NHS set to stall if it doesn’t get on board with tech

Under pressure from an ageing population, how to implement technological innovation and its role at the centre of a political tug of war, the NHS could be reaching a tipping point.

The NHS will set itself back decades if it fails to embrace huge technical innovations being made in data analysis, which is becoming central to the development of healthcare. 

Much like in the US, the UK healthcare system is a pawn in a political battle. Jeremy Corbyn used the Labour conference to amp up the rhetoric around nationalisation of the NHS, stating that if elected: ‘We will redress the system to serve public health, not private wealth.’ 

The redress of the balance includes breaking pharmaceutical patents, in the mould of Argentina or India, in order for publicly owned companies to make cheaper, generic versions of drugs the NHS needs. It would also see GP and private healthcare practices nationalised, preventing private ownership or management.

However, Paul Major, manager of the BB Healthcare (BBH) investment trust, said preventing external companies from working with the NHS could mean ‘setting our own healthcare system back decades’ as it will miss out on the opportunity to improve treatment through data analysis.

Major said that by shunning external providers, the NHS is unable to take part in a ‘revolution’ in data analysis.

The hundreds of NHS trusts in the UK collect large amounts of information on patients’ backgrounds, treatments, survival rates and other comparable data, which if analysed would reveal better protocol or treatment plans for certain conditions.

Major said analysis requires ‘complex, big data algorithms’ and the NHS has ‘all this data, and it has all these services, but it is not an IT company’. 

In order to answer questions on best treatment plans that ‘benefit the whole society’, Major said it has to find a developer of artificial intelligence (AI) algorithms to ‘help make services for the population’.

However, the NHS will no doubt look back cautiously to 2017 and the furore over its use of British technology company DeepMind, which is owned by Google, to process patient data. 

‘The Daily Mail went apoplectic and everybody started talking about patient privacy,’ said Major.

But he described the issue as a ‘totally ridiculous conversation’. 

‘The NHS is not an IT company, if it wants to do those sorts of things, it has to bring in relevant expertise and we all have to have grown-up conversations as a society and as adults and say, we want the best version of the NHS we can have,’ said Major.

Positive disruption 

Andrew Harradine, head of fund research at EFG Asset Management, said there is huge opportunity in ‘disruptive healthcare’ which is challenging the incumbent big pharma names. 

He said the emergence of ‘a lot of new technologies recently, such as genomics, the cloud, AI’ reveals the ‘environment is quite ripe for disruption’.

‘I think there is a very big opportunity there,’ said Harradine, who highlighted the launch of Babylon Health, which provides remote consultations with doctors and other healthcare professionals.

‘I think there are around 40,000 customers in the UK,’ he said. ‘I think it’s a case of starting small, proving a concept, and building things out from there.’

Patrick Thomas, investment director and head of ESG investing at Canaccord Genuity Wealth Management, said it would be ‘interesting’ to see moves from the likes of Apple and Amazon into healthcare and whether they can succeed in disrupting the sector over ‘the next five years, because clearly, it’s a data game more than anything else’.

Healthy returns 

BBH, which invests in a concentrated portfolio of healthcare and biotech stocks, has a focus on healthcare technology, with its top holding being Teladoc, which provides remote medical care over the phone and videoconferencing, making up 8.9% of the fund. 

Major said it has spent a ‘tremendous amount of time’ looking at Apple and Google and agreed that if ‘demographics are destiny’ they will have a huge role to play in healthcare.

‘If you are a very large company, you’re going to find it impossible to ignore the delicious statistics about healthcare globally that tell you [the role] that data is going to play – patient-centric decisions are going to play an ever greater role in healthcare,’ he said.

‘So yes, they are coming. The question is, who do they disrupt and how?’

 In particular, Major is excited by the social care offerings the big tech companies could bring to market, but said it would be more difficult to carve out a niche in the healthcare and pharmaceutical sectors despite the access companies like Apple and Google have to vast swathes of data.

‘I think they will play an ever-greater role, but I think there’s still a significant opportunity for small, innovative companies to find their niche and create opportunities, and in doing so deliver great returns for investors,’ said Major.

Threat to the NHS 

While fund managers are actively searching out disruptive healthcare technology, there is a concern that disruption may well be perceived by the UK public as a threat to the NHS.

Major said there are two conflicting sides when it comes to the use of outsourced, disruptive technology in the NHS. On one side, there is the general public who have strong opinions about the future of the NHS and ‘the people who are actually tasked with delivering the services to the population’.

He said the latter should be ‘empowered’ to make the right choices for the service and ‘at the end of the day, the NHS is just a giant procurement organisation’. 

‘It doesn’t make beds, it buys beds to put in hospitals,’ he said. ‘When you start looking at services, in some ways they’re the same. If you can’t deliver a service yourself, you find somebody who can deliver it on your behalf and you contract them to do it.’

Major said there is a ‘disconnect’ between NHS senior figures who understand the benefits of outsourcing and contracting and the policies of Corbyn and Labour, whose message around nationalisation was ‘simplistic’.

‘They [senior figures] recognise there are lots of things they could bring to the benefit of patients and society that require significant changes to the system in contracting with external parties,’ he said.

Corbyn has been critical of outsourcing and contracting as a way to privatise the NHS by the back door, pushing instead for the system to own and deliver services itself, but Hilary Coghill, founder and investment director at City Asset Management, said nationalisation doesn’t work. 

‘That may all sound well in theory, but practically we have tried it before and it does not work, and there is no way he [Corbyn] can deliver on everything he has promised,’ she said.

She added that the ‘pipedream’ of nationalisation ‘could ruin the economy’ if Corbyn is elected and tried to implement his plans.

Major said Corbyn’s plans are like putting the NHS in a jar and picking it. His viewpoint fails to take into account the world in which the NHS is operating. 

‘The reality is that the service we created 40 or 50 years ago was to serve a population that isn’t the one we have now, which is lots and lots of elderly people’ he said.