Health technology

Health technology stands at the forefront as one of the major economic issues in the UK and in all parts of the world because of the vast need for accessible healthcare, integrated electronics record system as well as continous patient care (NHS Information Authority, 2005; Tabladini, Capitani and Gatti, 2003; Nixon, et al. , 1999). Add to this is the increasing cost of health care such as medicine and other miscellaneous expenses related to the lack of an integrated records system which can provide the ease and convenience of retrieving patient data by hospitals.

With the aim of providing efficient care and in the process reducing the cost of health care to UK patients, the government launched in October 2002 the National Program for Information Technology or the NPfIT. Aimed to be completed by 2008, this program has been allocated with ? 2. 3 billion budget in order to be realized. However, questions on the probable success of the project vis a vis the amount that was spared in order for it to take place will be evaluated.

Specifically, an evaluation from an economic standpoint will be discussed pertaining to the strengths and weaknesses of the project as well as the potential benefits as compared to the cost to the government, the hospital, health care personnel as well as UK citizens. Moreover, at the end of the paper, recommendations will be made in order to increase the efficiency and effectiveness of the NPfIT to further benefit the people. The Economics of the NPfIT UK NHS: Issues and Problems in the NPfIT

The dilemma between economics and health care is that: there seems to be an endless need for health services such as medicines, hospital beds and health care practitioners while on the other hand, there is a scarcity in the amount of money that can be relegated to the health care industry. This is because the UK government would also need to prioritize other needs in the society. Creating a balance by meeting the demand for health of the people propelled the NPfIT of the UK NHS.

This program was aimed at delivering a basic health record for all patients, which will enable fast and easy access to the indispensable information that healthcare professionals and workers, patients, and the public (NHS, 2002). Bridging the gap between scarcity and the increasing need for patient care is therefore an important economic goal- saving the factors of production and in this case hospital services would require an efficient implementation of the NPfIT as well as a better cost-benefit ratio. With a budget of ? 2.

3 billion, the National Programme for Information Technology was established in October 2002 with the appointment of its Director General. The NPfIT set four primary goals: (1) More NHS intranet bandwidth (512 Kbps-1 Mbps for GP practices i. e. finally broadband); (2) The NHS Care Records Service (NHS CRS); (3) The Electronic Booking Service (EBS); and (4) The Electronic Transmission of Prescriptions Service (ETP). The UK government has shown support through increased investment in the NHS from the 2002 Budget – more investment to fund a ‘catch-up’ period leading to health spending of 9.

4% of GDP by 2008- a move that will increase the funding necessary for the program to succeed. Economically, the UK NHS’ NPfIT presents an opportunity to cut the operating costs of hospitals because of the integrated means of accessing data thereby, reducing the need to conduct diagnostic tests and other procedures that has already been done. By making it accessible, time is saved in the process of delivering care; the already scarce number of health care staff can be utilized to serve more people particularly the increased number of elderly patients.

Hence, the projected benefits of the NPfIT includes: 1) a decrease need in the number of staff thus, a decrease in the salary needed by the government to cover for the costs; 2) reduction of repetitive procedures that has already been done by previous hospitals; 3) ready access to information leads to time savings which can be translated to more patients being served in a day; and 4) an efficient connection between hospitals and general practitioners which will save time and cost for the patients who are also perpetually in need for better medical insurances.

Thus, in doing so, the NPfIT has the potential to maximize the use of land, labour, capital or resources and even enterprise or the hospital administration. This paper argues that the UK NHS NPfIT is economically sound to carry out if problems on its funding and implementation can be carried out. Moreover, given the negative history of health technology programs, the NPfIT is an ambitious yet when carried out can prove to be one of the more important economic saving mechanisms in the health sector.

Before exploring the arguments for the NPfIT project, let us first examine important economics concepts that will be used in evaluating the health technology program. One of the primary goals in economics to increase production and alleviate scarcity is the maximization of the Production Possibility Frontier through improving efficiency and maximizing the opportunity cost. First let us consider the clustering in the NPfIT- UK was divided into five clusters: (1) North East, Yorkshire and Humberside, (2) London, (3) East Midlands and Eastern England, (4) North West and West Midlands, and (5) South West and Southern England.

Let us assume that each of these clusters would only provide for specialized areas in the hospital, for instance, if all Operating Room Procedures are done in Cluster 1, all Outpatient are done in Cluster 2, all OB-Gyne and Maternal and Child in Cluster 3, all Medical-Surgical services in Cluster 4 and all diagnostic and laboratory tests are done in Cluster 5, the result would be an inefficient system. This is because the equipments and professionals in one cluster would not be sufficient to cover for the number of patients. Moreover, patients would need to travel to those areas in order to access their health care needs.

Hence, UK hospitals provide all the basic needs of the patients in one hospital particularly tertiary hospitals. What the NPfIT can do on the other hand, is to provide a linkage between these five clusters: if one patient has been living in Cluster 1 for years and then moved to Cluster 5, the hospital in Cluster 5 can still access the records of the patient from the hospital in Cluster 1. In doing so, the hospital has saved from time, resources and labour thereby, making the process more efficient. Consequently, in emergency cases, the availability of patient data is crucial in delivering emergency care.

For patients in accidents for instance, examination of their blood types, history of the patient, previous ailments and other laboratory results would take time. However, accessing it through the NPfIT’s electronic records would only take minutes and thus, giving the patient the chance to have a greater chance of survival. Hence, instead of having a line graph, what we will have is a curved graph where greater accommodation for more patients can occur. First issue would be: in economics, free market would dictate that health resources be allocated according to the demands of customers and in this case patients/clients.

Currently, the NPfIT has not achieved the Pareto Efficiency or the PPF because it has yet to be fully operational. Thus, while the goal is to provide the lowest cost possible in order to have efficiency in productivity, the result has yet to be realized. For one, the anticipation of the UK government that by 2010, the population of the patient will, as stated earlier, exceed 50 million, leading to 310 million GP consultations a year cannot be operational because of the lack of funding (Soper and Hanney, 2007).

The NHS Executive set an objective for all NHS trusts to have EPRs in position by 2005. However, only about 3% of trusts were met this objective by the spring of 2002 (NHS, 2002). This is because the budgets for IT, which was allocated locally, were used to ease financial pressures elsewhere. This is also because of the inadequate setting of central IT standards (Wanless, 2002, p. 103). The report recommends “ring fencing and doubling the IT budget” (Wanless, 2002, p. 102). The UK government answered with ? 2.

3bn for a new National Programme for Information Technology (NPfIT) in the NHS in England with the publication of Delivering 21st Century IT Support for the NHS in June 2002 (Department of Health, 2002). The aim here is for EPR to be implemented in all acute trusts by the end of 2007. Second, the demand curve for healthcare cannot be changed by delays due to bureaucratic reasons. For one, many projects are behind the target date of completion. This poses major problems regarding costs and the quality of care delivered to NHS patients.

The program is derailed by, among others, explicit political policy drive, lack of specific and constant implementation strategy for NPfIT, programme support falling among clinicians (Wanless, 2002), reorganisations and formations of newer bodies (such as Care Record Development Board) even after two years of programme implementation, and the re-targeting of delivery dates; for example, the data spine was re-targeted to December 2005. There is still very little evidence to show that NHS IT is making a difference in promoting efficiency in services.

Hence, the equity that was expected from this project is still severely lacking. For stakeholders including the UK NHS, the government, hospitals and patients, the failure in IS implementation can be disastrous and effects can be long term in nature. If the NPfIT fails like in all large-scale IS failure waste in resources such as money, time and effort is so high the organisation can be affected in two ways: once by sustaining time-consuming development that produces nothing in return and twice by lowering its capacity to start a new systems development effort from scratch.

Organisations whose IS implementation failed experience a weakening of their capabilities, loose valuable time and money and key staff. These organisations also face litigation costs, and end up with a radical deterioration of the internal climate (Pang, et al, 2003). Third, health technology should not focus on the IT alone but should consider the human resources aspect of the program. Technological innovation in the health care industry while difficult and complex is considered to be advantageous.

Resolving the conflict of organization and implementation versus the perceived benefits of the program is one of the key. Advances in IT have allowed the health industry to specialise its application that caters to the needs and nature of patients and health care providers alike. Being in an industry that is technology-intensive can make IT more usable and useful, particularly when it is used to become more operationally flexible rather than simply reducing costs or even improving quality.

Combining IT with other innovations like when it is used to create intangible assets such as intellectual property or responsive capacity can positively produce a better outcome. Effective adoption and use of IT requires organizational collaboration, flexibility, specialization, innovation, quality-orientation, reflexivity, and the like. Information-intensity can be seen in the amount of time, money, and other resources invested in IT use, inputs, and outputs, Investing in IT alone does not guaranty success.

Stakeholders should ensure productivity and competitiveness. The benefits of IT have led major actors to be even more powerful but it has eventually led to a dramatic failure because of poor management or lack of expertise in the application and maintenance. Finally, health care is not a product or service that is elastic and can be substituted by other products or services. It is inelastic in that health is basic demand that needs to be addressed at the time it is needed, in the manner that should be done by personnel that are qualified.

Important considerations here would be human resources, time and equipments- components of production or supplies where shortage should not be an option. Being a basic necessity, it is only right that the NPfIT focus its programs on health technology projects that seek to benefit the patients and the health care personnel as well. Since the UK NHS is a public institution and that health is considered to be a right of its clientele, the patients are not so much concerned with the costs of providing health care or if the UK NHS can recover its investments on the NPfIT program.

Consequently, the concern is not to for the health care industry to sell its services at a higher price. However, the economic idea is for the UK NHS to maximize its resources by reducing the marginal cost, operating cost and miscellaneous cost in order to spread the supply to a higher number of clients who want the products and services it renders. Moreover, since supply cannot possibly exceed demand in the health care services, the creation of more supply would always be met with more demand.

Consequently, how the UK NHS allocates its resources through the NPfIT project through the five clusters and how it would work out is still a question until it can complete the project. Meanwhile, there is a need to address the issues outlined in this paper in order to attain the maximal economic impact it seeks to achieve. Conclusion and Recommendations In economics, the cost of bearing the price in a project would be higher if sustained effort to finance and continue the project is not implemented.

Thus, cost would rise as time needed to complete a project is prolonged. This is the case of the UK NHS NPfIT project. Hence, the solution that would need to be resolved by the UK NHS is to complete this project and make it operational in order to be of benefit. The problem of funding has been felt in all clusters of the NPfIT. Thus, local governments had been tapped to aid in the generation of funding. Finding solutions in overcoming the impetus for the NPfIT project seem difficult for the UK NHS and the local governments with limited funds.

The challenges they face with IT application and development of new IT funding strategies include limited general funds, cost cutting, and the need to pay for large, multiyear projects crossing agencies. In lieu with the potential benefits that can be accrued by the stakeholders, this paper recommends that funds be generated from the following: • Budgeting and appropriations give states additional money for IT projects by retaining technology funds that are unspent at the end of the budget year (instead of allowing them to revert back to the general fund).

New technology projects can also be funded with the savings from earlier IT projects. • Leasing and financing involves lease-purchase agreements or loans to buy IT systems or services. This spreads out costs over time. • Bond sales can fund a wide range of technology projects and encourage use of existing systems by multiple state agencies. • Investment funds are pools of money established by the state that can be used to pay for pilot programs, new technologies or supporting projects. A legislature can provide the initial seed money.

Savings generated by the projects funded are used to replenish the investment fund. Money also can be used as grants to other agencies for their IT projects or paid in the form of loans that have to be repaid. • Performance-based contracting defines a state’s IT system or performance objectives. A vendor then comes up with the best solution. The system features rewards and penalties, as necessary, for the project vendor. • Certificates of participation are a form of borrowing in which investors provide up-front money for a state IT system by buying certificates of participation.

The vendor receives payment up front whilst the state pays the investors over time. These certificates don’t count against a state’s debt ceiling. • Benefits funding allows a state to pay for technology with the money saved from the project or improvement. This is usually the additional revenue collected as a result of the project. Moreover, while the challenges of the project is enormous due to the history of negative health technology programs in the UK and in almost all parts of the world, the UK NHS can succeed in attaining the efficiency and effectiveness it seeks to give to UK health patients.

For one, the infrastructure that has been started are promising and while there is still a lot to be desired in the cooperation of medical health practitioners, the UK NHS has been persevering in order to push for this project. The NPfIT is a reality that in the future can revolutionalise health care delivery through decrease in the cost of labour, resources, health personnel and time- in order to achieve efficiency in delivering health care services.


NHS Information Authority. (2005). The Importance of Infrastructure. Retrieved 29 November 2007 from

Nixon, J., Stoykova, B., Glanville, J., Christie, J., Drummond, M., and Kleijnen, J. (1999) The UK NHS Economic Evaluation Database (NHS EED): economic issues in evaluations of health technology. Annu Meet Int Soc Technol Assess Health Care Int Soc Technol Assess Health Care Meet. 15: 47.

Pang, T., Sadana, R., Hanney, S., Butta, Z., Hyder, A.A. and Simon, J. (2003) Knowledge for better health – a conceptual framework and foundation for health research systems. Bull World Health Organ. 81:815-820.

Soper, B. and Hanney, S. (2007) Lessons from the evaluation of the UK’s NHS R&D Implementation Methods Programme, Implementation Science, 2:7

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