shutterstock_158342732.jpgMy colleagues and I recently have written about how pharmaceutical and medical products and services companies need to understand payers and provider systems in the context of their local healthcare markets when developing commercial strategies. An acute example of this dynamic are the integrated payer-provider networks (IPPNs), which comprise both a self-administered insurance plan and provider facilities. These networks have become increasingly popular across the United States, with healthcare provider organizations launching or acquiring insurance plans. 

The economics and incentives within IPPNs differ from those of an integrated delivery network (summarized in the chart below). Most importantly, they are unable to pass off higher costs to insurance companies by negotiating higher reimbursement rates. There is, however, a spectrum of IPPNs ranging from those like Kaiser that compete with commercial insurers to systems with a more targeted insurance offering, such as the Medicare Advantage plan offered by Mount Sinai in New York. Since monthly premiums cover both medical and pharmacy benefits for these patients, IPPNs have a strong incentive to manage individual physician prescribing behavior while IDNs do not. 

 

Integrated Payer-Provider Network (IPPN)

Integrated Delivery Network (IDN)

Business Model

Provides health insurance and medical services

Provides medical services

Reimbursement

Collects monthly premiums from customers and employers

Negotiates rates with independent health insurance companies

Pharmacy Benefits

Makes its own formulary decisions within the IPPN

Navigates formulary policies made by external payers

 

This influence over prescribing behavior will be most evident in systems where a high percentage of the patient volume is covered by the IPPN. For these systems, the in-house payer arm plays a strong role in the decision process for the entire health system. In contrast, health systems with a low volume of patients covered by the payer arm will have a decision process that resembles that of an IDN since most of the system’s patients will still have external commercial insurance.

To develop an effective approach for engaging IPPNs with a strong, influential payer arm, manufacturers should avoid simply building a siloed segmentation strategy that’s bolted onto the sales organization. These segmentation strategies focus on structural components of the accounts and lack a broader understanding of the local market, including the influence of other payers and providers that compete with the IPPNs. Similarly, these siloed strategies struggle to recruit the necessary talent and expertise from sales and managed markets to engage both payer and provider stakeholders within an IPPN in a coordinated fashion. 

Instead, a life sciences company can improve its IPPN engagement strategy by identifying the influence that each IPPN has in its local market, and customizing the value and experience that the life sciences organization therefore should deliver. 

First, identifying influential IPPNs begins by considering each health system within the dynamics of the local market. The most influential systems will both impact physician prescribing decisions and have a significant share of the payer or provider market relative to other systems. However, some IPPNs are more influential than their size would suggest because of their prestige and resulting ability to influence other payers and providers.

Second, pharmaceutical companies should continue looking beyond therapeutics and contracting, the traditional means of delivering value, and seek out ways to contribute to a customer’s overall goals. For example, a manufacturer could collaborate with an IPPN on a disease awareness campaign, creating a win-win service that can increase screening and adherence, and ultimately improve patient outcomes. IPPNs are likely to be some of the most receptive customers to these programs because they’re financial responsible for both medical and pharmacy spending.  


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Identifying these opportunities will require manufactures to understand the unique objectives of each IPPN as well as their decision processes, and that places an increased burden on the organizations to develop deeper customer insight through analytics, market research and field intelligence.

And these programs will be most successful if they’re supported by the appropriate sales and marketing roles, requiring a custom engagement strategy. For key IPPNs, a field team frequently will be led by an account manager to navigate complexity and create a positive customer experience. Given the influence of both physician and insurance stakeholders, manufactures can benefit from defining a sales process to help organize collaborative responsibilities between field roles from sales and managed markets. 

To see how all of this comes together, consider the Pittsburgh market, where two IPPNs—UPMC and Highmark—are fierce competitors. As they battle for customers, these systems may be more open than comparable IPPNs to promoting patient choice for pharmaceuticals and medical devices, and less willing to impose system-wide restrictions in order to reduce costs. As a result, value stories and programs that emphasize innovation and patient outcomes, rather than just low costs, may resonate with these accounts. Depending on the specific product, a team of nurse educators and sales reps led by a key account manager would be more suitable for these IPPNs than a traditional team of sales reps.         

The benefits of developing such a holistic engagement strategy for IPPNs extend beyond these specific customers. The continued consolidation and vertical integration of payers and providers means that local market conditions are evolving toward IPPN-like economics and incentives. Health systems will increasingly create commercial ACOs that employ the best practices of today’s IPPNs, such as establishing system-wide standards of care that increase the use of some products at the expense of others. In a world where payers and providers collaborate even if they aren’t part of the same institution, life sciences companies should be prepared to ensure that their products are the preferred choice.

 

Topics: segmentation, Paul Darling, engagement, IPPNs, integrated payer provider network