The UK healthcare sector is battling with crippling workforce shortages and an unprecedented NHS backlog. Digital innovations will be essential to solving the most pressing health challenges of our generation.
And, positively, healthcare organisations are adopting scientific advancements. Digital therapeutics, epigenetics, AI and other forms of technology are being incorporated into the diagnosis process and care delivery. Harnessing new technologies will enable faster, more tailored diagnostics and more bespoke patient care pathways.
Despite economic uncertainty in the next three years, almost half of middle market businesses plan to continue investment in digital transformation.
For the future of UK healthcare, digital transformation presents great opportunities and can address considerable challenges facing the sector.
A trifecta threat: the backlog, long wait times and a diminished workforce
The NHS is facing intense pressure to meet demand for care. The British Medical Association (BMA) figures show a significant, and increasing, backlog. Almost 7.1 million people are waiting for treatment, with a median waiting time for treatment of 14 weeks – significantly longer than before the pandemic. The BMA also highlight the ‘hidden backlog’; patients who require care but have not yet presented themselves to a healthcare provider or have had referrals cancelled due to the pandemic.
The number of patients waiting over 12 hours from decision to admission has increased by 34% to a record total of 43,800 in October 2022 – over 60 times higher than October 2019. The National Audit Office (NAO) warn plans to reduce waiting times by 2025 are at risk, due to inflationary and workforce pressures.
Undeniably, the UK’s healthcare workforce is under huge pressure. The BMA report a shortage of NHS doctors in England compared to other OECD EU nations, and a lower proportion relative to the UK’s population size. There are over 130,000 vacancies in secondary care as of June 2022 - the largest number of unfilled vacancies since June 2018. The majority of vacancies are in nursing, where vacancy numbers are over 46,000.
However, this is not just an NHS issue. Social care and private care providers are also suffering. During 2022, Office of National Statistics (ONS) figures show human health and social work vacancies have climbed faster than UK vacancies overall, with levels reaching an all-time high of 217,000 in September 2022. Although vacancies dropped back slightly in October 2022, the latest ONS figures reveal an 11% increase in unfilled jobs year on year, compared with 2.7% growth for UK vacancies overall. This unprecedented level of vacancies is driving wages up - by 7.9% year on year, compared with the UK mean of 4.9%, although, these remain below the national average.
The role of digital transformation in the sector
There is clear recognition that digitalisation can facilitate efficient patient care delivery and ease the pressure on the workforce.
Globally, digital advances in the healthcare sector, such as cloud computing, tele-medicine, artificial intelligence (AI) and virtual care delivery, have led to increased efficiencies in care delivery. New technologies can enable faster, customed diagnostics and more bespoke patient care pathways. For example, remote patient monitoring (RPM) systems are a cost-effective tool to enhance clinical decision-making and assessment and reduce the chances of hospitalisation.
In the UK, the Department of Health & Social Care (DHSC) and NHS England & NHS Improvement (NHSE&I) have stated that, ‘improved digital services are central to implementing new ways of working.’ NHSE&I expect the NHS to reach a core level of digitisation by 2024, costing an estimated £8.1 billion.
Overcoming digital challenges in the healthcare sector
In The Real Economy’s most recent topical survey of middle market business leaders, over a quarter (28%) of UK businesses now consider digital transformation to be their single most important area of investment.
In the healthcare sector, strategic digital transformation is essential to future-proofing healthcare services. But with a shortage of digital skills, a high prevalence of cyber-attacks, and ever-shrinking budgets, digital transformation is a challenge.
Data quality, sharing and security
Legacy IT systems present a significant challenge to the sector. Now more than ever, healthcare organisations are required to work more collaboratively. With data shared between wider partners in the private and public sector, to maintain a single version of the truth, careful management of data is required.
There’s also a growing battle with cyber-crime as the cyber landscape evolves. The healthcare sector is a known target for cyber criminals. Health and social care is the second highest sector likely to hold person identifiable data at 81%. In 2022, the Information Commissioner’s Office (ICO) reported healthcare with the highest proportion of reported incidents at 20%.
To tackle data issues and cyber security, healthcare organisations must develop a digital strategy, with data at its heart, that works across multiple different healthcare settings in the patient journey. Organisations that don’t have a clear digital strategy, driven from the top, are less likely to achieve long term success. A good digital strategy should consider patients, employees, data security, wider architecture, skills and culture, and above all it should be aligned to the wider healthcare strategy.
To successfully implement digital transformation, staff need to understand the technology and the complexity of the healthcare system. But digital skills are in short supply. Health Education England estimates between 40,600 and 53,900 full-time-equivalent NHS staff hold roles in informatics (4% to 5% of the NHS workforce). Lack of skills was highlighted as a key barrier in our recent report by 29% of middle market business leaders.
To move forwards, the healthcare system must address the skills shortage in health analytics and IT to reduce the admin burden and, ultimately, enable clinical staff to spend more time with patients.
Recruitment and retention are clearly the most pressing challenges within the sector from a people perspective and is still an area that many get wrong. There are small changes employers could implement, from how job adverts are constructed to more realistic on-boarding processes.
Harnessing digital technology can reduce pressure on clinical staff by increasing focus on prevention and maximising efficiencies. For example, telehealth appointments have been used increasingly since the pandemic for triage, and data analytics can maximise optimal use of operating theatres.
Embedding an innovation culture
The sector needs to focus on the right interventions at the prevention and early stages, with particular attention paid to diseases driving the highest mortality. Predictive and monitoring technologies, genomics and data can be used to prevent, diagnose and treat diseases early, aligned with commitments in the NHS Long Term Plan.
The UK health market will need to focus relentlessly on areas in which it has, or can gain, competitive advantage – such as genomics and health data. The sector will need to be rigorous in addressing areas of weakness, such as adoption of new products across the sector and incentives available to manufacture in the UK.
The coronavirus pandemic demonstrated the sector’s ability to trial, embrace and deliver innovation to patients at unprecedented speed and scale. This momentum must be continued to deliver the medicines, technologies and tools that enable staff to care and treat more effectively. There should also be an increased ambition to work more closely across the public and private sector organisations to achieve these aims across the UK.
Leaders should create an environment in which new technologies can be tested rapidly and at scale, assessed and appraised using rich data and genomics-driven insights, and then adopted and spread across the healthcare sector quickly.
The governance and oversight of health data must be simplified to drive research and innovation, supported by ongoing public engagement, transparent use and the highest standards in data protection maintained to build public trust. The sector has potentially the richest health data in the world – but the governance of, and access to, this data must be radically simplified to unlock its full potential.
Leveraging private sector investment opportunities
With limited funding, resources and skills in the public sector, there is a growing debate about how private and public sector partners can work together. For example, there are great opportunities to work in partnership with the private sector to develop future MedTech and integrate technologies within the current healthcare system.
"Digital transformation can become the foundation of partnership working across health, social care, local government, and wider partners – including those in the voluntary, community and social enterprise, and private sectors – as place-based approaches to delivering care develop."
The King’s Fund, Partnership working through digital transformation
The healthcare sector continues to be an area of continued interest for the private sector. Although estimates vary, the global digital health market size was valued at USD 175.6 billion in 2021 and is projected to grow at a compound annual growth rate of 27.7% from 2022 to 2030, making this a key area of focus for investors. We are seeing private equity houses, in particular, express interest in innovative technologies across the sector, whether they are focussed on new ways of delivering patient care or the integration of technology into traditional service providers. This is evidenced by the ongoing level of deal volumes in the sector.
Likewise, healthcare remains a sector of interest to the debt markets, both banks and private debt funds are looking to support transactions.
Business models we have recently worked with include consolidators of care providers where technology is used to gain significant economies of scale, and healthcare services companies making ‘bolt on’ acquisitions in the technology space which are integrated into exiting services to increase efficiencies (and profitability) and make better use of the vast amounts of available data.
Partner, Head of Private Healthcare
Whilst there are many post-pandemic challenges in healthcare delivery, digitalisation presents a positive opportunity for collaboration from the private and public sector to improve the patient journey and reduce pressures on clinical staff.
Delivering change requires an approach in which new technologies can be tested rapidly and at scale, assessed and appraised using rich data and genomics-driven insights, and then adopted and spread across the healthcare sector at speed. This will require the sector to accelerate its transition to population health management, with the system focused on the total cost of care and the long-term benefits of innovation.
The government has a key role to play in providing the infrastructure, such as regulatory frameworks and information governance, to support the growth of the sector.
Building on the UK’s world-class pandemic response and vaccination programme, the UK has the opportunity to be a leader in healthcare as supported by the government’s UK Life Sciences Vision.
There is a myriad of opportunities to work with providers of new medical technologies and biotech, and greater collaboration across the sector could unlock huge improvements.
Please contact Suneel Gupta or Clive Makombera if you would like to discuss how these issues may impact your business.
Otherwise, for further healthcare sector insights please visit our Health Matters hub.