In an effort to reduce healthcare costs while improving the quality of care, healthcare stakeholders—including solo practices and even payers—are becoming increasingly integrated, giving rise to the organized customer.
- Healthcare spending in the United States continues to grow—to the point where it’s simply not sustainable.
- To reduce costs and increase the quality of care, a new way forward is necessary.
- Increasingly, integrated delivering networks are emerging as a potential solution, as independent physicians are consolidating with healthcare networks to become organized customers.
- Pharma companies need to pay special attention to this evolution if they wish to thrive in the evolving healthcare landscape because this is a new channel that does business differently than traditional channels (e.g., healthcare professionals, payers, and consumers).
The U.S. healthcare system needs a serious overhaul.
According to the Centers for Disease Control:
- $190 billion is spent on heart disease and stroke
- $174 billion will be spent on cancer in 2020
- $245 billion is spent on diabetes every year
- $174 billion is spent on obesity
- $379 billion will be spent on Alzheimer’s by 2040
While some of this spending is unavoidable, research suggests $765 billion of U.S. healthcare spending was wasted on unnecessary services, fraud, and excessive administrative fees in 2009.
In an effort to revamp the U.S. healthcare system, a new approach is needed. And we’re seeing it in the rise of the organized customer.
What is an organized customer?
Due to shifting market dynamics—and an emphasis on innovation, reducing costs and delivering better care—physicians are increasingly joining large healthcare networks, consolidating their services and expertise to become what are known as “organized customers.”
Quite simply, organized customers are healthcare providers that focus on delivering great healthcare services to patients—and doing so in a cost-effective manner. By consolidating several aspects of healthcare into one entity, they’re able to realize economies of scale and increase efficiencies.
As a result of this shift, the line between payers and health systems is becoming blurrier by the day.
To create even more efficiencies and deliver value-based cared, organized customers are increasingly offering their own health insurance plans, forming integrated delivery networks (IDNs). Today, 60% of IDNs have a health plan license, and more than 100 plans cover roughly 26 million patients across the country.
What’s more, many IDNs are also working with specialty pharmacies—helping them fill prescriptions faster, reduce medication abandonment and increase compliance.
Suffice it to say IDNs are becoming more and more common, increasing 30% over the last five years. Analysts believe that this trend will only accelerate in the coming years. By 2021, it’s expected that the top 50 IDNs will manage at least 50% of the entire healthcare market.
Seeking to get ahead of this trend, some commercial plans are taking the extra step to acquire providers. Molina Healthcare, for example, is a health plan that operates primary care practices in five states. Similarly, United HealthCare has a subsidiary that operates primary care clinics in six states.
What does this mean for pharma?
To succeed in this evolving landscape, pharmaceutical companies need to adjust to the increasing prevalence of organized customers.
Due to decreased access to providers—in 2016, less than 50% of providers were accessible to reps, compared to 80% in 2013—pharma must consider other methods of marketing if they wish to remain successful. These companies need to ensure that every aspect of strategic planning and operational deployment considers the organized customer (in addition to standard payer considerations).
“Industry-wide statistics suggest that doors are closing to pharma” says JP Strapp, Managing Director at The Kinetix Group. “This is a call to action for pharma to become more customer-centric. If pharma can adjust their approach to the organized customer, while considering the shifting geographic footprint and the changing risk dynamic, these doors could easily reopen.”
Forward-thinking pharma firms already understand this and have made moves to capitalize on the trend. Those that are slower to modernize their approach will be left at a significant disadvantage.
Succeeding during this transition requires the awareness that organized customers are a very diverse group. To this end, pharma firms must profile and segment organized customers—particularly in the context of local healthcare market dynamics. The better you understand your customers, the easier it will be to deliver value to them.
Pharma companies also need to keep in mind that the organized customer segment is dynamic and will evolve over the coming years. To capitalize, they need to stay on top of every development in the area to understand the potential implications and anticipate shifts in the market.
To learn more about how The Kinetix Group helps companies understand and prepare for Organized Customers please contact us today.
Stay tuned: This is the first post in a four-part series on how the healthcare market is changing. In our next installment, we’ll explore the era of the Quadruple Aim.