The Potential Social and Economic Value of Innovation Procurement Dr. Gabriela Prada Director, Health Innovation, Policy and Evaluation Healthcare Efficiency Conference September 19 th, 2011
Overview About The Conference Board of Canada Canada s Innovation Performance Health Innovation Procurement in the United Kingdom and in Canada Recommended Actions
The Conference Board Independent, not-for-profit, applied research Specialists in economic trends, public policy, and organizational performance Several initiatives in health: Centre for the advancement of Health Innovations Canadian Alliance for the Sustainability of Health Care Six other research centres focusing on health and healthcare Multiple customized research projects
Innovation: a process that extracts economic and social valuesfrom knowledge using the generation, development, and implementation of ideas to produce new or improved products, services, or processes.
Canada s Innovation Performance Ranking has not improved since the 80s. The "D" grade underlines Canada s relative weakness in developing inventions (patents and trademarks) and in translating publicly supported research into products with high levels of global market penetration.
Average Productivity Growth (per cent) Sources: The Conference Board of Canada; OECD.
Innovation Is also Critical for Healthcare
Average Per Capita Public Health Expenditures by Age Category
Health Care Costs as a Share of Provincial Revenues
20 Federal and Regional Balances National Accounts Basis ($ billions) 10 0-10 -20-30 -40-50 Federal Provinces Sources: Statistics Canada; The Conference Board of Canada.
Innovation Policy Toolkit
Innovation Procurement: A Compelling Opportunity For Canada
Innovation Procurement Innovation procurementinvolves the development of innovations and/or the purchasing of existing innovative products or services to improve the performance and functionality of public services and to solve important socio-economic challenges.
Innovation Procurement in the United Kingdom
The UK Has Effusively Embraced Innovation Procurement in Health Innovation and innovation procurement have been clearly articulated in key policy and strategy papers Efforts to implement innovation procurement have resulted in massive transformation of the health system: New accountability frameworks New governance structures Structural changes are shifting the mindset: innovation systems, need for alignment, focus on creating value
REGIONAL APPROACH TO TECHNOLOGY-LED INNOVATION NHS Operating Framework Quality & Productivity IDENTIFY NEEDS SHA 10 year vision PCT priorities REGIONAL PRIORITIES NICE MTAC CEP Innovation Fund Medtech roundtable NTAC Identify existing innovations that are not being taken up Innovation Lead & Stakeholder Group Identify new opportunities for innovation NIC Innovation Hubs NIHR SBRI Mobilise procurement landscape to speed adoption Procurement COMMERCIAL SUPPORT UNIT Innovative Procurement DH Guidance Government Strategy and life groups, including NHS Industry Develop precommercial procurement programmes Pre-commercial procurement
Successes: Adoption of Digital Signal Hearing Aids Royal National Institute for the Deaf (representing patients) acted as the lead organization and project manager Within 4 years the NHS went from no prescribing digital hearing aid to prescribing the technology to all appropriate users
Successes: Innovation Outcomes at Yorkshire and Humber SHA Over five years: Received 846 new ideas, assessed 408 and supported 58 Supported the development of 50 technologies with a market value over $81 million Supported the development of five spin-off companies Raised close to $3 million venture capital funding Partnered on R&D contracts to the value of $55 million
Successes: Healthcare-Associated Infection Technology Programme Identify NHS needs Locate effective technologies Fast-track innovative solutions Promote collaboration between NHS and Industry Improve communication between NHS and innovators Build evidence-base for new technologies Support UK innovation
Key Success Factors for These Achievements Steady commitment to innovation from the central government Regional mandate to advance innovation agenda Targeted funding for health innovation Strategic development of talent at all levels
Procurement Practices in Canada
Importance of Innovation Innovation is essential for the sustainability of Canada's health care system Innovation is a recognized priority at my organization I believe that our procurement policy could support Canada's goal of becoming a world leader in health innovation Average Rating Strongly Agree Agree Neutral Disagree Strongly Disagree 4.7 40 16 0 0 1 4.1 22 25 6 4 0 3.6 8 25 17 5 2
Importance of Innovative Products % Reporting that Procurement Approaches in their Organizations Support the Development and Uptake of Innovative Products and Services
Barriers for the Uptake of Innovations Rigid procurement processes and rules Lack of appropriate skills among the staff Lack of organizational interest in innovations Too much focus on cost reduction and standardization
Top Three Most Important Elements for the Evaluation and Selection of Tenders Quality benefits (efficiency, effectiveness, and safety) 1 Price 2 Cost-effectiveness 3 Whole-life costs ( acquisition, operating, and disposal costs) 4-5 Perceived ability of the vendor to deliver the required goods or services at the quoted cost 4-5 User-centredness: products and services that best meet the needs of the organization s stakeholders After-sales services 7 Technical merits 8 Innovative functionality that offers further potential applications 9 Rank 6
Innovation Procurement Processes: Areas for Improvement Engagement of patients and providers in pre-procurement stages Communication of innovation plans to the market Determination of organizational readiness for innovation Ability to assess capabilities of suppliers to take advanced products and services forward Designing evaluation frameworks that take into account innovative performance and spill-over benefits Design and implementation of contracts that don t restrict innovative developments
Key Lessons The concepts of innovation and procurement are still poorly connected in Canadian health care. Responses showed both a reluctance to take advantage of the supplyof innovative products available in the marketplace and a poor ability to express the demandfor innovative solutions to the market. Innovation requires risk-taking, but survey responses suggest that public procurement practices in Canadian health care remain highly risk averse.
Where do We Go from Here?
A Paradigm Shift is Needed From variable business practices to optimized, continuously improved business processes From episodic to continuous care From cost control to value generation in Healthcare
Innovation Procurement Needs To Be Part of a National Health Innovation Plan To advance Innovation Procurement, action is needed in four areas: Federal leadership: Canadian innovation policy National Health Innovation Office Targeted funding to: encourage greater risk-taking shift the focus of procurement to value generation invest in the development of the skills needed to manage a more innovative process Regional implementation give health regions an explicit mandate as health-care innovators a support the development of regional innovation hubs Culture and attitudes Empower members with the knowledge and tools they would need to think in terms of seeking value for money
For more information about the Centre for the Advancement of Health Innovations And CBoC s research on health, please visit or prada@conferenceboard.ca Thank you!