Joe Stevens co-wrote this blog post with Matt Ruple.
Our life sciences clients often ask, “How can we create mutual value for large, organized customers and ourselves?” While this sounds like a simple question, it masks a number of challenges. In previous posts we discussed how IDNs try to create mutual value, but ultimately elevate one key management goal as their top organizational priority. Frequently, these management goals transform from ideas to action at the service line level, where various departments within an IDN then express therapeutic area level needs. For example, a large IDN taking capitated payments for some of its population may track total cost of care across specialty drugs in oncology and rheumatology, while in cardiology, the focus may be on transition of care and discharge protocols to reduce readmissions.
Here’s how a pharmaceutical or medical device manufacturer can find successful partnership opportunities and create value for customers and themselves:
Figure 1: Creating and delivering value
The first step is understanding the priorities and needs of IDNs at both the macro level and the service line level, for each service line that aligns with your product portfolio. At this point, a strengths and gaps assessment is crucial to determine how well your products or services address these needs.
While it’s usually too late for life sciences manufacturers to change the product once it’s reached the market, with these needs identified, you can both refine the communication of your product’s value and generate new offerings and solutions that enhance strengths and cover gaps. This can significantly improve how your customers view you as a partner. As one pharmacy director at a large IDN recently told us, “We believe in long-term relationships, not transactional ones where you just buy a product. [For] the companies that work with us, we remember [our partnerships] when their products come up for review in the pharmacy and therapeutics committee.” Offerings should be built from areas where life science companies have capabilities distinct from IDNs. Traditionally IDNs have scale in geography, while life sciences companies have scale in disease areas. Best-in-class value added services use life sciences’ disease area expertise to address IDN needs.
To effectively engage, you must deliver value that aligns with IDNs’ focus and needs, such as financial strength, clinical excellence or patient experience. Being all things to all people, or worse, not being clear to anyone, not only frustrates your customers but also your customer-facing teams. For example, in a financially focused health system operating in a fee-for-service environment, offering total cost of care resources or a value-based contracting tools would likely fall flat.
Here are examples of the types of programs that align to the prioritized strategic intent of the IDN.
Table 1: Examples of programs of interest by IDN type
Implementing these programs should be done with a “start first, then scale” approach. The best partnerships start with a few strategic, closely partnered accounts that are motivated to invest their own time and energy in making the program a success. Once they’re mature, they can be scaled to a broader set of targets.
Finally, it’s important to measure the impact of our partnerships and programs, but that requires a change in the way of thinking from how we usually measure commercial activity. We have all become accustomed to metrics like ROI or market share, but these are all lagging indicators that may take years to gauge programs’ success. By the time we see impact on market share, for example, it may be too late to take corrective action. For example, one IDN pharmacy director recently said, “Manufacturers reach out to us to get the feel if something like that [a value based partnership] is beneficial or of interest. We ask questions to get at how it would work and often don't hear back from them.” It is unlikely the manufacturers he referenced will ever see any ROI from those offerings, but will the sponsor of those initiatives realize quickly enough that their offerings don’t resonate?
The best approach involves first identifying a series of leading indicators that can give us feedback quickly (for example, customer satisfaction or program enrollments). We should also identify shared outcomes that can be used to communicate progress of the program to both parties. For example, we might look at total patients diagnosed for a diagnosis program, or adoption rates for a new care protocol for an education program. The exact metric will differ greatly by partnership, but the key is that the shared outcome is recognized as value by both parties. If we have selected the right leading indicators and shared outcomes, we can be confident that our lagging indicators like ROI will be present when we arrive at a point where it can be measured.
It’s easy to create an IDN partnership that creates value for one party but often challenging to craft one that delivers value for both the provider and the manufacturer at the same time. Succeeding requires a structured process to develop, implement and refine programs that enhance the value of our products and bring unique value to our customers and patients.
For more, attend Joe Stevens’ presentation, “Why IDNs Have Become an Important Customer for Pharma, and How You Can Engage Them Effectively,” at the ZS Impact Summit in Chicago Oct. 14-16, or contact Matt Ruple or Joe Stevens.