Emergent Markets: Healthcare Services

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Healthcare Services

Healthcare services refers to the sub-segment within the healthcare domain which is provided by the medical professionals, paramedics, organisations and ancillary health care workers to customers in need of medical support or help.

Introduction

This is one of the 16 market profiles produced as part of the Economic Market’s foresight study commissioned by the North East LEP. It provides an overview of the future growth prospects for the Healthcase Services market globally, a summary of the enterprise base serving the market in the North East and relevant regional assets, and an analysis of how the continued convergence of global trends will affect future market development.

These markets were selected as those most likely to present opportunities for future regional growth in the North East LEP. This was done based on a trends analysis conducted by Frost and Sullivan, which identified 37 high impact trends driving continued change and growth in these markets globally. A shortlist of markets from this trends analysis was then cross-referenced against the current North East position by Cambridge Econometrics. This analysis identified the most significant opportunities for the North East LEP.

Each of these profiles also uses findings from the Data City platform to quantify the number of firms serving the Healthcase Services market in the North East. This platform links companies house data to companies’ websites and uses the website text and machine learning to classify firms into Real Time Industrial Classification Codes, which can allow analysis of markets often too emergent to be precisely measured in SIC codes. The data from this platform has been triangulated against ONS data to consider a variety of perspectives on the market.

More detail about the methodology can be found here for the 16 market profiles.

Description and global outlook

This includes medical treatment across several health areas such as primary care, mental health, outpatient care, surgery services, as well as auxiliary services in the form on nutritional services, laboratory and diagnostics, transportation, etc.

Market drivers

In 2020, the market faced a slight decline due to the COVID-19 impact and suspension of services within several healthcare areas. However, the market is expected to pick-up and experience faster growth due to increasing focus across the globe on improving healthcare delivery, integration of technology in service delivery, and remote consultation.

The COVID-19 pandemic also highlighted the infrastructure gap across global economies in healthcare services, and the need for increased investment.

The market is expected to benefit from an ageing population, increasing healthcare demand, and workforce costs. Integration of several technologies at different levels, such cloud based record keeping, IoT, nanotech, diagnosis technologies, telemedicine and robotics provides growth opportunities.

The biggest challenges for the healthcare services are:

patient and service provider engagement
increasing cost of healthcare
need of new delivery models
cost of technology integration
skilled technological workforce

Scale and scope of global market

The global market size for the healthcare services was estimated to be US$ 6.75 trillion in 2020, with an expected growth rate of CAGR 7% for the period of 2021-2023. The US is the largest global market for overall healthcare services, spending more than 17% of its GDP in 2019.

The UK has one of the best healthcare services in the world. However, the growing gap in funding and increasing pressure on the healthcare systems due to the COVID-19 pandemic has challenged service delivery.

In 2021, the UK was ranked among the last three among high income countries in terms of cancer survivability and infant mortality.

Some of leading global companies in the healthcare services market are Apollo Hospitals Enterprise Ltd, Laboratory Corporation of America, Mayo Clinic, Helios, Ramsay Healthcare, Tenet Healthcare, IHHH Healthcare Berhad, Davita, Cleveland Clinic, and Fortis.

UK market

Most healthcare in the UK is provided through the public sector. The NHS is the main provider of healthcare, and the UK has a small private healthcare market, for which demand is growing, in part due to lengthy NHS waiting times.

The NHS workforce is facing a major staff shortage. According to the Kings Fund, NHS hospitals, mental health services and community providers are now reporting a shortage of nearly 84,000 FTE staff, severely affecting key groups such as nurses, midwives and health visitors. Pressures on NHS staff have been compounded by the pandemic, which has exacerbated staff workloads.

COVID-19 led to new pressures and sweeping changes to the operation of the NHS. Hospitals had to physically alter their layout, patient flow and impose visitor restrictions to control the virus. The method of prioritising patient care relating to the urgency of need has had to change. Diagnostic and outpatient waiting times increase, whilst health inequalities worsened. COVID-19 also impacted upon mental health. The NHS Strategy Unit estimated that there will be a 33% increase in demand for mental health services across England over the next three years as a direct or indirect result of the pandemic.

The pandemic also led to a significant backlog of treatments and operations for cancer and other illnesses. In May 2021 it was estimated that nearly one-third of hospitals have seen long waits rise sharply with over 10% of patients going a year without treatment. It was estimated that 5.1 million patients were waiting to begin treatment at the end of April 2021, according to NHS England data - the highest since records began in August 2007.

There has been major disruption to cancer services, with some hospitals struggling to treat half of their patients within the target time of two months. Concern is growing for 45,000 "missing cancer patients", after a fall in GP referrals and screening services across the UK.

Capital flows and FDI

The NHS represents the greatest contributor to national and regional capital for healthcare services. Private research and development capital is niche, and focused around the commercialisation of early-TRL healthcare technologies and IP resulting from academic research.

Whilst in the broader biotechnology and biopharma markets, private capital is deployed extensively, regionalised healthcare investments to 2030 in the North East are expected to remain best placed with publicly-administered budgets for growth and capability development.

North East presence and capabilities

Regional overview

Five of the seven North East CCGs are rated ‘good’ or ‘outstanding’

Five of the seven North East CCGs are rated ‘good’ or ‘outstanding’ by NHS England, adult social care is rated strongly and three of the Trusts are rated as outstanding by the Care Quality Commission. These organisations operate outside the North East area in some cases, for example delivering health care services in the Tees Valley and into Cumbria.

Strong research orientation

Many of the trusts have a strong research orientation and work closely with regional universities and other research and innovation partners, including through as the Academic Health Science Network North East and North Cumbria (AHSN NENC). Research oriented trusts work with other partners across the north of England through the Northern Health Service Alliance (NHSA) and with clinical and research partners in Scotland.

Newcastle upon Tyne Hospitals NHS Foundation Trust

Newcastle upon Tyne Hospitals NHS Foundation Trust is a world-class provider of healthcare and one of the largest NHS organisations in the UK. Newcastle upon Tyne Hospitals manages over 1.72 million patient ‘contacts’ every year.

Its flagship services include:

The Cardiothoracic Centre at the Freeman Hospital
The Great North Children’s Hospital
The major Trauma Centre at the Royal Victoria Infirmary.

With around 13,500 staff, Newcastle upon Tyne Hospitals is one of the North East’s major employers.

The 2016 Care Quality Commission (CQC) inspection rated Newcastle upon Tyne Hospitals as ‘outstanding’. The Trust is consistently in the top ranks of the NIHR national league tables for numbers of recruiting studies, numbers of open commercial portfolio studies, and percentage of commercial studies recruiting patients to time and target.

Newcastle upon Tyne Hospital’s state of the art clinical research facilities provide the capability to undertake trials ranging from Phase 1 (first in human) to Phase 4 (post-marketing). Newcastle upon Tyne Hospitals also hosts the NIHR Clinical Research Network for the North East and North Cumbria.

On a regional level, the Trust has built strong partnerships with key organisations including the Northern Health Science Alliance and the Academic Health Science Network for North East and North Cumbria. It is the lead partner of a new Northern Alliance Advanced Therapies Treatment Centre, together with advanced therapies companies, universities and the NHS covering the North of England and Scotland.

World-class universities

In the 2014 Research Assessment Exercise, 28.9% of research in biological sciences in North East universities was rated 4* or higher. 21.7% of research in Psychology, psychiatry and neuroscience was rated 4* or higher.

In The Witty Review, North East universities were in the top 20 for research publications for 11 subjects including life sciences and regenerative medicine. Amongst top 20 research subjects university research council funding by subject area were Metabolic and endocrine, Neurological, Inflammatory and immune system, Biochemistry and physiology, and Cancer. Between 2007-2017 North East universtieis accessed £94m from the BBSRC and £118m from the MRC. Health research and NHS healthcare organisations include:

Newcastle University (Medical school; Institute for Genetics; Northern Institute for Cancer Research; NIHR Clinical Research Fabilities; Diagnostis North East and Genomis)
Northumbria University (faculty of health and life sciences, research specialisms in health and inegrated social care)
Durham University (biophysical sciences; medical humantities; CPI)
Sunderland University (the new school of medicine which opened in 2019.)

Other research centres include the Wellcome Trust Centre for Mitochondrial Disease and the MRC Single-Cell Functional Genomics Unit.

The North East LEP area has a strong and diverse university sector, with over 85,000 students studying at four universities: Durham University; Newcastle University; Northumbria University and University of Sunderland. In 2018/19 there were 31,475 enrolments in the four universities in the North East LEP area. Subjects allied to medicine; Social studies and Biological sciences.

It has been a priority of the North East LEP to increase the enrolment in STEM qualifications. Overall, the change in total graduates between 2014/15 and 2018/19 and who studied a STEM related subject has been roughly in line with the UK average at around 10%. However, some subjects have experienced a much faster increase in graduates, most notably in computer science, where the number of graduates increased by over 40% in the space of four academic years, compared to 19% in the UK as a whole.

According to data on occupations, the North East has a lower share of employment in Associate Professional and Technical Occupations compared to the average for England excluding London.

Key sites and assets

Key sites and assets that support the sector, NETPark (the North East Technology Park in Sedgefield, County Durham); Newcastle Helix (Science Central) which is home to the National Innovation for Ageing and Data, The Core (knowleged based science and technology SMEs and the Biosphere (Newcastle), Grade A offices and biology and chemistry labs.

Key networks

Key networks in the region include:

BioNow - a membership organisation supporting the biomedical, pharmaceutical and life sciences sector in the region. Sponsored by AstraZeneca, Lancaster University, University of Liverpool, University of Manchester, Newcastle University, Durham University and Manchester Metropolitan University, Bionow is a membership organisation for businesses in the biomedical and Life Science sectors in the North.
AHSNs: Academic Health Science Network North East and North Cumbria, Innovation Agency Academic Health Science Network for the North West Coast, Yorkshire & Humber partners Academic Health Science Network, Greater Manchester Academic Health Science Network.
MedConNect North

FUSE – Centre for Translational Research in Public Health
First for Pharma
NEPIC
The Northern Health Science Alliance

Analysis of GVA and employment by SIC sectors

The figure below summarises the findings from socio-economic data and economic forecasts, presenting headline findings for the Healthcare industry. The Healthcare industry has below average productivity and is a very large employer, with 75,600 employees in the North East LEP area. The sector is a slight specialism for the North East – with a Location Quotient of 1.1. Healthcare has experienced significant employment and GVA growth since 1981, with continued growth forecast.

The Data City findings

The Data City provides company data based on an AI-driven taxonomy search of terms and content on company websites. This is then connected to companies house data for each company – and allows an aggregate analysis for new industry and market definitions. The data captures the number of business branches in the North East LEP area, which means firms registered outside of the North East LEP but with branches in the area are captured in the data

There were 91 active firms operating in healthcare services in the North East LEP in June 2022, 3% of all UK active firms in the North East LEP area.

Location quotient

The data suggests that the North East LEP are generally does have a concentration of firms in the healthcare services sector. North Tyneside had strong location quotient for firms in this sector, in the top 40 in the UK. Newcastle, Gateshead, County Durham, Sunderland and South Tyneside also all had moderate positive location quotients, while Northumberland had a slight negative quotient.

Out of region locations

45% of firms in this sector operating in the North East had out of region locations, compared to 25% of UK based firms which had a location in more than one NUTS region. In terms of the most common regions for firms to have an out of region location, over 10% of firms with a location in the North East LEP area also had a location in the North West, Yorkshire and the Humber, the West Midlands, London, the South East and Scotland. However, the regions which the North East had a stronger link to than firms in the rest of the country were Yorkshire and the Humber, the West Midlands, Wales and Scotland.

Sector crossover

One of the innovative features of the Data City methodology is that it allows firms to be classified in multiple sectors. The platform does so through real time industry classifications (RTICs), which are constantly evolving classifications generated by an AI from companies’ websites. Firms can be classified under multiple RTICs at any one time.
This means the data can be used to demonstrate interdependencies where sectors overlap. In terms of health care services, compared to most other sectors this sector does not have much cross over with other sectors, which may suggest there are greater opportunities for cross sector working in this market that have yet to be realised.

Locations map

As suggested by the location quotients healthcare service firms are distributed across all the North East LEP. There is a concentration of firms in this sector in Newcastle city centre and on the boundary between Newcastle and North Tyneside.

Regional prospects

A critical part of this study is to shortlist which emergent markets represent “hot prospects” for the North East economy in the future. Using the findings from the study, and the assessment framework below, Health Services is rated as a market with:

Established status in the North East
National scope in terms of firm activities and ownership
Moderate presence, in the North East with 3% of all firms in this market having a location in the North East LEP (compared to 2% of firms nationally)

Existing regional specialisms

Moderate: average location quotient; some employment and firm presence

Firms

Significant: established firm presence, good start-up and SME activity and presence

Value chain cluster

Significant: established firm presence, good start-up and SME activity and presence

Innovation / technology

Moderate scale of R&D activity, with national leadership

Skills and human capital

Directly relevant: foundation and specific skills, with infrastructure and provision

Local institutions

Relevant institutions

Local assets

Relevant minor assets: of regional significance

Click here to download the assessment framework.

Strategic commentary

The Covid-19 pandemic has highlighted the importance of effective and technologically advanced healthcare services in responding to health challenges. With the North East generally having poor health relative to the rest of the UK and seeing a rise in working age economic inactivity due to sickness post Covid-19, it is clear healthcare services have an important role in wider economic health too.

There are no markets assessed as directly enabled by Healthcare services in this study, but Healthcare services still have a vital role to play in the regional value chain, as they are a major end customer for a variety of markets.

This will require support to deploy new technologies within Healthcare services. The table below highlights that healthcare is dependent on many markets across applied digital technologies and robotics in addition to traditionally health-oriented markets such as Biopharmaceuticals and Telemedicine.

Examples could include using autonomous vehicles to support mobility applications for disabled residents, robotics and immersive technology for haptic-enabled prosthetics with digital interfaces, and the use of IoT to monitor the health of care home residents or vulnerable adults in sheltered accommodation. Their effective deployment, however, will require regional coordination to ensure that services user’s needs are met.

Introduction