Stifled Innovation: Primary Care's Repeated Mistakes

If you work in primary care, you've probably come across a few incumbent systems that are impossible to displace - in their day, they were state-of-the-art, today they are only just fit for purpose, having been bought by private equity firms and used as cash cows with limited ongoing investment. Clinicians and administrators comment "surely there must be an alternative" - however, too often there are few, if any, alternative systems that offer a viable solution.

How has this happened? It is largely the outcome of a government procurement strategy from 2000-2015 that favoured a handful of winners who were willing to invest deeply on 'market-leading tech' to gain dominant share. Instead of spreading resources across a plethora of systems, through grants and secured funding the government backed a few 'winners'. The benefit was that in the short-term, NHS primary care benefitted from market-leading IT (rewind 10 years, and the complexity of primary care systems was way ahead of UK secondary care & ahead of primary care in international markets) - however in the long-term, the outcome is that NHS primary care now has multiple product categories that are either duopolies or monopolies, with little in the way of competitive forces to drive pricing or innovation.

Today, there are various programs (e.g., GP Connect, TIF) that are designed to reduce the dependence on suppliers in monopolistic or duopolistic markets - and open up the market for new entrants. These are seen as important programs designed to correct the uncompetitive markets that arose from earlier procurement.

With these programs now in motion, you would optimistically think that for new procurement, the government would have learnt to avoid creating situations of dependence on one key supplier. Most would agree, we should be aiming for markets where no single supplier holds >75% market share, or has the ability to shape pricing to their advantage.

Yet, over the last 3 years, primary care procurement has somehow managed to double down on creating a new set of closed markets with new dominant suppliers - this time typically funded by private venture capital rather than government grants - holding excessive market share, and able to dictate price and favourably influence policy.

How has this arisen? Firstly, through an illogical set of closed procurement frameworks. In 5 easy steps, here's how to block any short-term innovation arising from new market entrants:

1. Introduce frameworks as a means of pre-approving suppliers
2. Design the framework with incumbent providers
3. Invite suppliers onto the framework at a single point in time (not rolling)
4. Close the framework to new entrants after initial procurement - and do not re-open for ~2 years
5. Pressure the care providers to procure from this framework - and make 'presence on a framework' mandatory for market access (e.g., integrating with the NHS App)

Secondly, if you really want to limit competition, throw in a global pandemic with emergency procurement - and then allow this to roll for multiple years. For example, the much loved Accurx solution for delivering COVID appointment booking for primary care (Accubook) was recently renewed for £4.7M for 12 months without going out to tender.

Whilst no-one can question the quality of Accurx's solution, the contract value (seemingly in the region of ~7.5p per patient for a national contract) reflected their monopolistic position in the negotiation - and the funding will only serve to reinforce their hold on the market. Remarkably, Accurx even managed to extend the procurement from a "COVID booking solution", to a solution which they now market as centrally funded for all types of primary care scheduling (extending beyond COVID to include the likes of Flu). In a "hunter-turned-gamekeeper" moment, by holding a national contract for all of primary care scheduling, the once-upstart-now-incumbent Accurx now themselves block the way for other innovative suppliers (Disclosure: I have a conflict here :-) ).ㅤ

"So what?", you might say - so long as the tech is good, we're happy. And to a certain extent this is true, putting to one side the 'value for money' issues arising from monopolistic markets. You could perhaps argue that, in one sense, by using Venture Capital money to hold a position, is a way of redistributing capital market wealth back into the public coffers through a side door. But ultimately in the long term it is not in anyone's interest to limit competition. New entrants can't get a foothold, and so innovation is limited to that delivered by the incumbents. Existing suppliers eventually get bought, and then operated exclusively for shareholders rather than for their original innovation goals. The taxpayer loses, with monopolies able to achieve super-normal profit. So we need to tread carefully - in a market with private vendors, we need competition to deliver the best healthcare outcomes for the UK.