Over the last decade, healthcare providers have been consolidating at breakneck pace. A variety of factors have fueled the rise of so-called health systems (also known in various permutations as integrated delivery networks, accountable care organizations, hospital systems, and more) rising costs, competitive forces, and the advance of regulation like the Affordable Care Act, just to name a few. Health systems deliver economies of scale, cost controls, shared liability, and a more optimal way in general of handling the business and regulatory demands faced by today’s providers in the United States’ mixed system of public and private payers, where over a third of Americans receive care through Medicare, Medicaid, and the Veterans Administration.
Many Shapes and Sizes
Health systems come in many shapes and sizes. Some are as simple as physician practice supergroups like LeBauer Healthcare in North Carolina’s Piedmont Triad region of North Carolina, where practice groups join forces to create even larger entities. Others like Altru Health System in Grand Forks, North Dakota, may have a hospital as the hub, with spokes consisting of ambulatory surgery centers, physician clinics, nursing homes, and specialty centers for treating diseases like cancer.
Still others take the form of super-systems like Baylor Scott & White Health of Texas, where dozens of hospitals and even more clinics and centers roll up to one managing entity. Some behemoths even straddle multiple state lines across multiple regions, like AdventHealth, which reaches from Colorado to Florida. Even more interesting, entities like UPMC Health, the system founded on the University of Pittsburgh’s center of excellence, is even a hybrid entity that provides care and offers its own health plan covering citizens in western Pennsylvania.
Out with the Old
Historically, companies in the life sciences (pharmaceuticals, biotechnology, medical devices, and diagnostics) have engaged with key opinion leaders (KOLs) to advance medical science and optimize their products. KOLs have predominantly resided in centers of excellence—magnets for patients, research, and clinical trials—usually attached to medical schools and teaching hospitals. Now, there are very few standalone centers of excellence, as they, too, have felt the same pressures as treating practices and local hospitals.
The vast majority of COEs now fall under the purview of larger health systems, often super-systems. For example, Johns Hopkins Hospital and School of Medicine, the two pillars of one of the East Coast’s preeminent centers of excellence, are now just two of many entities comprising the Johns Hopkins Health System Corporation.
Dispersion of Influence
The world of health systems poses specific engagement challenges to industry that transcend the normal obstacles of representatives having limited or denied access to healthcare professionals. Health systems can be quite complex. The influence or impact of KOLs can be diluted, especially in therapeutic areas like diabetes and pulmonary diseases, where providers see thousands of patients. Business operations may be centralized or decentralized, and HCPs may be employees, contractors, or both.
In the old KOL/center model, a single endocrinologist may have tremendous influence across an entire organization’s approach to diabetes care, based on her history of treating patients, performing research, publishing in scientific journals, and mentoring residents and fellows. In the new world of health systems, the endocrinology KOL may find her influence on closer-to-equal equal footing with HCPs—primary care physicians, internal medicine specialists, and allied health professionals—spread across a labyrinthine geographic footprint. And perhaps just as important, treatment decisions in health system frameworks will surely be measured against accountable care goals, value-based paradigms, and cost/benefit analysis.
Demanding a New Approach
Companies in the life sciences simply cannot approach the shapeshifting landscape of IDNs with the same old approach of medical science liaisons engaging with KOLs and sales representatives covering key treating physicians. Companies must also rethink the notion that one MSL and one rep can cover an entire entity, when consolidation upon consolidation is happening right before their very eyes. Yesterday’s standalone hospital is today’s centerpiece for a system including multiple care clinics, and tomorrow, that same hospital may be one of 20 in a mega-system.
We are now in a state of constant consolidation. There are a few health systems nationwide, ranging from the small and local to huge, multi-state entities that rival even government care organizations in their scope. So, what are biopharmaceutical, device, and diagnostics companies to do in response to their changing customer landscape?
First, you must know your customer. This isn’t as easy as it sounds, either. You need to know everything from who the KOLs are within a system to the flow of patients when referred across the system within a disease state. What’s important to that system? Does it struggle with quality of care measures? Or is it a leader in clinical research? MSLs can calibrate their outreach and engagement accordingly, depending on the answers to those questions.
Second, a one-size-fits-all approach doesn’t work. While one skilled MSL may be able to cover a regional hospital’s KOLs, flying solo in an entire health system with hundreds of potential key customers is beyond any single human’s capability. The new system framework demands teamwork and more boots on the ground.
Third, the approach must be multi-disciplinary. While MSLs are highly skilled at consulting with KOLs on advancements in the therapeutic area, very few, if any can stand on equal footing with IDN professionals focused on costs and economies of scale. While many companies have liaisons focused on government payors, health plans and pharmacy benefit managers, they rarely engage with finance professionals charged with balancing costs, driving efficiencies, and creating economies of scale when achievable.
Fourth, the account plan must be comprehensive. If you’re engaging only with KOLs, you’re just seeing the tip of the influence iceberg in a typical system. You must expand your customer list to include several sets of key stakeholders, including relevant treating, allied health professionals, medical directors, heads of nursing, and in many cases, even C-suiters in executive functions like finance. The reality is that while the old KOL-centered strategy relied on that individual’s sphere of influence, the new Wild West era ushered in by systems may see multiple spheres of influence and decision-making in a single health system.
Reorganize and Optimize
Currently, many companies take a binary organizational approach to provider engagement, with medical affairs liaisons and commercial representatives looking to achieve very different goals with their individual and institutional customers. Health systems may demand a third rail of engagement, with liaisons selected for disease state expertise and credentials, continuously cross-trained in health economics and outcomes research. While commercial reps must be held apart due to regulatory and ethics demands, they, too, can be cross-trained to be attuned to both medical and economic realities discussed with each engagement opportunity.
Another organizational approach may be relying on teams of professionals assigned to a system. For example, Emory Healthcare in Atlanta may require a team of MSLs—one each assigned to the medical school, the hospital, and related clinics—an appropriate number of commercial reps, and HEOR liaisons working on evidence-based strategies to drive success on an economic level with the organization, as their colleagues engage KOLs and other HCPs on areas like disease management and meeting quality standards.
Regardless of organizational approach, the focus of every health system relationship should be fueled as all good, functional relationships are, through mutual value creation. When companies take an old-world, KOL-centered approach into the new world of health systems, their representatives are ill-equipped to bring value to other stakeholders. The good news is that health systems stakeholders need the data, insights, and medical expertise on offer from their life sciences counterparts. It’s up to those in life sciences to seize upon this value opportunity
It’s a new day in American healthcare. Market forces and regulation, as with other business sectors historically, have converged to create a playing field where consolidation of some kind, be it practice groups merging or health systems forming multi-state megasystems, is the only way for providers to move forward profitably and be able to focus on providing care effectively. As companies in the life sciences seek to partner with their key customers, they must recognize that their customers have changed, and so have their needs. What was once a largely academic equation must now be weighed with economics. What was once solely seen through the lens of physician opinion must now be measured for value, not just to the patient, but to all stakeholders.
If companies want to be the partner of choice for their customers, they must engage with customers within every sphere of influence, identifying both individual and institutional needs, and then meeting them.
About the author
With over a decade of experience in consulting and client management, Brian serves as the liaison with our consulting, research, and accounting divisions. Brian consults with clients on cutting edge work centered on understanding customer sentiment and impact in digital/social media.