The commercial realities for NHS Overseas

The UK’s Department of Health and UK Trade and Investment are, once again, exploring how to commercialise the NHS ‘brand’ overseas. Drawing examples from where some highly recognisable UK hospitals have set up, notably in the Middle East (Moorfields, Great Ormond Street) the spectre of a steady income stream coming into the NHS from these commercial enterprises has apparently got some folks in government all excited.

It is not uncommon, certainly amongst naive entrepreneurs, to say that if they only got 1% of the market they would earn billions. It seems that some civil servant has run some numbers, and come up with some sort of business case that has big numbers at the bottom of the page — otherwise, why would the DH and UKTI be claiming there would be financial benefits to the NHS into which all these global profits will be ploughed. The DH has a poor track record with commercially-oriented projects, tried with a Texan, tried with local talent, and wasted so much taxpayers’ money on ideas that were obvious failures from the beginning: NHS University, Modernisation Agency, and so on.

Criticism aside, let’s consider the real commercial environment. Let me first say that I am not against this sort of activity, and there is considerable opportunities for success. So, let’s look at the world out there.

All countries in the world are grappling with the costs of care. Others are facing that plus the need to expand their healthcare infrastructure. Rising numbers of middle class taxpayers in many countries are now informed and affluent purchasers of healthcare from a range of sophisticated, domestic suppliers. The countries that are most likely to be interested in expanding the services on offer are also countries with high levels of profit-motivated healthcare, private clinics, extensive and often high patient co-payments. All these are a long way from the experience an NHS hospital would have with a fixed tariff, publicly funded NHS.

No doubt, setting up a hospital in China or India involves a degree of approval, but unless the services are particularly hard to structure, require considerable capital expense or rare expertise, these countries are quite capable of building their own clinical facilities, training their clinicians (many of whom had in the past emigrated to work in the NHS), and supplying the necessary equipment (much of which they already make, in Workshop China). Many poor countries incur substantial losses on buying healthcare from abroad, without creating any domestic value.  Nigeria, for instance, wants to increase tertiary care investments as this is where they most frequently must sent patients abroad. Commercial enterprises from the NHS could contribute to the problem if they are seen as remitting their profits back to the UK.

Medical tourism is something high on the agenda of many countries, such as India or Singapore and they are streets ahead of the NHS when it comes to the commercialisation of their clinical services. The Medical Tourism Association, based in the US, has no UK members, though organisations from France, Spain, Hungary and Poland are members. Medical tourism, of course, is offering less expensive care at world-class levels of clinical excellence (and not just a hip op in the sun!). Indeed, the Middle East used to be medical tourists to the UK, until they started buying in what they needed. It is clear, therefore, that there is some market for medical tourism, and it depends on marketing domestic excellence internationally, rather than necessarily setting up shop in these other countries.

The DH and UKTI refer to the success of US hospitals in exerting an international presence. These US organisations are highly commercial organisations, and have well-developed clinical costing systems, and access to capital, as well incentives to align staff. True, not all are overtly commercial though and Research Triangle Institute (RTI) in North Caroline is worth thinking about as a way of structuring NHS global objectives. In effect, the US is good at this sort of thing as are European counterparts where commercial hospitals are part and parcel of the public healthcare system.  The NHS has discouraged in the past this sort of entrepreneurialism, as counter to the values of the NHS (the Patients Association has used this argument).

The apparent lack of commercial entrepreneurialism by the NHS is likely to put NHS organisations at some risk unless they make greater domestic efforts to test out and understand healthcare markets, many of which are not planned or regulated in the way the UK market is. Take for instance walk-in clinics. a sensible idea, but why are the ones at the train stations private? US instincts to be responsible to consumer preferences has led to an explosion in retail clinics, for instance, to respond to co-payment and cash patients — many countries would see these as particularly interesting.

Now let’s look at these profits. As any company will tell you, they spend considerable time thinking of ways to manage taxation across many countries. If an NHS hospital were to set up in another country, and it generated a profit, then I would think that country would want to tax it. If the hospital has set itself up as a non-profit, they that country would most likely expect any such surplus revenue to be put back into the services available in their country. Think about it. Why should, say, India, permit an NHS hospital to generate profits there which would be sent back to the UK to bulk up NHS services? The NHS and the UK are hardly broke despite the hand-wringing of government, and have no real barriers to service development except those that are self-imposed. India, on the other hand, or China or Malaysia or whereever, are using the private sector to build domestic capacity to benefit their own citizens. How should the NHS feel about shifting overseas profits from a low income country with serious health challenges, to wealthy olde GB, simply because the UK government doesn’t want to spend any more money than it has to?

And just to close the circle at this stage, other countries have similar ideas, and had spectacular failure, or lacked the necessary domestic knowledge and skills to work in this international arena. Any proposed activities will be overseen by some new review board called Healthcare UK, and what will it do?

So what are some conclusions?

I would think the best approach is to focus on helping build a country’s domestic capacity; but this sounds more like an aid programme than a commercial enterprise which DH and UKTI have identified. I might focus on India, China, Brazil, and other countries in Asia where there is considerable investment available and the need for services a priority. It may be worth noting that in many countries, the real problems lie in primary care, as patients already have direct access to specialists on a cash/copayment basis. SInce citizens/patients are used to paying cash or large co-payments, governments tend only to be concerned with regulation, rather than owning or running their own facilities. In India, Tata Steel, for instance, run their own chain of hospitals to world standards. Well-structured commercial thinking that address a country’s economic and healthcare priorities would also help them stem the flow of money to 3rd countries for the costs of care of patients sent abroad — perhaps someone in the UK will try to understand Nigeria’s objectives and offer to set up a productive tertiary centre and perhaps link it to some training facilities so they can build domestic expertise (however, Nigeria’s ICU at University College Hospital, Ibadan, is described as the best in Africa for cardiac care and was built as a public/private initiative by UCH and JNC International, based in Nigeria).

Obvious examples where I have had some inkling that opportunities exist (and not engage in vampire economics) include Libya which needs a complete refit of its healthcare delivery infrastructure (not just ambulances though that is no doubt worthy), including higher education (some hotel chains are looking to expand into hospital construction…), and other countries which have emerged from periods of conflict, and then there are those in the throws of revolution to consider — post-conflict reconstruction would bring the added benefit of advising on building fully integrated service structures (primary and secondary/tertiary/quaternary capacity) which in the end is what we all preach, isn’t it.

There is some market for contract management of hospitals, but many countries are taking a more nationalistic approach with a preference for local talent, than imported talent to run hospitals — I run seminars for health managers from many countries and they were quite sophisticated in their knowledge). Health management training centres in the UK are not really addressing the blend of commercial issues with healthcare, in the way that other countries, are able to (I’ve taught in one in the UK). Expertise is the real issue and few UK universities offers a post-graduate qualification in commercial hospital management, strategic capital planning and all that (they do offer courses more suited to public officials managing state-run hospitals, e.g. Leeds and Anglia Ruskin University’s Hospital MBA; but there is no UK or European equivalent of AUPHA in the US/Canada, so standards and practices reflecting real-world requirements are weak).

Now, if the few that could do this do it well, then it would do wonders for host countries and build the reputation for excellence that the NHS has been losing. Whether it returns profits to offset NHS underfunding is another matter.

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