Quantifying & Capturing Value In the Age of Healthcare Reform

Copyright © 2013 by LeveragePoint Innovations Inc.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means —
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This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion.
COMPANY CONFIDENTIAL
Quantifying and Capturing Value
in the Age of Healthcare Reform
Monthly Webinar Series – April 18, 2013

2
Sponsored by LeveragePoint
the Software Solution for Value-based Pricing

3
Today’s Presenter
Quantifying and Capturing Value in the Age of Healthcare Reform
Chris Provines is a healthcare and medical technology
industry veteran. He has 23-years of experience in various
functions, including executive roles at Johnson & Johnson
and Siemens Healthcare. He is a world-leading expert in
medical technology pricing and market access. He is the
CEO of Value Vantage Partners, a global consulting and
training company focused on strategic pricing, value selling,
and sales negotiations.
Chris is the author of the Strategic Pricing for Medical
Technologies, and is an award-winning Adjunct Professor at
Rutgers University Business School where he teaches in the
MBA program. He can be reached at
chris@valuevantagepartners.com.

Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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• Learn about key changes to the US healthcare market
• Discuss strategies for quantifying the value of your offering and
connecting it to customers' evolving business model
• Share what best practices companies are doing to grow in the new
normal
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Learning Objectives

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Shift Happens
New
Buyer
Old
Buyer
Relationship driven / less
sophisticated buyers
Value & data-driven /
professional buyers

6
Physician
employment
trends
Purchasing
consultants
Value based
purchasing
Reimbursement
cuts
Data
transparency /
Comparative
effectiveness
Increasing
evidence
requirements
Patient
satisfaction
ACO’s
Bundled
Payments, Gain-
sharing
Readmission
penalties
Costs
Quality
Pressure on
Prices, Value,
Utilization &
Margins
=
Key Drivers Will Accelerate the Shift

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Source: Beckers Hospital Review; April, 2012
1. Cost containment
2. Improve patient
quality
3. Maintaining
reimbursement
4. Data connectivity
“There is one strategy that
was almost a near-
consensus among the
surveyed hospital executives:
Negotiate more aggressively
with vendors and suppliers”
“If suppliers can prove they
have an immediate impact on
patient outcomes, that'll
resonate with the C-suite of
the hospital.”
Top Areas of Focus for Hospital Executives

Physician
gain sharing
programs
Value based
purchasingNew business
models
Accountable
care
organizations
Rise of the
economic
buyer
Healthcare
Reform
Implications – sales and corporate
account teams will need to:
 Interact in a credible way with
administrators on healthcare
reform issues
 Understand the business impact of
products, solutions & services
 Be able to sell the value of
technology and services to ACOs
 Be able to sell both clinical and
economic benefits
 Deal with more powerful economic
buyers
 Use value in trades during
negotiations
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Sales Teams Face a Wave of Challenges

9
normal
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Learning Objectives

10
10
Understand Your Value Proposition
Patient Provider Physician
ACO/Insur
er
Psychol-
ogical
Clinical
Economic
Where do you have
advantages?
Adapted from: Strategic Pricing for Medical Technologies, Provines (2012)

11
Understanding Economic Value
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The big questions
to ask related to
your solution?
Who ultimately pays?
• Medicare
• Medicaid
• Commercial
• Employer / Other
How is the provider/physician paid?
• Prospective case rate (DRG, APC)
• Per diem
• Fee for service
• Risk based / bundled payment
How does the buyer evaluate the
economics of your solution?
• Total cost of ownership
• Quality incentives / reimbursement
• Population vs. clinical event
• Risk mitigation

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“Classic” Examples of Value Management
12
Cypher Drug-
eluting stent
Oncotype DX,
21-gene
reverse
transcription
assay
Quantify
Communicate
Capture
• First drug-eluting cardiac stent launched
• Substantial investment in clinical & economic
data and reimbursement activities
• Priced to “share” value at ~$2,900 per stent;
cost-neutral for payer versus bare metal stents
• Innovative breast cancer recurrence assay
• Test helps to better predict recurrence risk and
direct chemotherapy
• Company sponsored comprehensive economic
analysis to quantify value and show savings
• Priced at $3,450 at launch

13
You Don’t Need a Blockbuster to Start
13
Common
challenge
What best practices companies do….
• Products
came to
market
through
510K or Lab
Developed
Test (LDT)
regulatory
path
• Little
evidence
exists
Prioritize
critical
products;
select 1 or 2
key solutions
to start with
Quantify value
using single
center study;
decision
analytic tool; or
approved
protocol to
study customer
economics
Develop
selling tool;
train and
deploy
through the
sales team
1. 2. 3.

Different Elements of Offering
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You Need to Think Broadly About Value
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• Payment terms
• Contract length
• Performance requirements
• Risk sharing
• Service hours
• Response time
• Shipping terms
• Customer support
• Training
• Etc.
• Quality level
• Speed
• Capacity
• Etc.
Core
Solution
Services
Business
Terms
Enablers
• Procedure kits
• Automation
• Mapping
• Etc.

15
normal
15
Learning Objectives

16
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Better
integrate
value into
R&D
Unbundle &
understand
value of
offerings
Quantify
Communi
cate
Capture
• Implement value into formal stage gate process
• Use quantitative techniques to dollarize
• Look at value from “buying center” and each
stakeholders’ perspective
• Make evidence decisions early in R&D process
• Unbundle offering (core solution, enablers, service)
• Quantify value of separate components
• Use components of offering to “trade” with different
buyer types
Best Practices for New Normal
Quantify Value

17
17
Arm sales
team with
value
messages &
tools
Educate sales
team on value
& customers’
business
Quantify
Communi
cate
Capture
• Provide sales team with quantifiable value
messages and tools
• Align messaging and tools to different buyers
and buyers’ payment mechanisms
• Many sales teams are responsible for
communicating clinical and economic value
• Educate sales team on the customers’ financials
and business model
• Teach sales teams to communicate economic
value to value analysis committees
Communicate Value

18
18
Teach sales
team to
negotiate with
new buyers
Develop
population and
risk based
contracting
models
Quantify
Communi
cate
Capture
• Prepare sales team to deal with more
sophisticated professional buyers
• Identify standard list of offering trades
• Provide guidance on how to trade value with the
new buyers (buying committees, VAC’s, etc.)
• Align pricing and contracting strategy with
customers’ new payment models (ACOs, bundled
payments, etc.)
• Be prepared to take on risk when it’s to your
advantage
Capture Value

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• Healthcare reform and other trends are ushering in major changes
for providers, employers, insurers, and patients
• Healthcare suppliers who are prepared for the new normal will be at
a significant advantage
• The future clearly points to value-based healthcare buying
decisions – you need to be prepared to win
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Conclusion

20
Professional Pricing Society Spring Conference
• Ed Arnold will be presenting, “Anyone Can Build a Value
Model: Let Me Show You How”
• Friday, May 3rd at 1pm PDT

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LeveragePoint framework for Customer Value
Reference
Value
Positive
Differentiation
Costs unique to
doing business
with you
The Unique Value
You Provide the
Customer
Confidential
Quantify Value
Visualize Value

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Communicate value with confidence & consistency
Planning
Costs
$5.40
Reduce
Testing
$7.36
Lost
business
$3.06
Reporting
$3.08
Integrate
$2.88
Value Message Value
Higher levels of reliability reduce
operating failures
$108,000
Streamlined parts inventory
reduces parts carrying costs
$320,000
Higher output and revenue due to
reduced excavator downtime
$720,000
Fuel efficient engines reduce
energy costs
$640,000
Engage customers by
showing them how you
impact their bottom-line
Confidential

23
Thanks for Watching!
sales@leveragepoint.com
www.leveragepoint.com
(617) 945-7075
Chris Provines
chris@valuevantagepartners.com
(908) 421-0112

Quantifying & Capturing Value In the Age of Healthcare Reform

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