As the healthcare industry has experienced growing pressure to adopt a focus on care quality and health outcomes while reducing costs, traditional delivery and payment models continue giving way to new approaches.
Practices are merging, hospitals are consolidating and for some stakeholders, pay-for-performance is replacing fee-for-service. Payers are collaborating with integrated hospital systems and physician groups as a way of embracing population management to deliver and demonstrate value. And a growing universe of provider networks, such as accountable care organizations (ACOs) and integrated delivery networks (IDNs) are beginning to reshape the way care is provided and clinical decisions are made in the outpatient community setting.
As a result of these changes, the days of one-size-fits-all brand strategies, promotions catering solely to individual providers and a view of payers as the only critical “stakeholders” are ending for commercial teams. Consider some of these changes:
- Employers are demanding more value for their healthcare dollars, placing greater pressure on payers to offer value-based benefit designs that clearly demonstrate care quality and outcomes.
- Health Systems and Providers continue to embrace a mantra of “strength in numbers.” The industry witnessed a 40.6% increase in practice mergers and hospital acquisitions between 2010 and 2011 alone. Such consolidation further removes individual physicians from prescribing and treatment decisions.
- CMS and Commercial Payers have responded by continuing to evolve from claims management to population management, taking an actuarial approach to analyzing and improving member outcomes.
- Physician Practices are undergoing this shift in focus, driven by multiple models that have emerged, including ACOs and the patient-centered medical home (PCMH), a quality-driven model for delivering primary care. These models emphasize greater payer or provider accountability, improvement in overall care experience and quality, and a goal of enhancing outcomes while reducing overall healthcare costs.
This shift toward value-based, outcome-focused care delivery and payment has begun to soften the boundaries between payers and providers. In the past, payers and providers often found themselves as adversaries in the delivery and reimbursement of care. That has begun to change, as evidenced by two increasingly important healthcare entities: IDNs and ACOs.
The Impact of IDNs
Across the board, IDNs have great diversity in their community value propositions, business and clinical approaches—and impact on the pharmaceutical market. Each IDN has its own rules, culture and coda, which may not be easily discernible based on its website or any publicly available source.
Within a local market, IDNs often vary greatly in how they operate—including how much or little influence they exert on affiliated physicians in adopting and using specific drug classes and branded pharmaceutical products. This influence also varies significantly by disease state. If an IDN has great focus, activity and influence in one therapeutic area, it does not mean that it exerts such ability in another.
By the start of 2013, more than 970 IDNs were in existence, a 30% increase over the prior year. With more than 80% of hospitals now part of an IDN—and at least half of the physicians in the United States affiliated with an IDN—it is critical to understand the commercial impact. Unfortunately, for many commercial teams there remains considerable confusion around how to define, understand and engage with these entities.
Many commercial organizations evaluate IDNs by size only—a low-value approach. That’s because IDNs are not created equal, and even large ones may have little to no influence on provider treatment choice. What’s more, if an individual IDN operates across multiple local geographies, its influence varies greatly across these local markets. Due to this complexity, measuring a provider network by size becomes an exercise in “informed guessing,” with actual influence or influence specific to a therapeutic area not measured. A better approach is the use of a consistent framework that clearly quantifies and defines the impact of IDNs and ACOs, as well as how they should be prioritized and segmented.
Measuring a Provider Network
Such a framework can help inform and execute the right strategy, providing straightforward answers to these four questions:
- Do IDNs/ACOs impact therapeutic areas’ business nationally? If so, how much impact do they have?
- How does IDN/ACO impact vary by region?
- Which IDNs/ACOs affect treatment preferences?
- How does the IDN impact and influence treatment preferences?
Strategy without structure makes it impossible to effectively target stakeholders. To directly capture the impact of IDNs and ACOs, new stakeholder-based metrics must be used. These metrics—physician influence, market reach, and class and brand impact—activate a commercial framework and structure for stakeholder-based strategies, resources and local tactics. Physician influence measures the impact of IDNs on affiliated provider treatment decisions and how it varies compared to the local market; market reach uncovers the volume and potential performance impact of the IDN; and class and brand impact determines treatment protocol or preferences driven by IDNs and whether an entity is currently helping or hurting a brand’s performance.
When the framework is activated, physicians are initially segmented by IDN affiliation, specialty and geography, while each prescription is segmented by pay type, payer, plan and IDN within each local market and across an entire therapeutic area. This enables the identification of provider groups that exert significant influence on treatment preferences above and beyond the payers that exert the greatest influence toward brand performance. All stakeholders are then prioritized and can be further segmented by treatment preferences. Finally, these segments can be aligned to the most optimal brand strategies, resources and field tactics.
With this insight, commercial teams have a better understanding of whether these provider networks impact a brand; how much, or little, influence they have; how that impact varies by region; and how the provider network impacts and influences treatment preferences. As a result, commercial teams can more effectively segment IDN/ACO accounts, align the right sales and marketing strategy, resources and tactics—and strengthen competitive advantage. The ultimate outcome: Higher market share.