The rise of accountable care organizations (ACOs) across the country presents pharma, biotech and medical device companies with both a new challenge and a new opportunity. For starters, life science companies have to rethink their approach to dealing with customers that are now joining networks of healthcare providers to better coordinate care and reduce overall costs. But it also offers healthcare companies a chance to work with these organizations to better serve patients and deliver higher quality care.
“The pharmaceutical industry and ACOs have a real opportunity to work together to promote complete care for patients while achieving cost-effective goals that tie outcomes to the value of care provided,” explains Sybil Mead, Research Director, Government Payers at Health Strategies Group, a marketing intelligence and research firm serving the pharmaceutical and biotech industry. “Both stakeholders strive to address the health of a larger population while improving the care of individual ACO patients. The partners recognize that patients can move from one system to the next, but need to have uninterrupted care in order to improve health.”
There are already more than 600 ACOs nationwide, and according to Premier, Inc.’s 2013 Economic Outlook C-suite survey, hospital participation in ACOs is expected to double by the end of 2014 to 50%. One reason: The Affordable Care Act actually encourages healthcare providers to join ACOs by incentivizing their success. For example, the Medicare Shared Savings Program (MSSP) provides a financial reward to the participants in an ACO if they meet specific quality benchmarks, which are measured by things such as patient experience surveys, claims-based measures and participation in the Electronic Health Record (EHR) Incentive Program.
ACOs also take responsibility for a defined patient population and various disease states, such as diabetes or coronary artery disease, and are evaluated on their quality of care and ability to reduce costs. Medicare also offers the Pioneer Program for organizations that are already experienced in operating in a similar model to ACOs. However, if these ACOs fail to meet their benchmarks, then the participants are forced to pay a penalty.
“This is nothing short of a revolution in the U.S. healthcare landscape,” says Angeliki Cooney, Director at IMS Health, a global information and technology services company. “ACOs are tasked with providing patient care in a cost effective manner. As a result they have to engage with their local communities in ways they’ve never experienced before. ACOs need to develop a relationship of trust and loyalty with their patient populations to ensure they keep coming back to the same network for all their healthcare needs. Then and only then can ACOs truly monitor every patient longitudinally to track outcomes and treatment costs in order to intervene and continuously improve.”
And just as ACOs are refining their approach to providing care, healthcare companies must find new ways to engage these customers and better meet their needs. But first, companies must recognize that no two ACOs are necessarily the same. Not only does each ACO have its own structure, but each one can be comprised of a variety of different stakeholders including hospital systems, doctors, pharmacies, private insurers and more. They also each have their own benchmarks and quality measures that must be met.
There is an old adage in the medical device industry, “When you’ve seen one hospital, you’ve seen one hospital,” explains Melissa A. Lowe, Director, Medical Education and Training, U.S. Extremity Fixation at Orthofix, a global medical device company focused on reconstructive and regenerative orthopedic and spine solutions. The same holds true for ACOs.
Unfortunately, for life science companies that means there is no one-size-fits-all approach to dealing with ACOs. But fortunately for our readers, industry experts and ACO executives have provided tips for what to know about an ACO before you even approach it, how to structure your sales and marketing strategy, how the industry can collaborate with ACOs and what the future holds.
What to Know About An ACO Before You Approach
“Do your homework, be prepared, know your ACO before your appointment,” says Clara Anne Spencer, Director of Pharmacy Contracting at Carilion Clinic, which is a part of a MSSP ACO called Doctors Connected. “Definitely know what our focus is, what diseases we have prioritized in our ACO development, and then try to find ways that you can help. Look to determine how resources can be better coordinated between the ACO and industry and show improved patient outcomes.”
Here is just some of the background you should learn about an ACO before even deciding to take a meeting:
1. Know Their Disease States: “What’s really important is where the pharmaceutical’s drug or device overlaps with a priority area for the ACO,” explains Anthony D. Slonim, MD, DrPH, CPE, FACPE, who is the Executive Director of both Barnabas Health ACO-North and Central Jersey ACO as well as the Executive Vice President and Chief Medical Officer of Barnabas Health. “For example, we are focused on managing diabetic patients, heart failure patients, coronary artery disease patients and hypertension patients—and that’s where the pharmaceutical companies can help us.”
However, Dr. Slonim says that it is not unusual for a pharmaceutical company that makes oncology products to come in looking to partner with the ACO. But since that isn’t one of their targeted diagnoses or conditions he is not interested in having that conversation.
2. Understand Their Goals: Lowe says that you want to be able to “talk their talk” in order to even get your product in the door. The industry representative needs to be able to have a conversation that relates to each specific ACO and their patient goals. “They’re getting compensated and managed by accountable care,” she adds, “so you should be aware of those goals and be able to talk very congruently with those customers around those goals and how your product may or may not fit into their solutions.”
Life science companies should also know what quality measures an ACO is being evaluated on so they can offer help beyond their products. “Pharma companies can provide programs for patient-focused disease management, especially in the disease states targeted specifically by the Centers for Medicare and Medicaid Services in the 33 quality measures,” explains Mark Sorrentino, MD, Executive Medical Director at PPD, a global contract research organization. “These programs will require unbranded education, in a sense, to serve as information sources and data repositories for the disease and not just on their product.”
3. How Mature is the ACO: Alan Gilbert, MPA, FHIMSS, Chief Growth Officer at TEAM (Technology Enabled Active Management) of Care Solutions, a company that develops ACO performance management software, states that you have to know where an ACO is in their lifecycle. An ACO that just formed in 2014 is probably still busy setting up the organization’s administration and wouldn’t even know what questions to ask about what you can offer them. “There are different levels of knowledge, different levels of how mature they are as an ACO,” Gilbert explains, “so sometimes you have to wait until they’ve figured out some of the challenges related to setting up an entirely new line of business as an ACO.”
4. Learn Who To Sell To: “What the pharma and life sciences industry needs to realize is that to some extent, though they previously educated doctors and detailed them on their drug, now the conversation is going to be aimed and targeted toward the clinical committee of the ACO,” says Dr. Slonim. “They are the ones who are going to make decisions about formulary, not the individual physicians.”
Dr. Slonim adds that the structure for each ACO is different so who you actually need to talk to will depend on each individual ACO. For instance, at the two ACOs he manages they have medical directors and clinical practice committees that help administer their guidelines and provide care. One thing the ACO does not do, however, is interfere with the relationship between a doctor and a patient, so they never recommend what treatment options a doctor should prescribe. That means that life sciences companies should not just ignore doctors because they are part of an ACO.
5. Know The ACO’s Structure: Gilbert explains that knowing the structure of an ACO helps determine whom you need to target. For example, if you are talking to a single tax ID multi-specialty medical group, then your target may be the senior executive team of the medical group, typically the Chief Medical Officer, because in this type of medical group every doctor is owned and salaried by the medical group and they have to do what the medical group mandates. However, in a physician-hospital alliance in which independent physicians and private practices partner with a hospital system to form an ACO, the participating physicians don’t have to follow the same decisions as the hospital system. So even if the CEO, COO, Chief Medical Officer and the Head of Care Coordination of the ACO all think your product is great, the community physicians are still free to choose a competitive pharma or biologic product.
“In that case it’s similar to when you get a hunting license,” explains Gilbert. “I am giving you access to hunt on my farm but I am not guaranteeing you are going to shoot anything. That’s a dramatic difference to the example in the single tax ID multi-specialty medical group, so you have to understand who they are.”
How to Structure Your Sales And Marketing Strategy
Once you have a better understanding of the ACO, then the time comes to plan how you want to approach the organization. The idea of selling to a system or network rather than to single doctor is not new. In fact, Lowe believe that the sales model has been moving in that direction for quite some time given the need to negotiate contracts with group purchasing organizations (GPOs) and integrated delivery networks (IDNs).
“We’ve consistently seen that the most successful people don’t just sell to one doctor,” says Lowe. “The ones that are really struggling are still about 10 years back in sales mode as they focus on one doctor and think that he or she will just come in, hit a grand slam for them and get their product on the shelf no problem. That really hasn’t existed in a facility wide hospital system in a very long time.”
If you are one of those companies still stuck in the past or are just looking for fresh ideas to have more success selling to ACOs then consider these six tips.
1. Talk With Everyone: Even before ACOs, Lowe believes the strongest sales people are the ones who call on a diverse array of customers within a facility: C-suite executives, pharmacy managers, materials managers, purchasing directors, doctors and more.
“They know everything that everyone does in a facility inside and out and who is a key player in moving the needle when it comes to product reform, inventory supply chain and what gets on the shelf and what doesn’t,” explains Lowe. “Those sales people who do that better than anyone else are considered more of a value in the institution. They get more face time, they know more of the doctors and the C-suite than anybody else, and they understand the hospital’s business, not just getting their product in the door.”
2. Don’t Assume Doctors Understand Their Own ACO: Just because you brushed up on an ACO doesn’t mean all of the doctors within that ACO have done the same. “I do medical education programs with surgeons, and they can be just as confused with accountable care as the general public is,” says Lowe. Sometimes their practice was bought out by a hospital and they suddenly become part of an ACO they know nothing about. Or maybe they received an email when their organization joined an ACO but they only quickly skimmed it before deleting it. No matter the reason, sometimes doctors are just unaware of what ACO goals, objectives and limitations have been put in place in their facility.
Lowe believes that you can actually become a valuable resource to these uninformed doctors. By researching their ACO online and speaking to the C-suite executives to validate that information, you can explain to the doctors at the lower level what you know about their facility, who is leading the charge and what they are being graded on. She explains, “You have to educate the customer, you have to go to the higher ups and you have to have a congruent message for the two to inform each of what the other is doing.”
3. Don’t Just Push Products: “Looking at products and sales should not be the leading force or impetus toward how to work with ACOs,” explains Spencer. “It’s more about taking care of the patient and what tools they can develop to help us improve outcomes. That way it becomes a win-win-win: A win for the patient, a win for the industry and a win for the hospital.”
Rather than trying to sell a product companies should be offering solutions on how to identify patients who have a potential for better outcomes or communication tools that could improve compliance. For example, if a company has a diabetic agent, then they should be offering ways to educate patients about diabetes, proper nutrition, exercise and how to maintain their A1c levels.
Gilbert agrees that the focus should be on offering solutions for better population health and chronic disease management. One example would be an algorithm that can determine what is the best statin for a heart patient to take based on certain criteria. He explains, “The algorithm has to be generic and based on the current state of the clinical literature, and not specifically steer a doctor to prescribe one or another medication.”
4. Provide a Value Proposition For Your Product: However, when you do go into an ACO hoping to sell a product you have to make sure you provide two things: 1) An explanation of how the product can lower the total cost of care for a population or episode of care, and 2) What services can be provided to the ACO partner that can bolster the value of healthcare overall, according to Andrew Thorrens, Head of Reimbursement & Market Access at Durata Therapeutics, Inc.
For example, Thorrens says that Dalvance (Durata Therapeutics’ lead product candidate with an FDA action date of May 26, 2014) could potentially align with these two needs.
(Editor’s note: Dalvance will be the first once-weekly antibiotic for acute bacterial skin and skin structure infections (ABSSSI) and could provide an alternative to current once- or twice-daily infusions for patients suffering with cellulitis. From an ACO perspective, this means many patients could be treated using the once-weekly infusion in outpatient settings, versus current therapy options that require twice-daily infusions for a 14-day period or an inpatient admission for the intravenous administration.)
As Durata prepares to launch this new therapy, adds Thorrens, the company is developing processes that will support ACOs using Dalvance to minimize potential obstacles to therapy and assist the ACO or healthcare professional in coordinating the necessary steps to drive better outcomes.
“As ACOs focus on value impact and the overall episode of care, they will look for levers that help them shift care out of the hospital and into the home or physician’s office and away from an inpatient or acute setting,” explains Thorrens. “At the same time, companies should be looking to develop teams that can work at the health system level with incentives designed to match the new market realities. Simply getting access to senior-level health system executives will be a challenge and may require different skill sets than in the past. To state the obvious, the ability to effectively communicate how a product can lower the overall cost of care will be paramount to the success of that strategy.”
5. Give Them The Info They Actually Want: “I don’t like to be sold to, I like to be educated,” explains Dr. Slonim. “Here is a good example: A sales rep will often say to you, ‘Our Drug X is better than Drug Y’ and they will give you a nice briefing on why that is. I want to know the specifics. For instance, use our drug when your patient’s creatinine doubles because we are not renally excreted. Give me the education that goes behind when and how to use the drug. And that’s often where I think the life sciences industry has opportunity.”
Dr. Slonim adds that they also need to be focused on outcomes related to the total cost of care. He states, “I don’t care if a drug has a higher per unit price, as long as the total cost of care outcomes-wise demonstrates that the patient achieves greater efficiency.”
Health Strategies Group’s ACO Trends and Strategic Implications report revealed a similar preference across ACOs. It revealed that ACO participants are most interested in pharmacoeconomic data and patient experience information to validate decisions about treatment and pathways for care.
“As ACOs develop, they are looking for tools to make broad treatment decisions for their whole organization that will ensure better outcomes at lower costs to the organization,” explains Mead. “Materials that inform clinical pathway development, outcomes data and patient management tools created specifically for the organization are important to health systems and physicians as they assess and implement guidelines for care.”
6. MSLs Are The Way To Go: Another key finding from HSG’s ACO Trends and Strategic Implications report: All ACO stakeholders (systems, physician groups and plans), would prefer to meet with medical science liaisons (MSLs), account managers and pharma executives.
“ACOs say they are interested in interactions with individuals who can discuss contract terms, who are armed with programs and other resources to assist the organization to meet goals, and who have competencies to work within the customer segment (with hospital reps, nurses, care managers, pharmacists) on behalf of the company,” explains Mead.
Robin L. Winter-Sperry, MD, President & CEO of Scientific Advantage, a consulting firm specializing in Medical Affairs and Medical Science Liaison teams, says that many clients have come to her company to help them to define the expertise needed for MSLs in this area regarding training, defining guidelines and the skills required to effectively collaborate with ACOs and groups like them from a medical perspective.
“For MSLs and their internal Medical Affairs colleagues working in this area, they need to be fluent in their understanding about pharmacoeconomics, evaluating real-world data, outcomes measures and topics such as what constitute ‘competent and reliable evidence,’ ” she explains. “They have to understand more about the business in this area, going beyond the pure science.”
One of the reasons for this expanded skill set: MSLs are now dealing with new audiences. Traditionally, MSLs have focused on medical thought leaders, but now they may have to talk with payers or other people who specialize in areas outside of their expertise.
“Even if you have a physician running an ACO, they are looking at a broader realm of things these days than just the medical content—they are looking at outcomes, the patient journey, where the most efficient points of contact are for the patient and their care,” adds Dr. Winter-Sperry. “Due to the special type of knowledge and skills required, it’s a new area where many companies are starting to invest time and resources. Health Economics and Outcomes Research (HEOR) is the newest areas of MSL specialization”
Meanwhile, Dr. Slonim says he is happy to deal with whoever has the knowledge, but when they come to talk to him, they better be prepared.
How Pharma Can Partner With ACOs
As Spencer already mentioned, ACOs are not always interested in hearing about a company’s product, but that doesn’t mean life science companies cannot provide support to ACOs in other areas.
“When looking to collaborate with an ACO, I think the most effective thing to do is to have a conversation just to see where are the best places that resources can be provided and shared,” advices Dr. Winter-Sperry. “You are dealing with very strict economic times as well as a dynamic industry. I think that conversation is really going to make a big difference and will determine where the areas of greatest needs are, resources required and managing expectations so that they can work together to provide something that’s really going to help improve patient benefit.”
Here are four examples of the types of collaborations that can work between ACOs and the industry.
1. Patient Education: “The goal of the ACO is to improve patient experience and the overall health of a patient population, while reducing healthcare spending,” says Dr. Sorrentino. “To accomplish this goal, healthcare professionals and patients must collaborate on solutions and processes. The pharmaceutical industry will need to educate patients about cost considerations, such as metrics on prevention of hospitalization and treatment efficacy in comparison to other therapies. In addition, ACOs are looking to the industry to lead patient education efforts in regard to disease state knowledge, drug compliance and how to recognize potential side effects of the products they are taking.”
2. Patient Engagement Programs: “We struggle as an ACO around patient engagement and I think many pharma companies have patient engagement programs that can help to advance our conversation with patients—not just our doctors,” says Dr. Slonim.
Gilbert says that one of the ACOs he works with is running a program with a medical device company in which tablets are supplied to Medicare congestive heart failure patients on discharge from the hospital. The tablets are preloaded with guidance on a healthy lifestyle, personalized medication instructions, instructional videos, and individual care plans to assist the patient in avoiding another hospital admission. Patients used the tablet to record and transmit compliance, vitals, physical activity and possible side effects to the ACO care team.
3. Drug Access Programs: Spencer says one of the challenges that they are constantly dealing with is making sure their uninsured or underinsured patients actually have access to their prescribed treatments. Because of this, her organization is always interested in ways that pharma companies can help, such as with co-pay cards, but they are curious to see how the new healthcare plan will roll out and how the cards will be applicable since a lot of Medicare patients are exempt from using co-pay cards.
4. Outcomes/Cost Optimization Methods: According to Cooney, pharma is uniquely positioned to support ACOs in their mission to achieve lower costs and better outcomes because the industry brings two key strengths to the table: Marketing and analytics.
“Pharma companies can employ their deep expertise in developing patient loyalty to assist ACOs with patient adherence and awareness of their conditions,” explains Cooney. “At the same time pharma has long-time expertise in managing not only massive clinical trial programs but also tracking brand performance at the most granular patient level. This is a great opportunity for pharma to bring together these areas of expertise to develop disease and patient management programs that will support ACOs in optimizing the outcomes/cost equation.”
Cooney also notes that it is important to remember that treatment variability increases costs and prescribing several similar treatments to different patients is an expensive proposition.
“The brands that will ultimately survive are the ones that are paired with comprehensive patient services while competitors will just fall out of favor,” adds Cooney. “Meanwhile, regulatory concerns are unlikely to get in the way for as long as all parties involved keep the welfare of the patients front and center.”
What The Future Holds
No one can be certain what the future holds. As Lowe recalls, “At one time we had HMOs, and now we kind of don’t or we only have them to a certain degree.” So this ACO model may be very different or even non-existent a few years down the road, but there are a few things that our experts believe will hold true.
1. The Fundamentals Will Remain The Same: “I think the ACO model will likely be different, but the fundamental principles will be the same,” says Dr. Slonim. “We have got to figure out how we improve quality and reduce costs on outpatient care. Those goals will be the same—whether or not it is called an ACO may change.”
2. ACOs Will Want More For Less: “Still in the early years of development, ACOs have a long way to go in gaining the tools they need to fulfill clinical and financial needs,” explains Mead. “As they are able to grow and gain more autonomy, ACOs will want to make more sophisticated decisions about how they care for their patients and how they determine their decision-making and organizational structure. These organizations will want more from their relationships with the industry while promising less in return. Establishing positive working relationships with ACOs now, when their needs are high, is important to ensure long-standing relationships that translate to better access in the long-term.”
3. ACOs Will Take On More Risk: According to Thorrens, most health systems that have built an ACO are managing relatively small populations—in many cases 10,000 to 25,000 lives.
“It can be very difficult for clinicians to live in two worlds—where some patients are being cared for in shared savings arrangements and others are in the traditional fee-for-service model,” explains Thorrens. “For that reason, as ACOs learn how to manage risk, we expect that they will rapidly convert their existing fee-for-service contracts to partial or full risk.”
Current ACOs’ contracts may have different provisions regarding drug costs. For example, MSSP completely excludes Part D costs from the shared savings calculation. However, in most commercial ACOs, drug costs are included in the total cost of care calculation. That is why Thorrens believes a good predictor of what we can expect from ACOs in the future would be to look at the activity of commercial ACOs such as Aetna’s Accountable Care Solutions, Cigna’s Collaborative Accountable Care initiative, Advocate Health/Blue Cross Blue Shield of IL (BCBSIL) and OSF-BCBSIL Commercial ACO.
Even though these commercial ACOs have various models, they still share some common elements including: Providers must meet cost and quality targets; quality improvement initiatives focus on high-cost, complex conditions; and new payment models are implemented—or transitioned to from fee-for-service—including pay-for-performance, shared savings and global budgets.
“For life sciences companies,” adds Thorrens, “understanding the incentives behind these various contracts and payment models will be a key part of designing successful sales and marketing strategies.”
But, ultimately no one can be quite sure of what to expect considering everyone (the government, the industry, doctors, insurers and healthcare providers) is still learning their place under this model and the new healthcare system.
“It’s a learning curve for everyone,” concludes Lowe. “It’s a learning curve for all of the healthcare industry that supplies products to help with patient care. It’s a learning curve for our customers and it’s a learning curve for the leaders of these customers. I think we should all take ownership to really understand it better, to create better conversations as well as better outcomes.”
Related on the PM360 Industry Events Calendar:
2014 ACOs and Industry: The Collaboration Continues
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