Paul Darling co-authored this blog post with Joe Stevens.
Physicians continue to trade in the keys to their private practices in exchange for employee badges within large provider systems. Integrated delivery networks have become major players in healthcare delivery, and pharmaceutical and medical device companies are working hard to tailor their commercial approaches to suit these increasingly complex and diverse stakeholders, which is proving to be quite the challenge. As one industry executive recently told me, “If you know one IDN, you know one IDN.”
While IDNs are anything but uniform, there’s consistency in the goals that most IDNs care about—yet there’s inconsistency in which goals they prioritize. That should come as no surprise to our life sciences readers, but that knowledge largely has been based on experience. Now we’ve collected the data to prove it.
My colleagues and I recently fielded our new Provider Organization Partnership Tracker survey, reaching out to 89 vice presidents and directors within 67 IDNs across the U.S. to find out how IDNs define their strategic goals and how these goals impact business decisions, and what partnership opportunities exist for life sciences companies to help IDNs achieve those goals. One macro-level insight emerged from our work, which also has been noted in a recent article in The Economist: Many IDNs are working to replicate corporate operating models and methods used in other industries to support the standardization of systems and processes, ultimately simplifying healthcare delivery by increasing its efficiency and effectiveness.
A standardized approach to healthcare delivery creates new opportunities for life sciences companies to partner with IDNs and provide value to both individual physicians and organizations as a whole. Based on our survey, there are four common goals that can serve as conduits for manufacturers and suppliers to align effectively with their IDN partners, once they determine how each IDN partner prioritizes each goal:
1. Provide high-quality care and improve patient outcomes. Medical errors aren’t simply the result of bad providers, but rather poor systems and work processes. Standardization can help hospitals reduce medical errors (and liability) and improve profitability. In fact, 78% of our quality-focused respondents have implemented pathways and guidelines to address the challenges of healthcare delivery.
While this approach can risk fostering a “winner take all” environment via exclusive supplier arrangements within each hospital, life sciences companies can find success by demonstrating that their products serve the needs of both the IDN and its patients. We all expect clinical benefit for individual patients, but IDNs also want to see benefits for populations and their own finances.
2. Reduce the cost of care delivery. Interestingly, our survey results suggest that there’s no single preferred tactic to reduce costs, which may be due to the high variability in root causes. One clear theme is that cost-focused IDNs find that implementing ways to control operational and staff expenses is more beneficial than controlling other costs, like medications. In fact, we found that just 9% of IDNs who focus on costs believe that implementing restrictive protocols to drive the appropriate use of medications is the best tactic. This makes sense, as the price of a drug isn’t the only cost that an IDN incurs from pharmaceutical usage.
The need for today’s provider to be familiar with more than 1,000 drugs (not to mention the ins and outs of reimbursement for each), for example, can affect productivity. Some IDNs use EMR systems to lift the burden and to steer provider behaviors. By configuring EMRs with preferred agents as the default choice, physicians make fewer mistakes in prescribing medications to patients. This creates an opportunity for pharma and medtech companies to work with EMR vendors to streamline physicians’ processes for entering codes, and to communicate with IDNs on how best to help navigate EMR systems. In fact, respondents to our survey ranked EMR assistance from pharma companies fourth out of 18 choices in terms of the potential value that pharma companies can bring in their partnerships with IDNs.
3. Boost revenue. IDNs that are focused on revenue seek to leverage their market size in negotiations, something familiar to any corporation. (Our survey suggests that this is a favored tactic of 61% of revenue-focused IDNs.) Too often, IDNs perceive pharma’s interests to be focused solely on selling drugs, which they see as fundamentally misaligned with their own strategic goals. As a result, pharma companies often are seen as adversaries at the negotiating table, instead of as potential partners. One vice president of operations at a New-York-based hospital system told us during a post-survey interview that, “If the pharmaceutical companies remain in touch with what our mission and goals and problems and objectives and barriers are, then I think they’ll be on the same journey.”
To overcome the risk of losing access, one approach for suppliers is to demonstrate how their products can provide value to an organization’s bottom line. This starts with developing an IDN-specific understanding of the organization’s goals and then communicating how the products could reduce complications and readmissions, thereby increasing the number of value-based reimbursements.
4. Improve the patient experience and satisfaction. IDNs are focused on the patient experience particularly because it’s directly tied to Medicare reimbursements. Moreover, the survey results revealed that patient satisfaction can be a proxy for quality. Standardization could bring changes to many operational areas throughout an IDN organization, including reduced wait times, better communication with providers, enhanced patient education, and dedicated teams focused on improving the patient experience. Behavioral science research indicates that “nudging” works to change provider behaviors. A similar “nudge” approach could shape the patient experience by framing choices or providing default choices on the IDN’s website and on patient forms.
This creates an opportunity for IDN partners to assist in standardizing processes for patients in a given therapy area—for example, by offering simple prepopulated forms, back-office support or streamlined pathways. Prefilled forms reportedly have been shown to increase providers’ referrals to cardiac centers from 15 to 85%.
The word “standardization” itself sounds soulless, but the outcomes of standardization can be anything but. And life sciences companies can benefit from IDNs’ focus on standardization too, as long as they know where to focus. Stay tuned. We’ll be sharing more data soon to help drive your IDN strategy.