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Consumer/Patient Experience Special Feature: Protecting the Patient Experience in the Age of Mega-Mergers

Written by: | admin@medadnews.com | Dated: Thursday, June 6th, 2019

 

By Marc Helberg, managing vice president at the Philadelphia office of Pariveda Solutions

 

Consolidation has dominated healthcare news over the past few years. Mergers between hospitals, payers, clinics, and other healthcare organizations are turning an ecosystem of individual stakeholders into one dominated by a few giants.

Marc Helberg

At the same time, we’re seeing new players with sizable influence enter the industry, with Amazon as the best example. This constant disruptor has pledged to create more advanced healthcare delivery models, meaning it could begin weighing in on everything from prescription drugs to medical technology.

Reactions to this recent wave of consolidations have been mixed. Smaller players worry that pressure from the few major organizations in the industry could lower the quality of care patients receive and eliminate choice. Supporters, on the other hand, champion the same idea from the opposite angle: They claim economies of scale will lower healthcare expenses while still providing exceptional care.

So what does consolidation mean for pharmaceutical companies, and how can executives prepare for a more connected industry? Everyone involved should debate the merits of healthcare industry consolidation. However, we can’t let business opportunities or regulatory anxieties obscure the patient experience itself.

 

Healthcare Outcomes in the Wake of Consolidation

It’s possible that consolidation could lead to negative patient outcomes. Logically, concentrated markets lead to higher prices because providers have less competition — the opposite of what consolidation advocates claim. The Center for American Progress notes that hospital mergers in particular lead to 10% to 40% increases in healthcare costs. More problematically, higher costs don’t always translate to higher degrees of quality; after consolidation, healthcare outcomes can actually worsen.

Despite these drawbacks, a more concentrated industry does have its share of advantages. Consolidated healthcare systems, for instance, are in the best position to collect, organize, and leverage patient data as widely as possible. The future of data-driven healthcare will require interconnected systems of clinics, hospitals, payers, and pharmacies. To a certain extent, consolidation can help turn this vision into reality.

The entrance of companies such as Amazon isn’t always ominous, either. Although its footprint is large and its track record isn’t necessarily spotless, the company also has a reputation for making disruptive ideas practical and rapidly scaling them. If Amazon spurs innovation where it’s long overdue, its arrival could bring benefits and ultimately be welcome.

Whether the healthcare industry manages to lower costs and improve the patient experience across the board depends on its ability to engineer and implement new ideas and strategies. Consolidation aids and inhibits this effort in a number of ways, suggesting that executives must be proactive about moving new ideas through the pipeline and ensuring positive outcomes. However, the most important part is to never lose sight of patients in the process.

 

Staying Relevant in Crowded Markets

In the age of healthcare consolidation, pharmaceutical companies must be innovative to stand out among large players and provide value to patients. However, there’s always the risk of appearing irrelevant and unwanted instead of progressive and highly valuable. Innovations that positively impact the patient experience will be organically absorbed by the rest of the industry as it searches for new approaches.

Follow these strategies to carry on with business effectively and ensure consolidation has more positive outcomes than not:

Take a patient-centered approach. Interacting with massive conglomerates can make healthcare feel transactional. Taking a patient-centered approach that acknowledges the individual helps counteract this.Understanding what patients want — and need — requires a formalized process for receiving input during all decision-making. There should also be a comprehensive effort to understand what the patient and caregiver experience is actually like. So study interactions and work with advocacy groups. In general, pharmaceutical companies should aim to work as closely with patients as they do with providers.

Negotiate for outcome-based contracts. According to the Kaiser Family Foundation, 77% of Americansthink drug prices are excessive — and they’re right. Though brand-name drugs represent just 12%of prescriptions on the market, they account for 72% of spending.

Because they can lower prices by tying value to effectiveness, outcome-based contracts could provide a solution. With outcome-based payments, drug rebates and incentives would be linked to performance, rather than volume, so the drugs that are most effective would also be worth the most. As these contracts are not yet standard, their long-term impact on pricing is unknown. But this is exactly the kind of innovative, patient-first approach that warrants further study with support from pharmaceutical companies.

Think beyond the adequate. Although patients can provide valuable guidance, it’s up to industry leaders to stimulate innovation. If companies only do what patients want, healthcare will never leap forward in the way it should.

Amazon is instructive in this regard. When it started, home delivery was nothing new. But thanks to imagination and tenacity, the company reimagined how people shop for everything. Now that Amazon is entering the healthcare arena, every company needs to adopt the same spirit of pushing boundaries. After all, the solutions patients haven’t yet identified are the ones with the biggest potential impact.

Without guidance, healthcare consolidation will feed the trend of rising prices and declining outcomes. The industry needs fresh ideas, and it’s unclear if (or when) they’ll come from the top. Even small and midsized companies inside and outside the pharmaceutical realm can help lead the charge. Now as always, the most exciting innovations and direction could rise from the bottom up.

 

About the author

Marc Helberg is the managing vice president at the Philadelphia office of Pariveda Solutions, a consulting firm driven to create innovative, growth-oriented, and people-first solutions. Read more about the work Pariveda Solutions does here. He has extensive expertise delivering strategic initiatives and brings more than 25 years of consulting and industry experience to helping Fortune 100 companies transform their operating models and achieve their business goals. Outside of the office, he enjoys scuba diving, photography, cooking, and playing music.

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