency and value for money for the NHS. But it goes much deeper than just the pursuit of value for money - important though this is. We need to become a much more intelligent buyer and in the process, develop stronger relationships with the independent sector. 

The Supply Chain Excellence Programme is now under way and being led by the Commercial Directorate, led by Ken Anderson. There are three key strands to the work.

Firstly, renegotiating national contracts that fall under the remit of PASA to ensure that the NHS makes the maximum use of its unique situation as a major purchaser of goods and services. This work is already revealing that there are benefits to be gained from working in new and innovative ways with suppliers.

Secondly, exploring new ways of working for regional groups of NHS Trusts that will form  Procurement Hubs to pool expertise, agree common areas of specification and build greater dialogue with suppliers about how best to meet their procurement needs  and how to make it easier for suppliers to work more effectively with them.

And finally looking at the NHS Logistics operation to explore new ways of working to deliver benefits for the NHS - including potential partnering with a private sector specialist.  Once again I believe that this programme highlights our determination to adopt new ways of looking at the NHS and its crucial support functions. If by thinking and acting differently we can deliver better services for NHS patients then we won't hesitate to change the way we do our business. After all, defending existing public sector structures is not the same thing as defending public sector values. Our values remain the same. The way we organise our services can and should change to meet the needs of modern society.

Another area of innovation is in our approach to increasing clinical capacity in the NHS to treat more patients, reduce waiting times, and introduce choice for patients.

The Commercial Directorate is leading on our policy to increase clinical capacity  through the Independent Sector Treatment Centre programme, which will utilise the services of some of the world's leading independent healthcare companies for the benefit of NHS patients.  This initiative has already begun, with the first fixed site in Daventry fully operational plus two mobile units touring PCTs in England to perform cataract removals. The mobile solution is an innovative one that has already performed over 4000 procedures since it started in February of this year. It enables flexibility, responsiveness and rapidity in the delivery of healthcare and has been procured as a total service contract.

We would like to see more of this type of innovation in helping to further reducing waiting times and introducing greater choice for patients over where and when they are treated.

We have also recently agreed contracts with UK based providers Nuffield and Capio to provide an additional 25,000 procedures over this coming year as part of a wider 5 year initiative to focus on long waiting times in areas of particular need. These contracts represented a breakthrough in terms of negotiating for additional capacity at value for money prices.  Altogether, the Treatment Centre Programme will treat over 250,000 additional NHS patients each year.

 We are investing over £1.5 billion in this new partnership with the independent sector. A tangible sign of our commitment and determination to accompany the essential investment with the necessary reforms to make the NHS better and more efficient.

 We would like to go further still. We are now procuring additional diagnostic capacity and capability through a new national mobile MRI scanning and reporting service that we plan to come on stream in the summer of this year.

In the past many people, with some justification I think, have criticised the slow, and often protracted nature of Government procurement processes. But in this case, instead of asking for a specific solution, we posed a problem and set the time line. 

The rest was down to the independent sector to innovate and deliver; we placed an advertisement asking for expressions of interest in April of this year and we plan to be letting the contracts by the end of this month for delivery in July or August.

This initiative will be delivering 80,000 MRI scans per year for five years - a 10% increase in the current NHS capacity, delivering much needed diagnostic tests to NHS patients across England who currently wait unacceptable lengths of time. I believe this demonstrates that we are adopting more innovative and flexible approaches to procuring new services, and we will continue to encourage more lateral thinking about how to find solutions to the problems the NHS faces.

The MRI scanning exercise will utilise the new technology that we are adopting to enable images such as X rays and scans to be stored and mailed electronically, rather than printed on film and filed manually - enabling clinicians to provide a much faster diagnosis. The new Picture Archiving and Communications System, is being established under the Department of Health's £6bn IT programme that is currently being implemented. The largest IT investment anywhere in the world. PACS technology will begin to be rolled out from this summer through five Local Service Providers, our partners in the private sector. At present only 25 Trusts in the country have this latest technology. We are now looking to achieve national coverage in three years. This innovation alone will have a dramatic impact on the ability of the NHS to diagnose patients more quickly and again speed up the process of referral for treatment.

We are also looking at the next wave of IS-TCs which will help us to increase capacity to meet choice and waiting time targets, beyond 2005.

 These exercises will encourage plurality amongst providers. And greater diversity. Both of which will help the NHS increase flexibility, efficiency and responsiveness. Helping the NHS become the service we want it to be.

We must also not forget work being done under the PFI initiative. PFI is an important element of our overall 10 year plan to modernise and enhance the NHS.  This is much more than a new hospital building programme. It has to become the principal mechanism for getting new design solutions into the NHS, not just in buildings but in processes too. Building not just for the needs of today's society. But for the needs of generation to come.

The new Birmingham hospitals project is a good example of this.  Scheduled to open in 2008/09 this will create the most up to date hospital facilities anywhere in the world. The new hospitals will revolutionise healthcare design, both from a building as well as a service delivery perspective. Costing over half a billion pounds, the new hospitals will be a landmark development in the NHS. Helping the NHS become the service we want it to be. Building for the future. Building on partnership between the public and private sector. And in the process, making a direct contribution to national prosperity and competitiveness.

Part of the Commercial Directorate's remit is to help the NHS become a more intelligent customer, and in this process to encourage innovation in our procurement processes. The fact that the Department of Health, along with the DTI have organised today's conference will I hope demonstrate to you the strongest possible commitment we have to the overall innovation agenda and the important role it can play in helping the NHS to move forward.  Thank you for your participation at this event. It has been my privilege to speak to you today.