CVS Health’s proposed purchase of Aetna and UnitedHealth Group’s plan to buy DaVita’s primary care units could bring a sea change for healthcare delivery. They are two examples of the corporatization of healthcare delivery and the broader evolution of the healthcare landscape that’s currently under way. In addition to securing the position of immediate care facilities and pharmacies as first-line healthcare providers—which is expected to continue to reframe the healthcare delivery model as we know it—these deals would affect all corners of the healthcare ecosystem in areas from data and analytics to drug pricing and pharmaceutical customer influence.
Local healthcare delivery paradigms aren’t new. In fact, immediate care centers have become a staple throughout the U.S., and Kaiser Permanente has a fleet of mobile health vehicles that provide care to underserved communities. The Aetna acquisition would reinforce this industry shift toward engaging patients in the community to more effectively treat chronic diseases, proactively reduce unnecessary ER visits and directly affect population health. Moreover, the new healthcare delivery structure will draw patients away from the cornerstone of care in our country: the hospital.
This trend is popping up across the healthcare ecosystem, and providers themselves are pursuing a similar strategy. For example, Intermountain Healthcare announced plans to restructure its care delivery model by expanding its local-level offerings and managing its business models differently, a move that could have far-reaching effects on everything from strategy to skill-related decisions.
Beyond their impact on community care, these new partnerships would establish more leverage in pharmaceutical price negotiations, as higher internal transparency would make the net price visible across Aetna, CVS and its payer customers including Anthem (unless that arrangement will need to be modified). By uniting medical and pharmacy benefits and tracking the total impact on medical costs, it would be possible to consider a drug’s value and its cost. This would enable an increase in value-based contracting between pharma and the insurer, as opposed to the practice of flat rebating.
CVS’s purchase of Aetna would create a new consolidated data source—not to mention a more accurate picture of patients’ overall health and consumption behaviors. Point-of-sale data collected through CVS’s ExtraCare rewards card program could be combined with Aetna’s patient claims to enable healthcare interventions in the store. As more patients become accustomed to having their healthcare needs addressed in a retail setting, the mindset will shift from, “I seek treatment when I’m sick,” to, “I can stay consistently engaged in health maintenance.”
How CVS and UnitedHealth plan to pursue their new strategies (and, ultimately, be reimbursed for the tactics) remains uncertain. Between antitrust regulations and CVS’s previously inked deal with Aetna-rival Anthem, any number of issues could drive a fatal wedge in the pharmacy giant’s deal with Aetna. Regardless, the need to communicate product value to fewer but more complex corporate channels—each with their own business needs and goals—has become a reality. As such, it’s time for pharma to reexamine its commercial strategy. Here are five areas that pharma companies should consider transforming in the face of the pending changes to healthcare delivery:
- Use customer insights to transform your business model. Pharma companies need to learn how to gather customer insights that can become “value adds” to their customers’ businesses, and then to translate those customer insights into new above-brand services and offerings. Better customer insights will enable more effective investment and portfolio strategy decisions, and allow pharma companies to co-create with their customers by better understanding their businesses.
- Align your portfolio strategy with new models of care. It remains to be seen how pharmaceutical companies should respond to the introduction of new care models. For example, given this new corporate/franchise model of population healthcare, how do pharma companies adjust their portfolios to engage patients in both sickness and wellness?
- Develop your B-to-B selling capabilities. Pharma companies need to focus on establishing the capability to engage large corporations in a B-to-B fashion to better understand their needs and goals. Individual community care centers will not have decision-making ability. Instead, these corporate entities will evaluate their needs as an integrated company. Until we know how decisions will be made in a national healthcare chain, pharma companies should redefine their information needs as well as their ability to gather and store customer insights.
- Expand your customer engagement strategy to include large corporations. Pharma companies need to prepare their commercial resources to engage large corporate channels in a coordinated, customer-centric fashion. One thing to consider is whether CVS/Aetna, UHC/DaVita and other national-level deals have the same impact on every local healthcare market across the U.S.
- Transform your distribution and contracting strategy. As the distribution channels potentially become more concentrated, it will be critical for pharma to adjust its partner choices to ensure access to evolving key markets. To do so, companies need to assess whether their contracting strategy enhances their competitive position and is equipped to handle the potential increase in pricing transparency.
Recent moves to consolidate across the industry indicate that healthcare is being corporatized and franchised, which means that decision-making is being concentrated and automated. To match the changes happening in healthcare delivery, pharma companies need to evaluate every aspect of their commercial strategy. Companies that adjust their strategies now, instead of waiting for another potential merger between customer stakeholders to hit the newswire, will secure a strong foothold in this new era of localized healthcare.