As spending is reined in the NHS must find ways to increase quality without raising costs. The answer, according to chief executive David Nicholson, is innovation. Jennifer Taylor finds out how the NHS can become cutting edge while stimulating economic growth

Health minister Lord Darzi’s report High Quality Care for All set the NHS on a journey of continuous quality improvement. The next stage review’s consultative approach - taking in patients, managers and clinicians alike - resulted in a report where quality is the uniting theme. Lord Darzi sees it as the force that will bring about a health service more focused on the individual needs of patients and designed to incentivise clinical leadership.

Underpinning this improvement in quality of care must be a drive for more innovation, he believes.

He says: “We have already said quality would be the organising principle of the NHS. That is a very bold statement, and I do not think you can make that happen without innovation driving that quality agenda.”

What was different about Lord Darzi’s approach in High Quality Care for All was that it injected fresh ambition, says NHS chief executive David Nicholson. While chief executives in England were talking about successes in delivering shorter waiting times or reducing healthcare associated infections, their counterparts abroad were describing how they were creating an environment where more clinical trials are done, where their patients are getting the best possible treatment fastest.

“That’s not the normal way in which we talk in the NHS but it’s something that Lord Darzi has started to introduce,” he says.

The next two years will see NHS resources increase by 11 per cent, but after that will be a tough period. So how can the NHS keep that level of ambition on the one hand, while driving productivity? The answer, says Mr Nicholson, is innovation. “The way in which you connect quality to productivity is innovation. Even though we have a national system, sometimes our patients don’t get the best possible treatment until many years after other parts of the world. That is the issue for me: how do we get the best possible treatment to our patients fastest and how do we make sure that we use innovation to improve and produce productivity gains.”

His comments were part of a roundtable discussion of health innovation. It brought together leading people from different sectors to discuss the challenge of adopting innovation across the NHS and how to move towards action. It was one part of a high profile package of events and initiatives to embed innovation within the NHS (see box, “Innovation: the policies”).

The last week in April was Innovation Week, during which several initiatives were announced. A regional innovation fund will distribute £220m to strategic health authorities, which will receive £2m this year and £5m every year for the next four years. They will decide locally how to use the money to support innovation.

A panel headed by Sir John Bell, president of the Academy of Medical Sciences, will set annual challenges for innovation which will award £20m over the next five years.

The latest sources of clinical and non-clinical evidence will be readily available on NHS Evidence, an online search engine managed by the National Institute for Health and Clinical Excellence.

Strategic health authorities have been charged with a leadership role. They now have a new legal duty to promote innovation (see box). They will co-ordinate applications for health innovation and education clusters, which will be funded from a DH pot of £10m and be made up of NHS, higher education, industry and other public and private sector organisations, with the aim of spreading and adopting innovation locally and boosting education and training.

And there’s more to come. An Innovation Expo will be held in London on 18-19 June (see box), which will allow the public, private, scientific, academic and voluntary sectors to come together to demonstrate the benefits of innovation and share best practice.

As Mr Nicholson says, innovation clearly has the potential to improve the quality of care available to patients. But there is a second, equally important, benefit that has given impetus to the argument and an urgency that innovation must happen. It centres around the impact of innovation on “UK plc”, something the prime minister will be talking about in the coming months.

“Given the fiscal position and the economic challenge that now faces the UK over the next five to 10 years, I think we increasingly see some of the big public sector organisations that we have as major economic assets to the UK,” says Greg Beales, senior adviser for health and social care to the prime minister. “And so the other reason why innovation in the NHS is so important is because the NHS has the potential to be a huge strategic asset for the UK as it seeks to expand our life sciences industry [and] support our pharmaceutical industry.”

Growing pains

Over the past 10 years, the UK has benefited from pretty dramatic economic growth, which has come from financial services. But the forecast for the next 10 years shows that the sectors that will have to provide growth are completely different.

Science and innovation minister Lord Drayson says: “The UK life sciences industry has punched way above its weight, but all the metrics have shown that it’s now going backwards.”

He adds: “We absolutely need life sciences to be an engine for growth for this country. It’s really quite urgent for us to make these changes, and it’s almost a cultural shift - it’s a change in vision really.”

That new vision is of an NHS that not only provides a 21st century healthcare system, but also provides a major engine for growth for economic prosperity in the UK.

It is essential, says Lord Drayson, for doctors and nurses to see that they have an opportunity to affect how much budget the NHS has in two years’ time by providing innovation and change and growth now. There are two years of good funding left, but what lies beyond is as yet unknown. “One of the things that I think we can use as a way of getting the culture shift is to get people to realise that if it does not happen now, in two years we are going to run out of money,” he explains.

Speaking of his time as a defence minister, he says the way to get the procurement system to focus and deliver was to use the battlefield as the means of getting the culture to drive change. Everyone knew that innovation was needed because people would die if it was not done.

Wellcome Trust director Sir Mark Walport points out that, in contrast to the NHS, defence has a language of procuring research and development. He believes that health needs to move to a model of procuring better health services for the UK, and in so doing think about what innovation it wants and how to procure it.

There is a serious problem when it comes to the procurement of devices and drugs, says Sir John Bell. The pharmaceutical industry needs to move to a different paradigm where it treats smaller numbers of patients with more highly effective drugs. But he says: “They are not going to go there unless there is some pull because they are actually in a very fragile situation at the moment.”

He adds that the NHS needs to behave much more like a commercial entity and have partnerships where it shares risk and reward with the commercial sector. That can be used to incentivise innovation.

But drug companies find it a real problem to get clinical trials done in the right places in the UK, so they - and therefore their ideas - are decamping to other countries, says ENRC chair Sir David Cooksey, who reviewed UK health research in 2006.

“We have got to stop that if we want this to contribute to our economy and to make it really user friendly for them to develop their products here,” he says. He believes the new academic health science centres could be used as a pilot to see that through. “If we could make the NHS really user friendly from this point of view, it would drive the development of the industry in this country in a way that we would not get otherwise.”

Lord Darzi’s response to the predicament of pharmaceutical companies is: “Maybe we should actually look at the possibility of a national procurement centre and see how we can help the system take those big challenges.”

He also points out that the NHS mindset has focused on commissioning processes, rather than outcomes. But he believes that High Quality Care for All gives the impetus for primary care trusts to move from commissioning based on process to commissioning for outcomes.

When an organisation has a good idea, how does it get that idea commissioned by the NHS? It is a question that remains unanswered for Thomas Hughes-Hallett, chief executive of Marie Curie Cancer Care. “I do not really understand how I can make sure that the innovations that Marie Curie and the rest of the charity sector are creating - which we are quite good at because we can probably take more risk than the NHS - can be procured.”

The charity created a programme to enable more people at the end of their life to die at home rather than in hospital. It was so obviously applicable to heart failure that Marie Curie has been procured by the British Heart Foundation - not by the government or the DH - to create a five year programme to design and deliver an end of life care pathway for heart failure patients.

Mr Hughes-Hallett says it is important to make sure that delegating power to PCTs “does not stop still the ability of central department or NHS to look at innovation and say we would like to fund this”.

Young Foundation director Geoff Mulgan wants to see the NHS sending out challenges overtly, saying here are resources that will fund projects that can cut the onset of diabetes, for example. The NHS could then support collaborations and single projects, but would share some of the risk of achieving a tangible, measurable outcome.

“That is another way of procuring innovation, but very directly,” he says. “As resources are scarce, to have very precise challenges which, if successful, will clearly save money for the taxpayer, I think could be quite energising for the whole system and bring rigour to bear on which innovations really do lead to outcomes.”

He believes the challenges could lead to the emergence of different kinds of partnerships. Research and practice show that around 50 per cent of innovations in the public sector cut across organisational boundaries. Many of the key innovations in health will be in conjunction with local authorities.

But Mr Mulgan says: “That is where we are actually lacking the institutional means of incentivising it. There are not incentives [for the NHS] to keep people from turning up at hospital or for providing care in people’s homes. And as resources get tighter, that is going to become increasingly dysfunctional for the system as a whole.”

Sir John Bell agrees that there are crucial issues about how money flows in the system. “If you want to do something innovative in terms of patient care, it breaks the conventional structures - and in fact they are not structures, they are very big fences - about how money flows. And here I am talking about local commissioning, tariffs, the role of PCTs, the internal market. To actually get that to work is almost impossible, so if you want a tertiary care centre to take on an active interest in the management of chronic disease in a community, why would they do it? They will go broke. So I think that has got to be fixed, otherwise the barriers are such that people are just not going to try.”

Rewarding innovation

Incentives to innovate formed an important part of the discussion. As Jonathan Kestenbaum, chief executive of the National Endowment for Science, Technology and the Arts, puts it: “The behaviour that gets rewarded is the behaviour that will get reinforced.”

But incentives do not have to be only about money, says Sheila Adam, head of nursing for the specialist hospitals board at University College London Hospitals foundation trust. Many staff in the NHS would be completely incentivised by the fact that they have simply improved the care that is being delivered, she says.

Which brings in the innovators themselves. Every innovation Ms Adam has seen recently at UCLH has had a major clinical champion associated with it, and these people need to be supported in some way.

Being at the sharp end of innovation is a risk, says Norman Williams, director of the centre for academic surgery at Barts and the London trust. “People are risk averse in the NHS, there is no question about that. For the guy on the shop floor, putting in that innovation is a risky manoeuvre. If you are an innovator in a surgical subject, you can do enormous damage.” Professor Williams says a framework is needed for introducing innovations while at the same time protecting both patients and innovators.

And he thinks it is important that innovators do not get caught up in bureaucracy. He says: “You do not have the skills to write a business plan but you can be mired in that for ages and ages.” He would not want any business plan inhibiting innovation.

The concept of employees being a source of ideas is not unique to health, and the question is how to create a structure to systematically collect those ideas, says John Bessant, chair in innovation and technology management at Imperial College London. It is one of the common themes on innovation that comes out regardless of the sector being discussed - be it the NHS, big companies, or other areas. End users are also a source of innovation, and there is a growing understanding that there is a great deal to learn from other sectors outside one’s own.

Another theme across sectors is that the problem is not only about creating. There is so much knowledge out there that it is just as much about accessing knowledge and weaving it together in different ways.

Looking back at the 60 years of the NHS, there have been gains from many different kinds of innovation - clinical, technology, service, organisational and managerial - but there is little research on the relative contribution of each of these strands of innovation either to health gain or to economic growth, says Mr Mulgan.

He adds that the UK needs a mechanism for spotting a promising idea that nurses, doctors or social entrepreneurs are working on, then refining it and developing it so that it can be scaled up both within the UK and worldwide.

There are examples of innovation across the NHS, but Bernard Crump, chief executive of the NHS Institute for Innovation and Improvement, says: “The problem is these things are at a scale which is marginal to the overwhelming day to day work of the NHS.”

The financial situation of the UK means the NHS can no longer afford to keep innovations at a marginal scale. “We have done the maths that shows that the scale of the gap between what we would have expected to have in healthcare and what we now expect to have in healthcare financially can be bridged by the use of these things at scale,” he says.

Professor Bessant says there are three different modes of diffusion. One is broadcasting, which means getting the message out about what is good. The second is an enabling process, where people go to organisations and help them to help themselves. Peer to peer dissemination, where people learn from others in a similar situation, can also be used.

But adoption at the sharp end of care delivery is difficult, says Ms Adam. “For us, it feels like often we are bombarded with proposals for change [and] we do not know what we should really focus on.”

The emphasis on outcomes is not straightforward, since many organisations do not have the ability within their information systems to evaluate whether or not an innovation has changed outcomes. That means the evidence is not there to get the financial support, making it very difficult to roll out change to other organisations or to other areas within the organisation.

Speak the lingo

The good news is that the language of innovation is being spoken on the ground in the NHS, says Sheffield PCT chief executive Jan Sobieraj.

In Sheffield, it is not just at chief executive level, but people on the wards, patients and the public are discussing the fact that, in light of expectations for future funding and a harder edge on quality expectations, the only solutions are creativity and innovation.

In terms of the impact on the economy, there are mechanisms that already exist to look at how a whole range of organisations - third sector, private and public sector - can tackle local issues together. The local strategic partnership in Sheffield has been discussing how to use creativity and innovation to shift the economy, so that the city has a clear strategy to increase the number of people in work and shift the skill mix so they have greater qualifications.

Anyone who thinks innovation is just a passing fad should take note of what happened in the university sector and settle in for the long haul. Julia Goodfellow, vice chancellor of the University of Kent, says that around 10 years ago, universities were asked to look at enterprise and innovation - something that they were not used to doing. It took time, but the sector as a whole gradually realised the importance of this agenda and that it was not going to go away.

Mr Nicholson admits that consistency of purpose has not always been a strength of the NHS, and it is why he talks about the NHS in five year periods rather than conforming to the tendency to talk about the next six months. He says: “We see this [innovation] as part of the solution, not another thing to do, and we are absolutely committed to making this happen.”

He believes the NHS is making some progress on innovation and that particularly over the past two or three years people have begun thinking about it far more. “It is much more part of the way in which managers and clinicians are talking these days than in my experience it’s ever been,” he says.

Some people say the NHS can be binary, he adds, meaning that it can go either one way or the other and has difficulty dealing with the bit in the middle. “One of the things I think we have swallowed whole was this idea that everything was devolved, that somehow the solution to all of the problems was everything needs to be locally driven,” he says.

He adds: “But we are underexploiting the power of a national integrated healthcare system. It really strikes me at the moment when we are doing our planning for pandemic flu how difficult it must be in a system that is completely unlike ours to do what we do.”

So exploiting the national system is important, and there is more thinking to do about how the market, organisations and people connect with the NHS.

Mr Beales says one of the reasons for moving away from a top-down system is that the NHS had the tendency to focus on one thing - be it waiting times or infections or another priority - to the neglect of other areas. So innovation needs to be boosted alongside other NHS priorities.

“The challenge for us is: what are the lighter touch interventions? The way in which we can give people some flexibility around the way finance flows through the system without chucking the baby out with the bathwater of payment by results and the benefits that has brought,” he says.

“What are the ways in which we can encourage clinicians to co-operate more closely across clinical boundaries without losing the potential for procurement and commissioning we have got through PCTs?”

Part of the challenge is the more subtle ways of bringing about a “quiet revolution” in people’s willingness to take risk, in their creativity, in their entrepreneurialism across the NHS. It needs to be done in a fundamentally different way from some of the methods that have been used to deliver major change over the past few years, so it is no small task.

And there is a window of opportunity, says Mr Beales, probably 18 months at the most, before the UK is in a different fiscal environment. The government’s next operating framework will be a crucial platform for discussing its approach to innovation with the NHS.

But Mr Mulgan says the view that health is a cost, not a source of value, still exists. “That is the mindset still in much of government, that it is a cost that has to be contained, rather than almost certainly the most important sector of growth, for the GDP, growth of jobs coming out of the recession, and growth for British investors as well.”

He adds: “It is really two goals - health gain and economic gain - and if you can get both of those really embedded in the common sense of government and industry then we will all benefit a lot.”

The foundations for innovation are being put in place in the NHS, but the major challenge now is how to convert these “priming policies”, as Lord Darzi calls them, into a 10-year vision in which innovation becomes the social norm in the NHS.

In the short term, what is needed is a dialogue at local level. That means every provider and every commissioner in every organisation having a conversation about innovation.

The government has set out its stall in High Quality Care for All, now it needs to penetrate all the layers of the NHS.

“The biggest challenge we have is how do we set that dialogue running across the 1.2 million people who work in the NHS, which has to be customer facing rather than Department of Health facing.”

Lord Darzi will have the opportunity to start that dialogue running in person as a speaker at next month’s Expo. Other speakers include Mr Nicholson, Mr Kestenbaum and NASA innovative partnerships programme director Doug Comstock. The trade fair and innovation seminars will provide further opportunities to network and share ideas. For a virtual tour visit

Innovation: the policies

  • Regional innovation fund of £220m
  • Innovation challenge prizes worth £20m
  • NHS Evidence, an online search engine.
  • SHA legal duty to promote innovation.

Every SHA now has a legal duty to promote innovation

What is the duty? The strategic health authority (promotion of innovation) directions state: “In performing its functions each strategic health authority must promote innovation for the purpose of securing continuous improvement in the commissioning and provision of healthcare.”

Why a legal duty? The next stage review report found that leadership, vision and investment in innovation varied across the NHS. The new legal duty will raise the profile of innovation and encourage more rapid adoption across the NHS. SHAs will help to remove barriers to innovation, whether they be cultural, professional or organisational.

What is its purpose? The idea is that SHAs will be responsible for leading and embedding innovation at a local level. They will provide strong local leadership, and articulate the importance and value of innovation. Ultimately SHAs will improve patient care and identify best practice by sharing information across organisations.

What does that mean in practice? How SHAs carry out their duties will be up to them. Their role is to create the right environment for the rapid adoption and spread of successful innovations. They will encourage informed risk-taking and experimentation, and provide innovators with the space and time to innovate. They will also decide how to allocate regional innovation funds.

How will SHAs’ performance be measured? The Department of Health will not actively performance manage the duty. Instead, each SHA will be required to produce an annual innovation report which outlines progress during the year, including how it has stimulated innovation, how funds have been invested, and what impact this has had on the quality of services.

Innovation Expo

When 18-19 June 2009

Where ExCel Centre at London Docklands

What is it? A chance to catch up with the best in healthcare innovation from the public, private, voluntary, academic and scientific communities. Featuring seminars, speakers and an exhibition hall

Who should attend? Frontline staff from the NHS and social care, clinicians, managers, voluntary organisations, academics, researchers and industry

For more information and to register, visit