Joe Stevens, Jude Konzelmann and Jaideep Bajaj co-wrote this blog post with Paul Darling.
Becker’s Hospital Review’s ninth-annual meeting in Chicago earlier this month left us with several aha moments, but if we boil it all down into one actionable insight, it’s to focus on customer and patient centricity.
Several hundred hospital and health system executives gathered to talk about healthcare’s hottest topics ranging from value-based care and population health to patient safety and quality, revenue cycle management and health IT. The one common thread knitting one session to the next was that hospitals’ traditional healthcare models are being disrupted. We’re seeing pharmacies take direct aim at the U.S. primary care model, with the number of retail clinics increasing tenfold to about 2,800 during an eleven-year period. We’re watching the rise of remote monitoring and diagnostics through digital health solutions like telemedicine, with investments on the digital health front expected to grow 3 to 40% in the next five years.
In between discussions of how to assess and manage population health and how telemedicine is well suited to improve quality of care while lowering costs, the presenters pointed to a widening trust gap between hospital networks and pharma manufacturers. Their message was clear: Figure out how to weave the customer’s needs into every service, product and program that you roll out. Here are a few observations that we made at the conference:
- Maximize value during telemedicine encounters. Hospitals are making deeper investments in virtual and telehealth technologies to meet patient demands for affordable and convenient care while hoping to give their own bottom lines a boost. But as a few IDN-led presentations revealed, the payer reimbursement piece isn’t perfect for telemedicine, but it’s showing signs of progress. Payers are reportedly reimbursing some IDNs at about $25 per telehealth visit versus about $90 for a standard visit. The discrepancy in payment for the two types of services means that providers will be looking to design telehealth programs that deliver on the quality front while keeping costs down.
- There’s a need for pharma companies to align with hospital providers as they adopt more digital health solutions. To optimize the relationship between patients and providers who are unable to be in the same room, manufacturers could provide easy-to-administer drugs that require little to no monitoring, accompanied by supporting services that simplify the process for patients.
- Encourage the transition to a value-based system. Inevitably, the need to shed the old fee-for-service system in favor of one that rewards healthcare encounters that demonstrate value came up in many of the presentations. But the slower-than-expected transition has left those at the hospital network helm with a lot of questions, mainly about how to structure the payment contracts. Adding to that burden, hospital administrators are struggling with how to motivate and incentivize physicians to help with the transition—particularly against the backdrop of today’s very real struggle to manage physician burnout.
- Acknowledging the merits of the pay-for-performance model, health plans are beginning to extend value-based contracts beyond ACOs and PCMHs. For network providers unfamiliar with this new territory, negotiations can be long and grueling, and a resolution that works for both parties may seem out of reach. This is good news for pharma companies that have already begun exploring value-based contracts with payers, and therefore could lend their experience in how to partner with other stakeholders to improve value. There may be a real angle in helping providers (both systems and hospitals) to really become customer-centric and to begin to view patients as customers that matter. Additionally, techniques like segmentation could be introduced to better address the varying population needs.
- Reinforce population health management initiatives. Population health was unsurprisingly a hot topic at the conference, but many of the discussions centered on social welfare challenges such as accessing transportation, healthy food and safe shelter rather than on the big-picture aspect of innovating the preventive care model. With psychological disorders being the one (niche) exception, chronic disease management discussions focused on medication adherence and basic lifestyle changes but seemed to fall short of discussing innovative solutions for partnering with other stakeholders to study entire populations in the name of disease prevention.
- Building capabilities around population health goes hand in hand with moving to value-based payment models, which are designed to incentivize hospitals for keeping patients healthy. To align with the industry’s new population health push, pharma companies could design programs that support hospital providers’ objective of minimizing hospital visits by offering education and services that boost medication adherence rates. To take it a step further, there’s also an opportunity for pharma companies to evolve their portfolios beyond “discover and treat” offerings to include more preventive care offerings, a move that would reflect the healthcare industry’s recent health and wellness focus.
- Hospitals fear disruption by other players in the new healthcare ecosystem. Several presentations touched on the need to protect the hospital business model as more disruptive startups and app-based services angle for a piece of the rapidly changing healthcare industry. Instead of making additional investment in large, fixed capital like buildings, hospitals reported an increased interest in more high-tech services and finding innovative solutions to where care is provided and by whom. As hospital provider networks continue to incorporate more technological solutions, the facilities and services under their jurisdiction will become more widespread. For one, the in-home hospitalization model continues to gain traction, and studies show that caring for acute patients at home reduces costs by 30%. And as an added bonus, fewer hospitalizations means that there’s less need for a high-cost asset that depreciates rapidly: infrastructure.
- With the advent of new technologies, hospitals can expand their reach with the use of mobile X-rays, MRIs and other formerly hospital-based technologies. By providing these services to patients in their homes, nursing homes and assisted living facilities, the hospital provider incurs lower costs and doesn’t need to provide the infrastructure to administer the test. But it also means that a new governance model will be needed to manage the various components that accompany care delivery outside of a hospital’s four walls. How can pharma companies not only acknowledge what these new delivery models mean for the hospital network, but also devise a way to lift some of the burden?
The hope is that these changes will bring us one step closer to solving some of healthcare’s longest-standing problems, such as improving access to healthcare in rural settings, reversing the trajectory of medication adherence rates and getting a handle on rising costs. But these changes also underscore the need for pharma companies to pay attention to the transformations that their customers are undergoing. In looking ahead to next year’s Becker’s Hospital Review conference, we hope to hear stories that highlight productive, cross-industry collaborations and demonstrate a united front in this rapidly changing healthcare environment.