07th June 2016

Expert advice from Device Access UK: The NHS needs you! How MedTech can engage differently to help the NHS

The NHS needs to build twenty-two new hospitals in the next six years to meet the current systems demand for beds. To help alleviate these unprecedented demands the NHS could adopt new technologies but we all know that’s never been easy. So how can industry engage differently to help the NHS? In 2015 there were 900 more hospital admissions per day in NHS England than the previous year, and demand will eventually tail off in 2022. The Medical Device and Diagnostic industries have the greatest opportunity to work collaboratively with the system to play a key role in transforming care though innovation, but introducing new medical technologies and diagnostics into NHS England has always been challenging.

“Transformation on this scale needs strength of purpose, unwavering commitment, and investment to support innovation and to release the entrepreneurial energies within the NHS, to bring care closer to people’s homes and communities, and to support the empowerment of patients to better manage their own health through modern technologies.” NHS England Chairman, Sir Malcolm Grant

The NHS talks about transformation and innovation all the time but we know that there has been very limited success, with bodies like the Academic Health Science Networks (AHSN’s) who were put there to assist industry in helping the NHS to adopt and diffuse new technologies. This is not helped by the fact that very few MedTech companies engage with them or know what they are there to do.

The NHS is facing a perfect storm, caught between huge increases in demand and the prospect of a massive £30 billion deficit. Without revolutionary change the NHS as we know it will become unsustainable.

We are on the brink of another report (Accelerated Access Review) on why the NHS has issues on adopting new technologies, and this was looked at previously by the New Technologies Adoption Programme (NTAC) and also more recently by the Royal College of Surgeons. Both bodies delivered a great report on what else could be done, including recommendations of financially incentivising the providers (NHS Hospitals) to innovate. The Accelerated Access review is due in the coming months but the first draft was mostly focussed on the drug industries barriers to adoption.

So how do we engage differently? Do we really understand our customer – NHS England and each Hospital enough to have high-level discussions on how the MedTech offering will really help improve efficiencies on a Local or National basis?

Reimbursement is the general term used to describe the mechanism of payment by the Clinical Commissioning Group to the Hospital or care provider based on their activity – in other words, patient treatments. This process was once called “Payment by Results” now run by Monitor and called the Monitor Payment System. Both systems reward activity and not necessarily results. For those who understand reimbursement, this is the absolute starting point because when you know the specific amount paid you can start to justify the benefits and justification for adoption. Sadly MedTech players expect for example the Surgeon or his Business Manager to complete this section on the business plan submission, and that can be a reason why there are such delays in getting business cases approved.

When we have shown the Surgeon the new technology to a point where he says “I will need to submit a business plan to my manager”, are we providing enough supporting information besides the glossy sales brochure?

So how do the hospitals get paid for what they do? An uncomplicated and simple guide to the NHS reimbursement system and mechanism – what you need to know:

The reimbursement system works on the following processes:

Upon admission to the hospital the patient is diagnosed for what is wrong with them or condition, along with any co-morbidities, for example diabetes and high blood pressure.This information is recorded in the patient’s notes and updated during their stay or spell in Hospital. Later upon discharge, this diagnostic information is matched against a diagnostic coding catalogue or directory and is referred to as ICD – which means International Classification of Disease. ICD is used across the World. On top of this, essential other information is included such as type of admission – emergency or elective, and discharge information.

Again like the diagnosis information, the patient’s treatment or treatments and complications and outcomes are all recorded – for example, a hernia or a hip replacement and along with this information, further data regarding the laterality of the procedure and approach, for example open or laparopscopic approach in a gall bladder removal, or left sided hip replacement. The type of implant or material is also often recorded. This information again like the ICD example above is matched against a catalogue of codes called the OPCS code – OPCS being the Office of Population Censuses and Surveys who invented the recording of treatments system. For many people it’s referred to as the OPS code or operation description code.

When the clinical coders enter the above diagnostic and procedure/treatments information, it is entered into a computer coding system and translated into ICD and OPCS codes, the combination then becomes ‘grouped’ to create a payment code. This payment code is called a HRG or Healthcare Resource Group, or DRG in other European markets. This HRG code comes with a financial value which is often referred to as tariff. This tariff or HRG covers everything in the spell or episode of care including the device used, bed days, salaries and theatre time.

All the above information is also recorded in the Health and Social Care Information Centre (HSCIC) and this is known as Hospital Episode Statistics (HES) data. This data has been made available to a number of select commercial organisations.

London Hospitals get paid around 30% more that those in other parts of the country due to higher local costs.

The location of the hospital can make a difference to the price paid by the commissioner to the hospital – this is known as Market Forces Factor or MFF – for example London Hospitals get paid around 30% more that those in other parts of the country due to higher local costs.This % uplift is added to the HRG invoice to the CCG.There are several other factors that make a difference to what the Hospital is paid for performing the procedure that can make a significant difference to the HRG, below are some common examples;

  • Emergency admissions are often paid higher
  • When a patient exceeds a certain number of days then there are sometimes extra day payments
  • Specialist service top-ups – i.e. paediatric procedures have a significant % top up
  • There are several rewards in place to financially drive day case treatments over longer stays to reward productivity – these are called Best Practice Tariff or BPT.
  • Specific devices are paid for in addition to the HRG when they fall into what’s known as the Device Exclusion List – or high cost device list.

At the end of the patients stay an activity data set from the hospital is sent to the CCG in a system called Secondary User Service or SUS, and then the hospital is reimbursed.

When you are able to identify the HRG’s that apply to your procedure then you can still build your value story around it.

The best case scenario is when you are able to show the following;

The Treatment

  1. Mrs Smith: Elective Caesarean during a 7 day spell in April
  2. Mr Jones: Emergency admission for fragility hip fracture in April

The Code

  1. Mrs Smith: ICD-10 code are 0300 (twin pregnancy) and 737.2 (twins both live born)
    – OPCS-4 code is R17.2 (elective lower uterine segment caesarean delivery
    – Submitted to SUS in May
  2. Mr Jones: ICD-10 code are 7200 (fractured neck of femur) and W19.0 (unspecified fall at home)
    – OPCS-4 codes are W37.1 (primary total prosthetic repair of hip joint using cement) & Z94.3 (left side operation)
    – Submitted to SUS in May

The Group

  1. Mrs Smith: HRG payment currency is NZ13A (planned lower uterine caesarean section with complications)
  2. Mr Jones: HRG payment currency is HA12C 9 major hip procedure category 1 for a trauma without complications and co- morbidities)


  1. Mrs Smith: Elective and non-elective spell tariff is £2,704
  2. Mr Jones: Base tariff is £5,325

Tariff Adjustments

  1. Mrs Smith: The expected length of stay for NZ13A is 5 days. A long stay payment of £394 is payable for each additional days stay, in this case 2 days.
  2. Mr Jones: There is a best practice tariff for fragility hip fracture which applies to HA12C and other HRGs. An additional best practice statement of £1,335 where care complies with clinical characteristics of best practice. In this case, surgery within 36 hours of arrival in A&E, under expert care of a consultant geriatrician.


  1. Mrs Smith: Guys and St Thomas has an MFF payment index of 1.2770
  2. Mr Jones: Leeds Teaching Hospital has an MFF payment index of 1.0461


  1. Mrs Smith: Total payment is: (£2,704 + (2*£394)) * 1.2770 = £4,459
    – SUS extract in July informs monthly reconciliation between NHS Lambeth and Guys and St Thomas
  2. Mr Jones: Total payment is: (£5,323 + £1,335)* 1.0461 = £6,955
    – SUS extract in July informs monthly reconciliation between NHS Leeds and Leeds Teaching Hospital

Therefore, the more understanding of the three above items, and understanding reimbursement in both National and Local scenarios will help plan and forecast the probabilities of success. More importantly understanding the specific patient pathway through Hospital Episode Statistics (HES) data analysis will enable the company to fully understand the past trends and opportunities for a far more collaborate approach to the NHS.This data shows a summary of various types of basic information – from type of admission, such as emergency or elective, length of stay, age, sex, bed days, time waited for treatment by hospital.The NHS is the envy of many markets who do not have the ability to track patient pathways through this analysis. NHS England has one of the richest sources of health data in the world

Patient Benefit
First and foremost it needs to have a clear advantage for the patient – safer, faster, less invasive, less painful, easier, patient friendly, lower complications. Understanding current trends is possible by the examination of Hospital Episode Statistics data, which is far easier to interpret when you know about ICD, OPCS and the HRG result.

Hospital Benefit (Why perform?)
Improve revenue stream, increase productivity, less number or less qualified staff required, reduce waiting lists, reduce theatre time, readmissions, complications, length of patient stay and things to focus on. Most companies start with saving money and yes that’s important but everyone says that – it’s about the above that will raise the Business Managers attention.

CCG Benefit (Why pay?)
this is especially important with new procedures where permissions and funds need to be negotiated, the question is why should the CCG pay? What is the new product or procedure going to do to help them achieve their own local targets and objectives?

Company Benefit (Why commercialise?)
Funding a sales team and a clinical support team to help introduce a new product and a procedure come at a very high price, and change does not happen overnight.The investment made in this space should pay off in financial and value terms.

Example of industry success – the endovascular varicose vein treatment revolution
One example of enabling the Hospitals to generate income through improved efficiencies – reducing theatre time completely to a lower cost treatment room environment, reducing staff numbers, recovery time and improved patient outcomes was the move from varicose vein stripping to thermal ablation techniques.

In 2002 there were 31,360 overnight stays associated with varicose vein surgery. In 2012 there were only 4593*. Newer minimally invasive techniques were introduced around 2006.This transformation was hospital by hospital industry collaboration with NHS clinicians and business managers utilising the ‘Connect 4’ approach.

The tariff at the time was around £1200 + MFF per case and many patients needed an overnight stay at the cost of around £350 a night. This combined with an approximately 50 min procedure at the cost of £20/minute meant that hospitals were losing revenue though performing this traditional procedure.

“The device and diagnostic industries play a key role in delivering new Products that benefit the NHS, the economy and above all, patients” – Professor Dame Sally C. Davies Chief Medical Officer Department of Health

With newer thermal ablation techniques like laser and Radiofrequency ablation, these 30-minute endovascular catheter techniques under local anaesthesia meant that in a good set up the hospital could generate excellent income through performing 8 procedures per list instead of 3 and also not being fined for breaching the 18 week targets set by the CCG’s. The income produced per case was around £400 instead of a loss with traditional vein stripping surgery.

The sales message was about income generation and not saving money and adoption was considerably quicker as the business managers saw the benefits.

View the Device Access profile here or contact Michael for more information