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by GK Strategy 18th November, 2016
3 min read

The Digital Revolution – Unlocking SME potential in the health sector

The government and its agencies spend £45 billion with private sector companies each year, a figure that is only likely to increase as the public sector looks to outsource more services to mitigate funding shortfalls. With total government spending sitting at over £780 billion annually, there could be substantial growth in a market that is already significant.

Since the 1980s successive governments have aimed to diversify the makeup of public sector suppliers, particularly by opening up procurement to SMEs.

In 2010 the coalition government set itself a target that 25% of spend would go to SMEs within 5 years, and the National Audit Office announced that the target had been exceeded in March 2016 and the government in turn set a new target of 33% by 2020.

The NAO itself admits that the 2020 target will be extremely hard to realise, which means the government will be deprived of the “flexibility, innovative approaches and better value for money due to lower overhead cost” that SMEs can deliver.

There is some hope though: digital.

Across the public sector there is a race to digital to drive efficiencies and try and catch up with the public’s desire for technology. In a world where Estonia has voted online since 2005, it’s certainly time for the UK to do more.

Nowhere is digital innovation potentially more exciting than in the health sector.

Individually we are collecting ever increasing reams of data on the amount of exercise we take, what we eat and even our sleep patterns; mainly via our smartphones but also via wearable devices and GPS enabled cyclometers. This data could offer real insights into individual behaviour, risk profiles and public health in general; which is why the private sector is already desperate to get their hands on it.

Big pharma envisage being able to profile potential customers and target marketing more effectively, but for the public sector the potential is even more exciting. By aggregating and analysing this data, the NHS could gain valuable insights into the risk profile of the population, understand behaviours that were driving diseases and make preventative interventions before costly medical treatment becomes necessary.

All of that is possible today, with existing products designed by innovative British start-ups, and that is only a minor hint at the possibilities a real digital revolution in the public sector could bring.

Whilst initiatives, like the recent Wachter Review, are welcome, the health tech market is developing at a pace that public sector rarely feels comfortable with. If we are serious about driving innovation in the sector then we need a root and branch review of how public sector procurement works – the processes, procurement cycles and costs of tendering are still too much of an obstacle for a lot of businesses.

If the NHS can address those problems, then this is an area where SMEs could and should thrive. Disruptive change is the lifeblood of the technology sector and too often an anathema to government; a meeting of minds will be of benefit to both.

Doing more with less is possible, if you do it digitally.

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