Organizing for Value
Investment in real-world data, advanced analytics, and value-delivering services by life sciences companies is growing rapidly, particularly in the US and Europe. These companies are changing their commercial operating models as they attempt to improve patient and health system value outcomes.
The accessibility of real-world clinical data is expanding as providers assume some level of risk for outcomes, and as consumers increasingly monitor their health. We are seeing major life sciences companies build supporting internal analytics needed to assess this new data, and establish novel biopharma-customer partnerships. In addition, key commercial and medical line functions are being reconfigured to improve their performance.
For example, some companies are implementing customer-based commercial organizations that integrate their activities across therapeutic product lines, and focus on outcomes and value delivered to key customers, such as health systems or payers.
Simultaneously, these organizations are increasing the scope and scale of their medical affairs teams, by placing them in value-based medicine units, building internal and partnered analytics capabilities, and aligning studies to support the value of therapeutics for patients and risk-bearing providers.
Building A Value-Centric Organization
These trends show how some companies are creating value-centric organizations. This requires:
- Limiting or undoing certain historical patterns of investment;
- Assuring that performance of conventional 'volume' markets is sustained;
- Simultaneously building value analytics, services, and contracting capabilities.
A customer and value-centric approach focuses on understanding individual requirements of key large customers, and how these can be addressed with current assets and new investments. But it’s important to note that different regions and customers evolve at different rates.
A customer and value-centric approach that works in Minnesota or Massachusetts, where a few large risk-bearing systems predominate, may not work in Florida, where physician-owned entities carve out clinical functions throughout single hospitals and sub-regional systems. It is critical that execution plans point legacy systems to regions where the traditional approach remains salient, while redirecting these resources to patient and provider services in regions with customers that are value-centric.
Collaborations Form New Operating Models
The new operating models are shaped through informed life sciences company collaborations and agreements focused on value outcomes of targeted patient populations. In areas where reimbursement approaches are changing rapidly or financial pressures are highest, we see a rapid move from ‘product and value-centric’ to ‘services and value-centric.’
We can gain an insight into the operating models of these new value-centric organizations by looking at the device sector within life sciences, where the changes have first taken hold. Medtronic has acquired health services entities in acute cardiovascular diseases. In addition, the payer-owned health analytics firm Optum has entered the devices and diagnostics business through its acquisition of Alere.
With Medtronic, it’s a case of a product centric device company forward-integrating into providing services to patients and providers. In the second case, it is a health services and analytics company backward-integrating into technologies and capabilities that can directly interact with patients in a variety of settings, such as home and sub-acute facilities.
Often a catalyst for the new operating models is the creation of a separate operating group for patient value-focused services. In cases in which these services support or may evolve into a new revenue model, such as value-based contracts or payment on the basis of improved population outcomes, the new construct is best reinforced through a new operating group that’s independent from a specific product or legacy commercial team.
When the patient-directed services are the new primary go-to-market construct, supplementing or in large part replacing traditional representative and multi-channel approaches, they may best be structured as a new commercial services core. Either approach can assure adequate resource access and operating independence to grow to meaningful scale.
Change in Moderation
For some companies, the progression toward a value-centric organization may be less rapid or certainly more measured. It is almost becoming a standard that sets of services will be provided to patients and providers in lieu of a traditional representative or direct-to-consumer approach. These patient care services can vary in sophistication – from the efficient provision of prescribing and treatment information to more formal medical adherence reminders and patient engagement around treatments, diet, and lifestyle.
The broader and more engaged these services are for patients, the closer the relationships need to be with the patient’s care provider, provider system, or payer.
Challenges Along the Way
The conundrum faced by some organizations is whether patient-focused services units should report to a chief patient officer or equivalent and if there should be any link to medical affairs. There is not a single answer to this, rather a set of principles that organizations need to consider. The role of a chief patient officer is to assure that patients are transparently centered at the core of each functions’ activities, and that this is an approach that is integrated from research through to commercialization.
The role, and not the position per se, is most critical to have in place. In some biopharma organizations, this role is performed by the chief medical officer (CMO). In others, the CMO is more focused on post-marketing quality and compliance and less integrated across product life cycles and functions - leaving a gap best performed with a formal chief patient officer.
Similarly, in the most value-centric organizations, the medical affairs function is focused on optimizing evidence and value by advancing provider system and patient interactions. If the organization determines that patient services will focus on population outcomes or value-based payments, there are larger and broader roles for medical affairs. These may involve interacting with provider systems that bear direct risk for patient outcomes, working with payers, adhering to the life science company’s contract structures, and local regulations.
I believe that reorganizing commercial and medical line functions to create a value-centric organization will require life sciences companies to tread new territory as they realign departments and functions to focus on improving patient services and therapeutic value. This will help generate the return on investment that many companies are seeking with their investments in advanced analytics and related services.
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