This post is part of a series analyzing the impact of the changing healthcare landscape on the pharmaceutical industry. In our examination of healthcare stakeholder dynamics, it is important to analyze the trend toward consolidation.
The primary catalyst driving consolidation is the expansion of Clinically Integrated Networks (CINs). Optimal patient management throughout the care continuum is a critical success factor in value-based care delivery. CINs help improve patient-centricity and reduce costs through the development of a team of primary care and specialty physicians who actively participate in a streamlined care delivery model. Consolidation is essential to the development and expansion of CINs throughout the country.
The growth of the 340B Drug Pricing Program is another important factor in consolidation.
In 1992, Congress created the 340B Program to help vulnerable or uninsured patients gain access to necessary prescription medicines. Over the past two decades, the program has strayed from its core mission, as many hospitals have been “gaming the system.” Hospital systems are now aggressively expanding the program’s footprint, utilizing 340B to maximize profits.
The growth of 340B is staggering. In 2003, the total cost of drug discounts driven by the 340B Program was approximately $1 billion. By 2010, that number had skyrocketed to $6 billion per year, with a third of all US hospitals participating in the program. Program costs were originally projected to reach $12 billion in 2016, but that estimate was surpassed in 2015 with costs reaching $12.6 billion. Although legislators have identified course correction for 340B as a priority, the trend toward acquisition and consolidation continues.
Consolidation is often a messy process.
Most healthcare systems do not address redundancy issues, and very often, their operations are not streamlined. There are two notable organizational implications. First, most decision makers in key customer organizations are experiencing a huge increase in responsibility, and a merger just doubles their workload! Additionally, consolidation leads to a much more complex clinical footprint. A clinically integrated network may now have to navigate through multiple layers to make a formulary decision, and it often requires a number of different steps to operationalize any change at the health-system level.
These massive changes within customer organizations call for a recalibration of “optimal engagement.” As mentioned in our previous post, account planning is crucial. Because these ever-expanding clinical footprints are varied, the utility of customer archetyping has been minimized.
Proper planning must occur at the customer level.
There are a number of steps that should be taken before customer engagement commences. Account managers should have a current and thorough understanding of the customer’s organizational structure. This includes knowing the key influencers as well as understanding their strategic priorities relative to healthcare innovation. While population health management, patient engagement, and the patient experience are key components of healthcare reform, few health systems are addressing all of these elements simultaneously. Effective customer engagement will be dependent upon a fluid understanding of this prioritization.