Speech by Frans van Houten at AcTI Innovatie Conferentie, 27 October 2011: "Grand Challenge: Health and Ageing" (English)

Spoken word takes precedence

October 27, 2011

Minister, chairman, ladies and gentlemen,


In these uneasy economic times it is good to be here and talk to you about innovation as a solution and as a source of inspiration for healthcare in an ageing society. Innovation can help us to improve the quality and the efficiency of our healthcare and to control its cost. At the same time it will enable us to strengthen our economy. This is why healthcare is referred to as the 'growth engine' of the 21st century. If we give enough room for innovation in healthcare, we will be able to play a pioneering role, not only here in the Netherlands but also in Europe and around the world.


To do that, our primary focus needs to be on the patient and the healthcare provider, and we need to work on the basis of the entire care cycle: prevention, diagnosis, treatment and after-care. We need to develop meaningful products for each of these phases. What counts is the effect these innovative solutions have on the entire care cycle and we need to look beyond the boundaries of each individual phase. The various phases of care have to link in with each other seamlessly. We must also make sure that individual interests in the healthcare sector do not hamper the introduction of effective new solutions. Today I would like to emphasize how important it is to align the interests of all stakeholders in the healthcare sector are aligned so that innovation can be truly effective. And I would like to highlight the things we can do together to promote innovation, both in the Netherlands and in Europe.


Innovation and new technologies can structurally improve the efficiency of healthcare, which in turn, will make costs controllable. The idea that new technologies would make healthcare more expensive is a misconception. In fact, the cost of purchasing medical equipment is less than 2% of the total healthcare budget. Personnel costs are by far the biggest cost item in healthcare – over 70%! – and it is innovation that can help to limit these costs, and to reduce the growing shortage of personnel whilst at the same time improve the quality of healthcare. Good-quality and readily available healthcare enables the elderly to remain active for longer, and it enables patients and the family members who care for them to get back to work sooner. We need to also take this economic gain into account when we are weighing up the costs and benefits of investing in healthcare.


It is well known that the challenges in healthcare are immense. Our society is ageing at a rapid rate. The number of patients with chronic conditions is rising. People are not happy with the quality of care that is being provided. At the same time, we are faced with the prospect of a shortage of personnel, and healthcare costs are rising faster than our GDP. We actually need half a million more people to work in the healthcare sector. And if costs continue to rise at the current rate, then the healthcare sector in the Netherlands will account for much more than 20% of GDP in 2030 according to recent calculations made by the Netherlands Bureau for Economic Policy Analysis (Centraal Plan Bureau, CPB). That is not sustainable. In other countries the situation is much the same. We need to do more in terms of prevention and early, effective treatment. If we don't, by 2050 an estimated 50% of the population in the Western world will be suffering from a chronic condition.


In the field of technology, expertise is already proven – what yet needs to be done is to put this into practice. A lot of products and services already exist to help us deal with healthcare challenges, and more is in the pipeline. The FME Association recently published a brochure with a title: ‘1001 healthcare solutions’. This contains not only a good analysis of the way in which innovation can help healthcare, but also mentions a lot of existing solutions for all phases of the care cycle.


Let me run through the various phases of the care cycle to show you what technologies are available.


Prevention is better than cure. We all know that there is a lot to be said for maintaining a healthy lifestyle – eating healthy and taking enough exercise. There are products on the market that can help people to do just that. For example, an individual can record their daily activities by a small, portable device and this information is sent to a monitoring center. On the basis of the data recorded, the user is then given online motivational advice to help them improve their lifestyle.


A good night's sleep is also essential for a healthy life. Just like a number of other organizations and universities, at Philips we are carrying out research into sleep patterns and developing solutions for sleep disorders. For example, we are working on a pilot project together with the Universities of Twente and Antwerp, as well as Herdecke in Germany, in which a newly developed screening solution is used to promote early detection of sleep apnea.


For elderly people who live alone, prevention often means preventing an accident from turning into a medical problem. There are now emergency response centers which can automatically detect when an elderly person has had a fall. The elderly person wears a small device with sensors that constantly monitor their main movements and these are then compared with their normal movements by a built-in microprocessor. If this detects movements that suggest the person has fallen, the emergency response center is notified automatically. Other innovations which help elderly people to live independently range from devices that allow people to measure their own blood pressure and devices that check whether they have taken their medication to advanced scoot mobiles and 'riser' chairs.


Screening and early, accurate diagnosis can dramatically improve healthcare and reduce the extent of the treatment phase. This is extremely important in the case of cardio-vascular diseases. Here too we are making good progress in terms of technology. At Philips, for example, a few years ago we developed an ultrasound system that is still unique today. By using a very innovative and compact transductor, which is fed into the patient's esophagus − the esophagus runs very close to the heart − the physician can see in real time and in 3D how the blood is flowing through the valves. This enables the physician to see whether the heart valves are in good working condition, or if they need to be repaired or replaced.


Just as there are solutions for cardio-vascular diseases, there are also solutions for cancer and other diseases. For example, we can significantly improve the biopsy of suspect tissue in the case of prostate cancer by targeted removal of only the suspect cancerous growth and none of the surrounding tissue. We are able to do this with the aid of a smart combination of modern medical imaging technologies.


For a rising number of surgical treatments there are now minimally invasive alternatives, which mean less pain and faster recovery, involve less risk and are less expensive. Instead of a patient having to undergo open heart surgery, for example, a faulty heart valve can be replaced using a minimally invasive procedure. Through a small incision in the groin an artificial valve is maneuvered into the appropriate position using a catheter, again with the help of medical imaging technologies. We are also working on new minimally invasive methods to treat certain types of cancer using focused ultrasound.


Once the patient has been discharged from hospital it is important that they receive effective after-care at home. In the after-care phase for a patient who has had a heart operation it is important, for example, to monitor the concentration of blood thinners in the body. Nowadays this can be done remotely via a ‘telemonitoring’ device. Other vital parameters for cardiac patients can also be monitored remotely with the help of new technology. Effective care at home helps to reduce the number of re-admissions to hospital, which is better not only for the cardiac patient but also for our healthcare system.


Unfortunately, the existing solutions are not yet being applied widely enough. There are a lot of pilots, but solutions are not being implemented on a large scale. In many cases this is due to the way in which we have organized the healthcare system. Everyone knows that there are a lot of different stakeholders in healthcare: patients, physicians, specialists, nursing staff, hospitals, insurers, the pharmaceutical industry, suppliers of medical systems.... They each have their own interests within the system. We need to ensure that these individual interests are aligned with the general aim for society: good-quality affordable healthcare with a human touch. In other words: maximum efficiency and effectiveness in terms of the care cycle as a whole. The right incentives are needed to ensure this.


We need to reward hospitals if they successfully invest in quality improvement and cost savings. Our system of diagnosis/treatment combinations − and our plans to simplify them − are already a step in the right direction, particularly when it comes to promoting efficiency and transparency. But investment in innovation will only reach the patient faster if hospitals are rewarded on the basis of results.


Paradoxically, in many countries hospitals benefit financially if a patient has to be re-admitted to hospital shortly after being discharged, although the effect of this on healthcare is actually detrimental − and expensive. It is estimated that in the US alone 8 billion dollars a year could be saved on preventable re-admissions of cardiac patients by choosing the time of discharge more carefully and providing effective after-care at home. This is why in the US they are setting up accountable care organizations, which will have overall responsibility for the care provided to the patient, both in the hospital and at home. There are also plans to fine hospitals in which the number of re-admissions exceeds a certain limit. 


Today's impressive technology is the result of yesterday's hard work − work in research and development. We must not allow this flow of new products and services dry up. At Philips we are strongly focused on innovation.


Even in these times of economic uncertainty we want to develop meaningful, customer-centric products and bring them to market. In our three sectors − Healthcare, Consumer Lifestyle and Lighting − we are spending an extra 200 million euros a year, that's in addition to the one and a half billion euros we already spend on R&D each year.


Because speed is so important, I want to improve the entire innovation process at Philips. In order for innovation to succeed, the entire chain needs to function effectively: research, intellectual property, product development, manufacturing, marketing, sales and service. We want to be faster and more entrepreneurial, as this is exactly how we can innovate more successfully.


We frequently join forces with other parties, such as university hospitals, knowledge institutes, large and small companies, government. It is inspiring to work together with others, especially when each partner is pushing the limits of their own ability. A good example is the new and minimally invasive intervention technologies I mentioned earlier. We could not have developed these technologies without working together with other companies, knowledge institutes and hospitals in various countries.


Our cooperation also extends to other stakeholders. After all, when developing new solutions we need to know at the earliest possible stage which products and services are going to really help patients and healthcare professionals. In our vision the focus is on people, not equipment, and we can only develop this vision in conjunction with patients and healthcare professionals.


The exact role played by Philips in this process will vary according to the field of research and the country in question. In the Netherlands the care provider, the healthcare insurer, and the patient as the end-user are in joint control of innovation in healthcare. We are here to facilitate this for example through the Zorg Binnen Bereik Foundation, which addresses innovation in the care provided to people with a chronic illness at home.


Companies must have the courage to take an entrepreneurial approach to innovation. When carrying out joint research they need to act like reliable partners who are in it for the long term. What can universities and the government do to promote innovation?


I believe that the best way to excel in research and innovation is for the universities to specialize themselves. A lot of fundamental academic research that is carried out in the Netherlands is of the highest level, but there is still plenty of room for improvement in the way we translate new academic knowledge into commercially viable products.


Innovation would also benefit from universities working together with companies on applied research. That too can be scientifically very challenging. In China we work together with universities on product concept development. We also want to pursue these kinds of partnership projects in Europe, but it takes two to tango.


The government can help to promote innovation in the input, throughput and output phases. With regard to input, I am referring to public investment in the knowledge institutes and support for the endeavors of private companies. Efficiency is the key to achieving a higher throughput, for example by means of public-private partnerships. I fully support Minister Verhagen when, in his recent letter to industry ('Bedrijfslevenbrief'), he appeals for us to work together more intensively. Philips is actively collaborating with knowledge institutes and other stakeholders to draw up innovation contracts.


In the output phase there are two clear roles for the government. Firstly, thanks to its huge purchasing power, the government is capable of really boosting demand for innovative products and services. The success of a lot of innovation depends wholly on the existence of an important ‘launching customer’. The government is ideally positioned to take on this role as the first major client. I am therefore delighted that the cabinet plans to spend 2.5% of the entire government's purchasing budget on innovation-related purchases. And 2.5% means more than one and a half billion euros, so that really will make a difference. Secondly, the government could remove all sorts of barriers that hamper the implementation of innovative new solutions.


I am also very pleased with the government's announcement that our Dutch innovation policy needs to tie in with the European agenda. I am a member of the steering committee of the European Innovation Platform for ‘Active & Healthy Ageing’. This is the ideal forum for working with all relevant stakeholders to develop an overall response to the healthcare challenge in Europe. The aim is to extend the average healthy lifetime in Europe by two years by 2020. The more we in Europe align our efforts to promote innovation and to strengthen the healthcare sector, the better. Innovation across borders, and particularly geographical borders, is very beneficial.


Philips is one of the most active companies in the Seventh European Framework Programme for research, and we are already actively involved in discussions about the set-up of its successor after 2013, Horizon 2020. These programs are successful, but we are calling for a simpler set-up. Too many rules and conditions make it very difficult for small companies to find their way and to get involved with the necessary enthusiasm. Fortunately the people in Brussels are working hard to address this problem. It is also good that Horizon 2020 will probably have a very strong focus on the major challenges in society, which include health and ageing.

Ladies and gentlemen,
the importance of innovation for Europe and the Netherlands cannot be overstated. Innovation can deliver growth and competitive strength for Europe. The Netherlands must play a guiding, pioneering role in this. As a small country with an open economy, the Netherlands needs to actively engage with Brussels to create a strong, innovative, entrepreneurial, open and more integrated Europe. That is where the future lies for us as Dutch citizens and as Europeans.


Yesterday, during the EU talks in Brussels on the debt crisis, small steps forward were finally taken. Yet, there is still much to do and it is important that we continue to address these issues. We must continue to invest and innovate ourselves out of the current crisis. By taking specific action to promote innovation we can reduce our government's budgetary deficits. This is certainly true for healthcare: more innovation means better quality and greater efficiency, and therefore better cost control. So let us embrace innovation in healthcare by working on the basis of the entire care cycle and working together more effectively; by organizing our healthcare efficiently and giving a change to the solutions of today and tomorrow. In other words, by addressing the challenge of ageing in an inspired and entrepreneurial way.


I thank you for your attention.


Click here to read the Dutch version of the speech