‘Start me up’ – How can the NHS get more value from start-ups?

19 November 2018

Vish Valivety, Senior Consultant

The second in a series, this perspective focuses on using start-ups to help tackle the lack of entrepreneurial behaviours in the NHS (raised in the first perspective).

Start-ups shouldn’t be confused with small business. The intent of many start-ups is to disrupt the market with a scalable and impactful business model, while for small businesses such growth is not on their agenda. For a successful start-up, starting up is a temporary state during which they are working towards an outcome of iterating and validating a business model that will enable them to scale up in size.

There are a number of start-ups that operate in the UK and within the health and care market but not all of them are the traditional private companies that most are used to. Some start-ups actually begin their life as part of public organisations before being spun off. Others operate in the voluntary sector. What they often share are the entrepreneurial behaviours that we introduced in the last blog:

  • Minimal layers of governance layers mean that decisions can be made and acted on quicker
  • A willingness to take risks makes start-ups more likely to test and invest in new ideas if they could potentially lead to growth
  • Use of new technologies that unlock new capabilities and results
  • Working closely with the ‘market’ to define and refine the product or service they offer

But if start-ups can achieve all of this, why aren’t they used more? Although there are a number of reasons, from my point of view there are two key external factors that act as barriers preventing start-ups scaling successfully.

The first factor is procurement rules (both real and perceived), many of which fundamentally make it near impossible for an SME to compete in the health and care market. For example, trials for new services and technologies must be funded by the company that developed them, requiring capital and investment to get ideas off the ground. While this may work for larger, established firms, it can be a significant stretch for start-ups, especially when there is no guarantee that there will be a wider roll-out of a successful trial. This is also why software and services may be easier for start-ups to develop and have adopted than physical products. The next factor is risk, which comes in two flavours: financial and personal. Currently, there is no standardised financial incentivisation or safety net in place that would motivate the commissioning of start-ups or trial anything new over established providers. As a result, commissioners tend to stay with what they are used to, even if it is not the best solution.

Additionally, positive public recognition for taking on the risk of working with SMEs, or even trialling them, only comes about if they are successful. Health and care leaders can expect harsh criticism if an experiment does not pan out. This is a symptom of a wider fear of failure endemic in the NHS.

Spending time talking to a number of start-up owners about their struggles has been incredibly eye-opening for me. They have suggested some pretty interesting solutions for what needs to happen on a national level to encourage the NHS to use start-ups more effectively. Suggestions include:

  • Developing a system to underwrite trial periods to promote new start-ups in local areas and to allow innovative solutions to be tested beyond large, established companies (e.g. in test beds)
  • Publicly recognising and encouraging the use of start-ups other local organisations, not only the success stories. Failures can be praised if learning is gained
  • Creating a framework for start-ups where companies that have been trialled successfully across a minimum number of organisations get exposure and become ‘preferred’ start-ups to reduce the scaling and adoption boundaries that are currently in place

These are all great ideas that speak to the culture shift needed at a system level to encourage using start-ups to bring in new, entrepreneurial ways of thinking into healthcare provision. But what can we do at a local level to start a more grassroots movement? From the work we at PPL have done across the country, I think there are three key things we can do:

  1. Investigate potential gaps in provider-partner services within Integrated Care Systems that can be filled by start-ups and build them into the wider model of care;
  2. Be creative with how capitated budgets within an area can be used to encourage the use of innovative organisations to maximise value in an area;
  3. Work with boards and systems leaders to foster a culture of entrepreneurship, particularly in places that have additional funding for innovation.

What needs real change is the framework that start-ups work within. Without this, start-ups will not have the opportunity or incentive to compete with large companies and we will miss many opportunities to make services better for less.

In my next blog, I’ll be talking with a GP to find out what entrepreneurship means to her, and where she sees the opportunities to use GP practices as hubs for innovation.