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Reshaping Commercial Models to Serve
ACOs, IDNs & Emerging Provider Networks
Strategic Analysis
Copyright © Best Practices...
Table of Contents
EXECUTIVE SUMMARY
 Research Overview ………………………………………………………………………….....4
 Six Key Steps for Biopharmace...
One impact of the Affordable Care Act on the U.S. healthcare industry has been the rapid development
of influential provid...
ACO/IDN Benchmark Research: Objectives, Methodology & Topics
Best Practices, LLC undertook this benchmarking field study t...
Benchmark Class:
Large Companies
(Revenue > $10 Billion US in 2013)
Small & Medium Companies
(Under $10 Billion US in 2013...
To help distill the most precise and relevant insights, several data segments were used in this study.
Definitions of thes...
Our field analysis uncovered six focus areas for fine-turning commercial functions to better serve
ACOs/IDNs and other str...
This benchmarking study identifies key challenges the biopharma industry faces in working with ACOs
and IDNs, as well as t...
Key Findings & Insights
The following key findings and insights emerged from this field study and benchmarking analysis.
...
Key Findings & Insights
The following key findings and insights emerged from this field study and benchmarking analysis.
...
Drivers of Market Change Are Relentless & Require Pharma Action
Understand impact
of new ACO/IDN model
 Employ staff dedi...
Q. Estimate the percentage of your overall business that flows through ACOs/IDNs.
(n=12)
Large companies in this study are...
Q. Networks Classification: Indicate the types of delivery networks that you currently serve, plan to serve within 12-24
m...
 Potential cost savings through
headcount reduction
 Larger sales amounts per contract
due to customer consolidation
 F...
Q. What preparation and training do you provide to KAMs supporting your ACO/IDN clients?
(n=25)
At least three-quarters of...
16
Q. Material Support: Rank the importance of the types of data and materials that your
ACO/IDN specialists are using in ...
Large Company ACO/IDN Support Staff Focuses on Primary Care
Within the large company segment, primary care is the major fo...
About Best Practices, LLC
Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet...
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Reshaping Commercial Models to Serve ACOs, IDNs & Emerging Provider Networks

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The Affordable Care Act has had many impacts on the U.S. Healthcare industry, including accelerating the development of many new forms of healthcare provider networks. The rise of Accountable Care Organizations (ACOs) and Integrated Delivery Networks (IDNs) has forced pharmaceutical organizations to adjust their commercial models and activities to better work with these critical new networks.

Best Practices, LLC designed this benchmarking study to better understand the current and expected impact of ACOs/IDNs on pharma companies’ operations. The study will assist sales and managed markets leaders in developing an effective strategy for serving provider networks such as ACOs and IDNs.

Read more at: http://www.best-in-class.com/bestp/domrep.nsf/products/optimizing-managed-markets-function-roles-structures-resources-activities?OpenDocument

Published in: Health & Medicine
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Reshaping Commercial Models to Serve ACOs, IDNs & Emerging Provider Networks

  1. 1. Reshaping Commercial Models to Serve ACOs, IDNs & Emerging Provider Networks Strategic Analysis Copyright © Best Practices , LLC IDN ACO IDN ACO HEOR
  2. 2. Table of Contents EXECUTIVE SUMMARY  Research Overview ………………………………………………………………………….....4  Six Key Steps for Biopharmaceutical Companies .….……………………………….....9  Key Findings & Insights…………………………………………………………………..…..11 DETAILED RESEARCH FINDINGS 1. Stakeholder Preparation………………………………………………………………........21  ACO/IDN Outlook………………………………………………………………………….22  Change Management ……….........................……………………………………….…..31 2. Resources & Organization……………………………………………………………….....36 3. Sales Model Evolution…………………………………………………………...…....…….42 4. Commercial Capabilities ……………………………………………………………….....46 5. Service Strategies………………………………………...……………………………….....53  Key Services & Activities…………………………………………………………………. 54  Expanding Customer Access……………………………………………..…………...…. 63 6. Outcomes Approach …………………………………………………………………….….73 7. Current & Future Trends …………………………………………………………………....78 8. Lessons Learned …………………………………………………………………………...83 9. About the Benchmark Class ……………………………………………………………...86 2 Copyright © Best Practices , LLC
  3. 3. One impact of the Affordable Care Act on the U.S. healthcare industry has been the rapid development of influential provider networks—Accountable Care Organizations and Integrated Delivery Networks. Background: ACOs & IDNs Are Rapidly Changing Healthcare Market Savvy biopharma companies are studying ACO/IDN requirements and developing new customer support strategies. Some are farther along than others, creating dedicated ACO/IDN groups, adding resources, and adapting sales models. Biopharma Is Adapting to Rapid Market Change ACOs & IDNs Are Gaining Influence in Pharma Market Regulatory actions are driving rapid change in the U.S. healthcare market. One impact has been consolidation of small medical practices into large healthcare networks, represented primarily by ACOs and IDNs, which account for a fast-rising share of total pharma business. Network Standardization Will Further Reduce Physician Influence Treatment protocols will be developed and standardized at the top level in ACO/IDN networks, and cascaded to practitioners within. This practice reduces physicians’ treatment options and potentially prevents patient access to effective pharma products. For many, future success or failure will depend upon understanding how to access, influence and support this rising customer segment. New Biopharma Strategies for Powerful ACO/IDN Segment Are a Must 3 Copyright © Best Practices , LLC
  4. 4. ACO/IDN Benchmark Research: Objectives, Methodology & Topics Best Practices, LLC undertook this benchmarking field study to assist biopharmaceutical companies in developing an effective strategy for serving Accountable Care Organizations and Integrated Delivery Networks in the fast-changing U.S. healthcare marketplace.  Resource deployment  Change management activities  Sales force structure  Coordination and knowledge sharing  Customer targeting and segmentation  Understanding care delivery models  Identifying decision makers  Strategies to improve performance  Employing health outcomes  Lessons learned and trends Topics Covered Research Methodology Research Overview  This study assesses relative impact and priority of key practices and failure points that influence overall ACO/IDN/Large Hospital Network service performance.  The study also distills insights on how successful Sales leaders segment and target customer groups, staff and develop sales executives, and employ different engagement instruments over products lifecycles. Best Practices, LLC engaged 36 leaders at 31 pharma and medical device companies through a benchmarking survey. Analysts also conducted in-depth executive interviews to develop qualitative findings and insights. 4 Copyright © Best Practices , LLC
  5. 5. Benchmark Class: Large Companies (Revenue > $10 Billion US in 2013) Small & Medium Companies (Under $10 Billion US in 2013) Participating companies included large pharmaceutical firms, small and medium pharmas, biotechs, and medical device organizations. Two thirds of participants hold titles of director or above. More than half represent Sales or Commercial functions. Universe of Learning: 31 Companies Participated in Study 5 Copyright © Best Practices , LLC
  6. 6. To help distill the most precise and relevant insights, several data segments were used in this study. Definitions of these data segments, as well as other research terms and acronyms used throughout this research, are provided below. Large Companies – Healthcare organizations with annual revenue above $10 billion (US) in 2013 Small & Medium Companies – Healthcare organizations with annual revenue below $10 billion (US) in 2013 Data Segmentation & Acronyms Used in this Study Segments Analyzed: ACO – Accountable Care Organization HOL – Health Outcomes Liaison IDN – Integrated Delivery Network KAM – Key Account Manager MCL – Managed Care Liaison MSL – Medical Science Liaison S/M – Small & Mid-Revenue Companies Abbreviations Used: 6 Copyright © Best Practices , LLC
  7. 7. Our field analysis uncovered six focus areas for fine-turning commercial functions to better serve ACOs/IDNs and other structured customer groups that strategically align with their portfolios. Competing in A World Where ACOs & IDNs Are A Dominant Force 1. Prepare Internal Stakeholders for Growing ACO/IDN Dominance 2. Align Resources to Match ExpandingACO/IDN Segment 4. Build Commercial Capabilities to Support Specific ACO/IDN Needs 3. Evolve Traditional Selling System into Consultative B2B Model 5. Develop Individualized ACO/IDN Service Strategies 6. Tie Outcomes to ACO/IDN Goals Key Steps to Build an Effective ACO/IDN Strategy 7 Copyright © Best Practices , LLC
  8. 8. This benchmarking study identifies key challenges the biopharma industry faces in working with ACOs and IDNs, as well as the vision needed and successful tactics employed to engage these customers. 8 Vision & Tactics Needed to Meet Challenges of Engaging ACOs/IDNs  Developing new capabilities for staff working with ACO/IDN customers  Ensuring resources levels are aligned to rapid ACO/IDN growth  Understanding what industry services are most valued by specific ACOs/IDNs  Developing a tightly focused service strategy Challenges  Using seasoned field personnel and executives for best access to key ACO/IDN leaders  Identifying specific needs of ACOs/IDNs before approaching them  Providing services aimed at helping ACOs/IDNs cut costs and improve quality of care to meet reimbursement goals Tactics  Recognizing ACOs/IDNs are driven increasingly by cost of care under the new system  Realizing the traditional rep to doctor sales model will not transfer well to serving ACOs/IDNs  Investing now to build staff capabilities will help companies be in the forefront when the healthcare industry completes its transition Vision
  9. 9. Key Findings & Insights The following key findings and insights emerged from this field study and benchmarking analysis.  The volume of business flowing through ACOs/IDNs is increasing sharply:  Sales through ACOs/IDNs are expected to increase by 50% for large companies and 136% for small and medium sized (S/M) companies by 2016.  Nearly half the large companies and one-quarter of S/M expect ACOs/IDNs to account for 61%-100% of their business by 2016.  Internal communication and education on ACO/IDN segment is critical:  Timely communicating to internal stakeholders the significance of ACO/IDN rise is critical for biopharma success.  Depending on the importance of information, all communication channels employed for product launch can be used to communicate changes on ACOs/IDNs.  Top rated ACO/IDN services:  Medical education is the service bio-pharmas provide that ACOs and IDNs value most.  Typically, educators are nurses, clinical educators, MSLs and field trainers on product use. 9 Copyright © Best Practices , LLC
  10. 10. Key Findings & Insights The following key findings and insights emerged from this field study and benchmarking analysis.  Companies are building new commercial capabilities to effectively serve networks:  Three-quarters of the larger companies are providing special training to Key Account Managers (KAMs) to prepare them to serve the ACO/IDN segment.  Outcomes data rates as most valued material pharmas provide:  Participants rated outcomes data and disease state education as the most valued materials provided to network members. 10 Copyright © Best Practices , LLC
  11. 11. Drivers of Market Change Are Relentless & Require Pharma Action Understand impact of new ACO/IDN model  Employ staff dedicated to communication  Use national and local communication levels  Identify ACO/IDN issues  Segment customers  Align with customer needs  Deliver valued services  Restructure sales team  Transform to a B2B sales model Internally communicate the changes Adjust strategy Response  High cost of developing new drugs  Generic competition for off-patent drugs  Public pressure around high prices for new medicines  Healthcare reform  Exchanges  Sunshine Act  ACA Regulatory Drivers Industry Disruption Internal Pressures Customer consolidation  Providers absorbed into ACO/IDN networks  Pay-for-service to pay- for-performance shift  Quality metrics govern reimbursement  Outcomes focus  Value message critical ` Biopharmaceutical companies are adjusting strategies to adapt to consolidations of individual customers into large ACO and IDN networks. 11 Copyright © Best Practices , LLC
  12. 12. Q. Estimate the percentage of your overall business that flows through ACOs/IDNs. (n=12) Large companies in this study are currently channeling at least 20% of sales through ACOs/IDNs. Within two years, a majority expects to see a sharp increase in the amount of business flowing through these organizations, with nearly half predicting 61-100% of business to emerge from ACOs and IDNs. 27 18% 0% 36%36% 18% 36% 0%9% Within next 12-24 monthsCurrent 0 - 20% 21 - 40% 41 - 60% 61 - 80% 81 - 100% Large Company Segment: Percentage of Total Sales Coming from ACOs/IDNs 19%27% %Responses 46% Amount of Business Large Company Business Is Increasingly Flowing through ACO/IDNs Business is being driven both by an increasing number of companies turning into ACOs and by increased outreach to these organizations. 12 Copyright © Best Practices , LLC
  13. 13. Q. Networks Classification: Indicate the types of delivery networks that you currently serve, plan to serve within 12-24 months and don't serve. Among Delivery Networks, ACOs Are Top Area for Customer Growth Registered and unregistered ACOs are the key types of delivery networks where benchmark participants expect to grow their client base. More than 40% plan expansion into the ACO market. ACOs are currently underserved relative to other types of delivery networks. 71% 37% 30% 68% 62% 67% 64% 78% 25% 48% 44% 29% 24% 22% 18% 19% 4% 15% 26% 4% 14% 11% 18% 4% IDN ACO (Registered with CMS) ACO (Not registered with CMS but outcomes focused) Multi-site Health Systems Elite National Teaching Hospitals/Medical Centers Large Medical Groups Local or State Teaching Hospitals/Medical Centers Health Maintenance Organization (Combines payer & delivery) %ofCompanies Type of Delivery Networks Served Serve Plan to Serve Don't Serve (n=28) 13 Copyright © Best Practices , LLC
  14. 14.  Potential cost savings through headcount reduction  Larger sales amounts per contract due to customer consolidation  Fewer accounts to manage providing opportunity to focus on customer- specific needs  Interacting with customers through educators and personnel with medical backgrounds rather than traditional sales reps  Easier to align centralized sales strategy with ACO/IDN needs  Better opportunity to customize support services  Increase in customer bargaining power due to customer consolidation  Increased pricing transparency  Financial costs  Investment in building new skills  Cost of developing outcomes data  Challenges in change management  Potentially spotty contract implementation and compliance on the provider side  Low morale due to change  Reduced contact with physicians  Must invest in communication to keep internal stakeholders informed Quantifiable Non-quantifiable Impacts of New Business Model on Pharma: Pros & Cons of Change The following pros and cons of change were gleaned from benchmark participant interviews. 14 Copyright © Best Practices , LLC
  15. 15. Q. What preparation and training do you provide to KAMs supporting your ACO/IDN clients? (n=25) At least three-quarters of large companies in this study are providing training to Key Account Managers who support ACO/IDN clients. Classroom training and CBT modules are the most common methods. Fewer than half the smaller firms provide training to KAMs, with one exception: 65% of the S/M segment prepares KAMs through background reading. Companies Prepare KAMs with Multiple Types of Training 75% 75% 63% 50% 50% 13% 0% 47% 35% 29% 65% 47% 24% 18% Classroom training courses in ACO/IDNs Training modules (online/CBT) Account call shadowings/introductions Background readings Briefings No specialized training or support Other (Specify) Preparation and Training Provided to KAMs Large Cos SM Cos % Responses “Capabilities for this role are very different than our current sales capabilities.” -- Interviewed Team Lead, Big Pharma “A major session at our next national meeting will be training to teach reps how to get to that higher level people and how to make more red carpet level calls.” -- Interviewed VP, Medical Device 15 Copyright © Best Practices , LLC
  16. 16. 16 Q. Material Support: Rank the importance of the types of data and materials that your ACO/IDN specialists are using in the field. (n=18) Disease state education materials and health outcomes data are ranked the most important support tools for field specialists working with ACOs and IDNs. Note that while disease education was ranked among the top three services by the greatest number—82%—health outcomes data was the support tool most often ranked #1. Disease State Education & Outcomes Data Highest-Ranked Materials Category Overall Rank *Top 3 #1 #2 #3 #4 #5 #6 Disease state education 1 82% 19% 44% 19% 0% 13% 6% Health outcomes data 2 65% 53% 12% 0% 12% 6% 18% Journal reprints & articles 3 63% 19% 19% 25% 6% 6% 25% Patient case studies 4 50% 6% 19% 25% 25% 13% 13% Pipeline info and reviews 5 38% 13% 6% 19% 31% 31% 0% Upcoming clinical trials info 6 26% 0% 13% 13% 27% 20% 27% Note: * Top 3 - percentage of respondents that ranked each service among their top 3 * #1 to #6 - percentage of respondents giving rank of 1-6 to each service Copyright © Best Practices , LLC
  17. 17. Large Company ACO/IDN Support Staff Focuses on Primary Care Within the large company segment, primary care is the major focus area for the ACO/IDN support function, while more than half the small and medium companies in the study have their major focus on specialty care. 17 Primary Care 45% Specialty Care 34% Over the Counter 17% Other 4% Large Companies Primary Care 31% Specialty Care 54% Over the Counter 8% Other 7% Small & Medium Companies (n=34) Q. Therapeutic Areas: What primary therapeutic areas is your ACO/IDN-focused function responsible for? Therapeutic Areas: Copyright © Best Practices , LLC
  18. 18. About Best Practices, LLC Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics, and winning strategies of world-class companies. 18 Copyright © Best Practices , LLC Best Practices, LLC 6350 Quadrangle Drive, Suite 200 919.403.0251 www.best-in-class.com

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