Doctorpreneurs

THE National Health Service (NHS) faces a funding crisis: already short of money, it said it will find £22 billion ($35 billion) in efficiency savings by 2020. But as emergency services creak and politicians shudder at the thought of closing more hospitals, within the system lies an untapped source of wealth.

The government first came up with the idea of making money from NHS employees’ inventions in 2002. More than a million people, it realised, were spending their days thinking about better ways to treat people. Innovation might save money, and hospitals could help their staff sell their ideas in exchange for a share in the profits. To make the plan work, the government allowed hospital trusts to buy shares in companies set up to develop an invention.

American hospitals have made vast sums from such arrangements: in 2014 Massachusetts General Hospital in Boston made $68.9m in licensing fees. But the British model is a less healthy specimen. According to Harry Quilter-Pinner at the Institute for Public Policy Research (IPPR), a think-tank, British hospitals are often baffled as to how they are supposed to make any profits at all.

Although in theory the NHS is keen to exploit innovation, in practice the path is often blocked. One problem is that there is no clear process for pitching an idea: doctors who do must tout their wares to each hospital, and sometimes each hospital department. One inventor, an orthopaedic surgeon called Matthew Prime, came up with a digital database for accident and emergency patient notes which, he says, caused a 50% drop in complaints and lowered surgical waiting times. Despite this success, only four other hospitals took it up. Others continue to write each patient’s notes out five times, on various whiteboards and notepads, as they come in.

Another obstacle is that there are limited incentives for NHS hospitals to invest in new devices and ideas. Unlike in America, British hospitals do not directly compete. There is political pressure not to run deficits, but little to invest in innovation. There are different budgets and commissioners for different sections of the NHS (such as preventive health care and specialist hospital care), and ideas that might move money from one to another are often resisted. Funding structures inhibit innovation in other ways, too. Princess Alexandra Hospital, in Harlow, offers a new test for whether cancer has spread. The test, performed immediately after a lymph-node is removed, gives results in 40 minutes, rather than two weeks, which then allows other affected lymph-nodes to be taken out within the same operation. Malignant cancer needs a fast response. Yet only a handful of hospitals have adopted the test. According to the IPPR, this is partly because hospitals are paid per operation, and the test would mean one fewer.

As a consequence of all this, venture capitalists are put off British medical companies. When they do invest, they avoid risk. Most British medical-technology companies sell variations on existing products, rather than striking out into new territory.

British medical firms also tend to be sold early, before large risks are incurred—or any money made—usually to buyers in countries with larger, richer medical-device companies. An important contribution to the invention of Magnetic Resonance Imaging, a type of scan for looking at tissues inside the body, happened at Nottingham University, winning a Nobel Prize for Peter Mansfield, a British scientist. Making these machines is extremely lucrative: they can cost up to £1.8m each, and are a hospital staple. But no large British manufacturer took on the job, instead they are made by Siemens, Philips and General Electric, so the money flows mainly to Germany, the Netherlands and America. The NHS could do much better at finding a cure for its own financial ailments.