By Cindy Lorah
Recently, the Health Care UST MBA at the University of St. Thomas convened a discussion on the changing landscape of purchasing decisions as care delivery systems evolve to value-based, population models such as ACO’s. This event was part of the MN Chapter of the American Marketing Association’s Health Care Special Interest Group series. The panel included:
- LeAnn R. Born, vice president – supply chain, Fairview Health Services
- Pat Courneya, M.D., health plan medical director, HealthPartners
- Steve Swanson, M.D., president, John Nasseff Neuroscience Institute, Allina Health
- Moderated by Mark Morse, principal, MORSEKODE agency.
The program provided a valuable perspective for medical products organizations struggling to understand the new reality and its implications for their market and development strategies. The conversation broadly addressed three questions:
- What are the characteristics of the new reality?
- Who will be the key influencers in purchasing decisions?
- How can suppliers effectively demonstrate value and thrive in the new decision-making environment?
What are the characteristics of the new reality?
- Focus on the Triple Aim. Work to 1) maximize the health of the population, 2) improve patient experience, and 3) do so at a lower cost. This focus has implications for all sectors of health care.
- Evidence and transparency. As providers get more comfortable with measures, they are demanding it from their partners as well. In this part of the country, there’s a clear goal of seamlessly blending health records and claim records to support data-driven decision making throughout the system.
- Total cost of care. Focus on maximizing value throughout the continuum of care, which is broadening to include population health starting with prevention (when possible), incorporating chronic disease management, reduced hospitalizations, home health, etc…all the way through end-of-life care. MN Community Measurement is now moving forward with a Total Cost of Care measure to provide transparent ways to compare full episodes of care across provider systems.
- Wellness and prevention. Throughout the industry, there is a shift from an interventional message to a wellness and prevention message. When there is conflicting data, which do you trust? Many stakeholders are looking for ways to develop authenticity and connect all sources of patients’ health information & influence.
- Experimentation and uncertainty: Provider organizations are struggling with how to move away from fee-for-service models to value-based models, incorporating shared savings, care delivery model innovation, new partnerships and new value propositions. Most are still being paid in large part as fee-for-service and being held accountable to historic profitability measures. Former profit centers will quickly become cost centers if they don’t adapt quickly to their evolving payment structures.
Who will be the key influencers in purchasing decisions?
- In health care systems, those with the data to understand quality outcomes and long-term value will be key influencers. Integrating EHR data, plan information, and spend information to make better decisions is the goal. Specific decisions will depend on the type of product:
- When purchasing commodities, systems will no longer automatically buy from group purchasing contract lists, but will evaluate the data for best long-term value.
- Specialized decisions are (or will soon be) no longer made solely by physicians, but will be influenced by quality committees, data analysts, supply chain departments, professional associations, etc. One of most powerful tools is doing doctor to doctor comparisons showing best practice outcomes within an organization and across a profession.
- New products. It is very hard to prove with data that a new technology is really worth the increased cost. Triple Aim considerations must be built into the entire design and development process, but at this point most systems can only assess short- to mid-term economic impact.
- Patients are increasingly influencing treatment decisions. In Minnesota, approximately 30% of health plans are high deductible, so patients are demanding more information about options, cost, quality, and outcomes. “Shared decision making” between patients and clinicians that takes into account the patient’s personal health goals and focuses on better educating patients about what will truly lead to better outcomes has shown that patients make more conservative, less expensive decisions, with more satisfaction and faster recovery because they are engaged and have buy-in to the decisions and outcomes. New players (such as Consumer Reports) and new technologies are creating tools similar to those found in other industries to educate consumers.
- Employers are demanding value for their employees to hold down premiums and promote a healthy, productive workforce.
- Government continues to be a big decision maker, controlling Medicare and Medicaid reimbursement.
How can suppliers effectively demonstrate value and thrive in the new decision-making environment?
- FDA approval is not enough – it is a very low bar from a reimbursement perspective. From the outset, Triple Aim objectives must guide product design to address not just that it works, but that it’s necessary and adds value to the system.
- Flexible strategies. Manufacturers need to create strategies that are flexible enough to address global market differences. This region is very data-driven, but each region of the country and the world will have different needs and expectations.
- Long-term vs. short-term economic impact is still difficult for payers and providers to assess. Most in this region are currently looking at “mid-term” impact. They are looking beyond an episode of care (such as a single surgical procedure) to total cost of care a few months to a year out, including infection rates, hospital readmission rates, etc. Long-term costs are still hard to measure. Data analytics are not where they need to be and there is a lot of mobility in the system, so longitudinal data is hard to track. Kaiser Permanente has been doing this for long enough that they are now demonstrating effective life cycle value analysis. This is the long-term goal and the more expensive the treatment, the more it will be looked at. Well-organized groups will be able to see what products / treatments are really working. From a marketing perspective, partnering on this on-going analysis to help create valuable long-term data will be important.
- Support transition to new payment models. The current transition between traditional fee-for-service payment models and evolving value-based models is difficult for the operational leaders of hospitals and specialty practices. Budgetary responsibilities still lead to misaligned incentives. For example, oncology groups earn a lot of their profit administering oncology drugs. HealthPartners’ health plan is now off-setting the differential, so groups are not incented to prescribe higher margin drugs. US Oncology is opening up their best practice guidelines to support value-based decision making.
- Comparative effectiveness. Often new products have incremental benefits for a subset of a population. Suppliers can add value by helping providers understand how to best match alternatives to realize the best advantage for each population.
Take away: No one will be able to sell anything without the data to show value and support of the Triple Aim.