The New Age of IDNs. Six Reasons to Sharpen Your Strategy

Transcription

1 The New Age of IDNs Six Reasons to Sharpen Your Strategy

2 Many pharmaceutical companies struggle to figure out the right level of investment in creating and executing an IDN strategy. If your organization has struggled to understand when and how much to invest in integrated delivery network (IDN) account management, you are not alone. IDNs, also called integrated health systems, have been discussed for decades, but until recently have not been a strong enough force to meaningfully impact brand market share. Some manufacturers formed account teams too early and subsequently disassembled these teams, only to build them again in the past year or two. Some manufacturers are still watching and waiting, wondering if the time has come to form a dedicated IDN account team; others are worried that they have fallen behind. This white paper pulls together insights to answer the question Have IDNs reached a tipping point? and demonstrates why IDNs have in fact grown in importance and now require greater attention from manufacturers. The insights are based on secondary data as well as a year of indepth market research conducted by Zitter Health Insights in support of our suite of IDN products and services. Our primary market research has encompassed the following stakeholders: In-depth interviews with executives from more than 20 pharmaceutical manufacturers that are in various phases of forming IDN account management strategies In-depth interviews with more than 30 IDN executives responsible for pharmacy, medical, population health, formulary, clinical pathway, and contracting initiatives Quantitative real-time online survey data on more than 350 pharma-idn meetings that have taken place in the past nine months This white paper answers the question Are we falling behind with our IDN strategy?

3 Contents Six Reasons to Sharpen Your IDN Strategy 1. Rapidly increasing reach of IDNs 2. Rising power over payers and brand share 3. Rapid advancement in clinical integration 4. Emerging core of heavily detailed IDNs 5. Differing needs and interests compared to payers 6. Room for improved pharma-idn interactions Conclusion: What it all means for your brand

4 1. Rapidly Increasing Reach of IDNs IDNs are rapidly acquiring control of large numbers of patients in concentrated geographic areas. The growth of Sutter Health in Northern California serves as an example of how quickly integrated delivery networks can expand to dominate a concentrated geographic region. The system has almost quadrupled its revenues from $3.5 billion in to $12 billion in , and is approaching the size of the long-established Kaiser Permanente system in Northern California. Sutter Health owned 24 acute care hospitals in with more than 3 million active patients 3 compared to Kaiser s 21 hospitals and 4.1 million members 4 in Northern California. Sutter Health has been ramping up its integration while continuing its expansion, launching a health plan in 2014 and completing a system-wide electronic health record implementation in These two IDNs provide care for more than 7 million of the approximately 15 million people who live in Northern California -- close to half of all Northern California patients. Facts at a glance 53,000 employees 24 acute care hospitals 3 million active patients Facts at a glance 75,000 employees 21 acute care hospitals 4.1 million members Northern California A key driver allowing IDNs such as Sutter Health to rapidly gain control of substantial patient populations in concentrated regions is the combination of existing local systems through mergers and acquisitions. Looking across the United States, there were 561 hospital mergers and acquisitions between 2011 and Two-thirds of all US hospitals are now part of a system Number of Hospitals Part of a Health System ( ) Source: American Hospital Association 66% of hospitals

5 2. Rising Power over Payers and Brand Share Once an IDN controls a large number of medical facilities in a geographic region, it has leverage over payers. Payers have long had the upper hand in negotiating reimbursement rates and drug access due to their control over large groups of patients. For example, an IDN with 50% of patients covered by Aetna would feel a substantial negative impact if excluded from Aetna s provider network. This dynamic limits an IDN s negotiating power to lobby payers for higher reimbursement or to dictate drug formularies. IDNs that have expanded to control a large number of patients in a concentrated region have turned the table on payers. When an IDN is prevalent in a geographic area, they own a high percentage of hospitals and medical clinics, making it less convenient for patients to find care outside of their system. Now payers are reluctant to exclude a large IDN from their health plan as this leads to angry patients who defect to other insurance providers. As a result of this changing dynamic, IDNs now have a stronger voice when negotiating with payers about reimbursement and formulary design. Geisinger and Aetna 5 Year Deal Aetna is very excited to have reached this agreement with Geisinger, which adds approximately 1,100 physicians to the Aetna network, and gives Aetna direct contracts with providers in all 67 Pennsylvania counties. Source: Aetna News Release In addition to exerting pressure on payers, IDNs also have the power to influence physician prescribing. These IDNs employ large numbers of physicians and are able to exert control over prescribing patterns via financial incentives, system-wide formularies, and clinical pathways programmed into electronic health records (EHRs). For example, an IDN may use their EHR technology to limit the medication choices displayed to their physicians at the point of prescribing to a narrower set of options than payers would employ. The IDN can also use clinical pathways to add its own utilization hurdles to prescribing. Percent of IDNs Detailed by Pharma that Use Means to Influence Physician Prescribing 80% 63% Clinical pathways System-wide formulary Source: Zitter Health Insights survey of 56 IDNs detailed by pharma

6 3. Rapid Advancement in Clinical Integration Many IDNs now have technology that allows tracking and coordination of patient care across conditions, providers, settings, and time. Integrated delivery networks are motivated to achieve clinical integration to gain needed visibility into system-wide cost drivers, as well as to better predict and control these costs. Without coordination across multiple settings, patients are more likely to receive duplicative diagnostic tests and conflicting care plans. A few benefits of clinical integration are highlighted below. Less prescribing variability, which increases the predictability of the cost of care. This is important to all IDNs, but especially those bearing financial risk Decrease in drug spending via increased use of generics and IDN-preferred brands Ability to benchmark care outcomes and physician performance Percent of IDNs* Achieving Clinical Integration Steps 93% 89% 86% 56% 30% Moving towards or have systemwide formulary Performance and outcomes metrics used for at least top DRGs Moderate to high level of centralized decision-making *Source: Zitter Health Insights survey of 56 IDNs detailed by pharma Offer a health plan Participate in capitated shared savings contracts Clinical integration also enables IDNs to more successfully take on and manage risk, which leads to even more aggressive scrutinizing and managing of drug costs. In fact, 20-30% of highly integrated IDNs are expected to engage in direct contracts with pharmaceutical manufacturers in 2017, bypassing GPOs 6 as a strategy for controlling drug costs. The following are some comments from IDN decision makers on this topic. As a large system, we have the leverage to direct contract with pharma to decrease our drug spending on brands. We are trying to stay away from biosimilars if cost reduction can be obtained from the pharma industry for brands Biosimilars lag behind in patient assistance programs. We are trying to ensure constant pricing for at least 2-3 years... It is a commitment from our system to use their product almost exclusively. In 2014, there were 104 IDNs with health plans, with 61% operating in multiple lines of business. These plans were available in 43 states, with a total enrollment of 15.3 million in 2014, up from 12.4 million in Some of the most recent IDN health plan launches are collaborations between payers and IDNs. While the overall number of lives covered by IDNs remains smaller than traditional payers, an IDN with a health plan can be a major player in a particular region

7 4. Emerging Core of Heavily Detailed IDNs A core group of IDNs with some specific features in common are being targeted and detailed by multiple pharmaceutical manufacturers. Zitter Health Insights has recruited a premier panel of IDN decision makers who are called on by pharmaceutical manufacturers. Information about more than 350 pharma-idn meetings submitted by these IDN decision makers over several months reveals just how active IDN detailing has become. Meetings were reported for all of the top 25 pharmaceutical manufacturers and many others 56 companies in total. 8 We have identified a core group of 75 IDNs that regularly meet with a large number of major pharmaceutical manufacturers. The six IDNs listed below are those that are detailed by the highest number of manufacturers. All of these IDNs have system-wide EHRs, and five of the six offer health plans. This signals a high level of clinical integration and appetite for risk-bearing indicators that these organizations have the tools to control costs and drug utilization, and feel successful doing so. Core group of 75 IDNs that are heavily detailed Six IDNs Included on Most IDN Call Lists IDN Name listed in alphabetical order Advocate Health Care Downers Grove, IL Banner Health Phoenix, AZ Health Plan BlueCare Direct Collaboration with Blue Cross launched 2015 Banner Aetna Collaboration with Aetna launched 2016 Single EHR system Cerner Cerner System-wide formulary Revenue (approx.) Employed MDs $5.6 B 1,350 $7.6 B 3,000 Northwell Health 9 New Hyde Park, NY CareConnect Launched 2013 Allscripts $9.5 B 2,750 Partners HealthCare Boston, MA None Epic Data NA $12.5 B Data NA Sutter Health Sacramento, CA University of Pittsburgh Medical Center (UPMC) Pittsburgh, PA Sutter Health Pus Launched 2014 Epic Outpatient only UPMC Insurance Division Owned by UPMC Epic (established 1997) $11.8 B 5,100 $13.0 B 3,600 Source: Data on file at Zitter Health Insights 8 Zitter Health Insights IDN Message Monitor 9 Used to be NorthShore Long Island Jewish

8 5. Differing Needs and Interests Compared to Payers All IDNs are interested in ways to reduce cost while providing high quality care, but each is unique due to geography and other factors. The strategies used to call on payers are not directly applicable to calling on IDNs. A hallmark difference between IDNs and payers is that IDNs have a fairly fixed patient population, whereas payers have high annual turnover in their insured patient base. Approximately 20-30% of a payer s insured patient base will switch to another payer annually. 10 This makes payers more interested in short term savings and less so in population health. If a payer covers an expensive medication that improves outcomes in two years, the payer may have footed the bill while a different payer reaps the reward. In contrast, IDNs serve a particular geographic area. They have a stable patient population because domestic migration rates are typically only about 1%. 11 This means IDNs care about population health, especially as IDNs take on risk for the patients they serve. The healthier their patients, the lower the total cost of care. Unlike payers, every IDN is unique. Each was formed through a different process of mergers and acquisitions, which leads to idiosyncratic challenges surrounding information technology and the path to clinical integration. Also, each serves a specific geographic region that has its own population characteristics. Therefore, an IDN based in Florida with an elderly patient population may be much more concerned about COPD than an IDN based in Mississippi that faces one of the nation s highest rates of diabetes. Additionally, if one IDN has a system-wide EHR and formulary and another is still working towards this level of integration, these two IDNs will have different capabilities in the types of solutions or programs they can implement and in the way they make decisions (system-wide vs institution level). A successful relationship would entail data sharing to foster appropriate utilization and excellent outcomes within our patient population. Our main focus is value and understanding what outcome our patients are getting for the incurred cost. IDN Decision Maker Most importantly, IDN decision makers are seeking partnerships with pharmaceutical manufacturers that understand and develop custom solutions for an IDN s unique needs rather than transactional relationships. The Zitter Health Insights IDN decision maker panel has shared a variety of partnership stories, indicating a high level of ongoing activity. Examples of ongoing pharma-idn partnerships Providing an outcomes specialist to support clinical pathways development Developing purchasing contracts outside GPOs Adding hyperlinks to copay assistance into EHRs Supporting inpatient-outpatient transitions and coordinated care management Providing closer outpatient monitoring to prevent re-hospitalizations Developing drug agnostic educational programs for patients and staff Offering pharmacy inventory management support Delivering provider education on barriers to achieving quality metrics 10 Community Tracking Study, Robert Woods Johnson Foundation 11

9 6. Room for Improved Pharma-IDN Interactions IDN decision makers offer a list of critical success factors for which pharmaceutical manufacturers need to improve performance. Critical Success Factor #1: Understand the IDN you are meeting with IDN decision makers are frustrated when pharmaceutical manufacturers don t understand their organization or needs. This seems basic, but is a common misstep. Less than half of pharma- IDN meetings include a needs discussion. 12 The following are actions to consider: Know how the IDN is organized, who the key players are, and how decisions are made; do not ask these questions during meetings Look up HEDIS and STAR scores; bring ideas to help an IDN with low score areas Provide market research data on an IDN s geographic area showing an unmet need Know an IDN s priorities through unmet needs discussions and align with those priorities Know which IDNs are willing to share their population health or other data with you Understand the timelines required to partner with an IDN and plan accordingly; some agreements require multiple levels of review that may take months Comments from IDN Decision Makers We hope they have done their homework and know where we do well and where we don t do well. They come to us saying, We see that you are not doing very well in breast cancer screening. Would you like to partner with us to develop some programs that would help? Meetings end quickly if the manufacturer has not done their homework. We will stop after 15 minutes, and say Let s reschedule when you understand what we need. I tell the pharmaceutical manufacturers why are you paying Quintiles to aggregate my six month old data? I will give it to you. Information about how our IDN is organized is readily available. I don t want to waste minutes discussing how many hospitals and clinics we have. Many manufacturers don t understand how long it takes to partner. We have so many levels of approval (legal, IT, security). In a busy system there are many projects going on, so it takes more time than manufacturers expect. It can take 4-6 months. 12 Data from 388 pharma-idn meetings captured in Zitter Health Insights IDN Message Monitor

10 6. Room for Improved Pharma-IDN Interactions, continued Critical Success Factor #2: Be a true partner bring ideas that offer a win-win Successful partnerships involve ideas where both the IDN and the pharmaceutical manufacturer have something to gain. An approach that is focused purely on selling is not highly valued by IDNs. On the other hand, IDN decision makers recognize that if there isn t enough gain for the manufacturer, a partnership may fail due to lack of consistent support or priority from the manufacturer. The following are actions to consider: Avoid approaching IDNs from a purely sales perspective Be able to clearly articulate the value to the IDN of your information or proposals Don t be afraid to articulate what the win is for the manufacturer Think about resources a manufacturer can offer that an IDN would benefit from, such as market research capabilities, data analytics, message testing, etc. Comments from IDN Decision Makers It has to be a partnership. Not just selling us stuff, but truly being a partner in how to leverage each other s resources for it to be a win-win. Successful partnerships happen when manufacturers listen to our goals and find unique ways to align with us. We are able to determine success by evaluating whether or not both the manufacturer and the health system got what they needed from the agreement. It is difficult when manufacturers come in without information about what they can do for us. We have a lot of initiatives we could use help with but we don t know what capabilities that company can offer. For a successful partnership, the interests of both parties must be met. They partnered with us and together we worked on a program where they did market research in our state (to identify barriers to a screening test) Then they helped us craft messages around those barriers and they developed materials that we can print and distribute No money exchanged hands. We worked together It is a very compelling way of developing a program vs. them developing the program behind their walls and bringing it to us.

11 6. Room for Improved Pharma-IDN Interactions, continued Critical Success Factor #3: Focus on above-the-brand partnerships Partnerships at the above-brand level are more likely to be perceived as true partnerships because the manufacturer is working with the IDN to benefit patients rather than to sell a medication. IDN decision makers recognize that pharmaceutical manufacturers will also see some benefits from these types of relationships downstream, such as a higher fill rate for prescriptions written, and greater adherence to therapy. For many IDNs, there are certain types of information or support that must be above-the-brand, such as educational materials. Despite this strong preference for above-brand discussions, over 90% of pharma-idn meetings include brand-specific discussion, indicating that manufacturers do not understand the types of conversations IDN decision makers consider most productive. 13 Comments from IDN Decision Makers We like that the manufacturer came in with non-branded materials, saying let s work together to create a program for your underserved diabetes patients. They really haven t even been talking about their drugs. We worked on a mutually beneficial project. It was unbranded and brought forward by the company. Since the idea did not include branding, the thought was the company was really looking to impact patient care and not sell product, which really allowed the idea to gain more traction. It cannot be branded with anything from the pharmaceutical company if it is an educational tool. Critical Success Factor #4: Create clear communication channels IDN decision makers experience frustration when the individuals involved in IDN-pharma discussions change from meeting to meeting, or when they cannot figure out whom to reach out to for answers or have to wait an inordinately long time for responses. The following are actions to consider: Provide a single point of contact who has knowledge and authority to answer questions Be sensitive to time constraints; utilize phone vs. in person meetings appropriately Ensure sustained, honest, and clear communication Provide prompt responses to inquiries Once an initiative has been started, follow it through to completion Comments from IDN Decision Makers Another critical factor regarding a relationship is how prompt the company is when responding to inquiries. I would have preferred if the MSL had answered the question rather than passing it off to a faceless person somewhere else. We all struggle with 6 or 7 different people from a pharmaceutical manufacturer contacting us and then we don t know who our main contact is. 13 Data from 388 pharma-idn meetings captured in Zitter Health Insights IDN Message Monitor

12 What Does This Mean for Your Brand? The level of IDN detailing taking place and large number of IDN-pharma partnerships indicate that IDN influence has reached a tipping point. If you don t have a solid IDN strategy and plan, you are falling behind. Our data indicate that a core group of IDNs have reached a tipping point in their ability to influence brand market share and wrestle control away from payers. IDN influence is only going to grow in the years to come as more IDNs complete their clinical integration processes. If your company is not in the trenches now, learning how to work with IDNs, you are falling behind. The manufacturers who are forming partnerships, learning the intricacies of how these systems operate, and building trust are going to have a competitive advantage. IDN decision makers are ready and eager to work with pharmaceutical manufacturers on projects that are mutually beneficial and have high value impact, with a shared end goal of better serving patients. Zitter Health Insights has the experts and tools available to work with you to sharpen your IDN strategy. Contact your Zitter Health Insights representative or Dr. Sarah Foss (sfoss@zitter.com) for more information about any of the following: Launched in 2017 IDN Rapid Response Answers to your IDN business questions in as little as 10 business days IDN Message Monitor Real-time monitoring of pharma interactions both yours and competitors IDN Qualitative Insights Three strategic reports per year each based on 20 IDIs on hot topics Coming in 2018 IDN Clinical Pathways Navigator Tracking how clinical pathways are impacting your brand IDN Access Tracking Tool Tracking how IDNs control access to your brand I am eager to begin building a healthcare ecosystem where we can work collaboratively to serve the greater good of our patients and optimize health outcomes. IDN Decision Maker

13 About Zitter Health Insights Zitter Health Insights has offices in New Jersey and San Francisco and serves virtually all major pharmaceutical companies in the US, as well as prominent specialty pharmacies and managed care organizations. Over the years, access to medication has become even more complex, with many new influencers emerging, including IDNs, specialty pharmacies, and patient support programs. Zitter Health Insights has kept pace by introducing first-in-class products to help customers understand each of these influencers and how these influencers fit together to impact patient access to medications and ultimately market share. Zitter Health Insights is committed to remaining a leader in all areas related to pharmaceutical access through our knowledgeable staff, proprietary technology, timely and accurate data, and commitment to client service. About the White Paper Authors This white paper was created by the Zitter Health Insights IDN team. Zitter Health Insights is your go-to resource for IDN account strategy research and information. We have created a premier panel of IDN executives and are co-creating a suite of IDN products and services alongside our customers. Contact your Zitter Health Insights representative or Dr. Sarah Foss (sfoss@zitter.com) for more information. Join the Zitter Health Insights Innovation Community Interested in co-creating products that address your unmet payer or IDN access needs? Contact Pamela Morris (pmorris@zitter.com), Senior Director of Innovation, to participate in our online customer communities or to be a part of our in-person or telephone voice-of-customer initiatives. Honoraria are provided Zitter Health Insights