Un-sustainable Costs Drive Change
The United States healthcare industry spend is massive—numbers vary but some have it at $8.7 trillion by 2020. The United States federal government spends nearly $4 trillion on healthcare representing considerable portion of the federal debt. Population health initiatives are growing in the United States as a parallel but direct result. Public payers (Medicaid, Medicare, VA, etc.) represents over 120 million beneficiaries alone. Add in commercial payers and self-insured corporations and you have an undeniable trend moving away from volume and toward value-based models including accountable care organizations, managed care organizations, and patient-centered medical homes. In this evolving healthcare world, this new paradigm focuses on strategies, methods, and approaches to achieve the “triple aim” of 1) improved patient experience of care 2) improved health of populations and 3) reduced the per capita cost of healthcare. A plethora of new arrangements, deal structures, and programs are being implemented to rearrange how healthcare is paid for under these new models.
Payer-Driven Value-based Care
In the new and rapidly growing payer-driven, value-based care model the focus has been first and foremost on public payers and providers. The federal government through Centers for Medicaid and Medicare seek to implement innovative programs to drive the Triple Aim. Examples for Medicare include the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). in the Medicaid world there has been an eruption of Medicaid managed care arrangements varying on a state by state basis. Commercial insurers follow as the value-based trend drives its way into the private payer space. There are 561 Medicare accountable care organizations in 2018 (that figure was basically 0 ten years ago). Most recently US Health and Human Services CMS announced it targets 90% of Medicare payments to value.
Population Health Targets Emerge
Overall this represents a shift to outcomes-based models which represents an evolving transformation in healthcare organizational structure, infrastructure, programs and technology—all requiring carefully understood strategic planning and investment. Technology is playing a key role. The Affordable Care Act triggered a massive wave of electronic health record (EHR) upgrades and new installations. As data accumulate and payers, providers, ACOs and others capitalize on efficient and scalable cloud computing environments, a myriad of advanced analytics applications and machine learning/artificial intelligence options start to become a reality. Vast troves of data will be “trainable” for powerfully advanced machine learning algorithms to support the next generation of population health analytics and decision support—this time is coming soon.
But a pre-requisite is that healthcare professionals understand the market forces—how government plays a vital role—and how activity and events are unfolding in the present moment.
Pharmaceutic Industry Implications
What does all this mean to the pharmaceutical industry? First and foremost, the emerging value-based driven world seeks to rein in on costs. Through new organizational mandates, health organizations are utilizing data to determine “hot spots” of cost; thereafter they implement programs, process and technology as well as people to coordinate care to drive down such costs and improve outcomes. One wide area of cost represents populations with chronic medical conditions. In the United States and in many other developed countries, those with chronic medical conditions are at the epicenter of the cost analysis. In the chronic condition population, medication is the primary form of treatment and will be under scrutiny for value-based outcomes.
There has been a flurry of payer and provider investment in value-based models over the past several years. In some cases, health systems have developed highly sophisticated population health systems to identify, manage, and track prohibitive cost patient populations. Nearly 50% of payers and providers have implemented population health systems according to a KPMG survey.
These population health systems, among other charges, will be utilized as a tool to extract key information to ultimately wring value out of pharmaceutical and biotechnology manufacturers. It is suspected that this type of activity is already occurring. There will be new data that pharmaceutical sponsors, for example, will need to provide about drugs. Not just the traditional data demonstrating clinical and economic value but also new categories of data centering on patient satisfaction, adherence, and hospitalization rates are incorporated into value-based models. A growing body of literature points to an emerging world where pharmaceutical companies must produce new metrics demonstrating the true value of their treatments in a cost containment culture.
Pharmaceutical Company Strategy
Pharmaceutical companies face challenges in the value-based care, population health-centric world. First and foremost, pharmaceutical companies need to formulate a population health vision that aligns with their specific company, history, and culture as well as pipeline. There actually may be multiple visions based on segment and therapeutic area. Note that this process must coincide with other steps below because only actionable intelligence based on solid on the ground experience and knowledge can lead to sustainable. This cannot be underestimated. A reactionary, ad-hoc, and piecemeal approach will almost certainly lead to subpar results.
Second, sound strategies must be developed based on a deep understanding of value-based market trends and events unfolding in the past and present, as well as a thorough mapping of pipeline to relevant target populations. This requires a considerable investment in domain knowledge, expertise, and, importantly, engagement with payers, providers, patient communities, and others that may be part of a value-based care ecosystem.
Third, they will need to invest in new groups and roles that seek first and foremost to not only understand the emerging models but master them. In parallel fourth, they must effectively engage and the groups that study value-based care may not be the same groups that engage with various populations. Pharma must localize in the community in creative and compelling ways. The pharmaceutical industry brand is not strong generally among broad swathes of the population. Countless surveys and articles call out the need for pharmaceutical companies to communicate and engage in new ways in order to build more trust and engagement with various populations. Pharma can be an incredible force for good; progress and transformation in highly impacted communities.
Fifth they will need to enhance and extend data collection, aggregation, and analysis to factor in population health paradigms. Sixth, they must be able to identify high-risk populations. To accomplish goal they must design and implement intervention programs and engagement tools and invest in technology for execution, follow up and continuous monitoring, improvement tracking, and reporting.
Finally, they must demonstrate that they contribute to the triple aim as well. A body of literature exists covering pharmaceutical industry strategies for population health programs. We will not delve into that topic here as the main goal next is a survey of pharmaceutical company population health programs.
Brief Pharmaceutical Survey: Three American Companies
Merck reports that it is practicing population health internally on its own employees! It notes that population health principles are used to improve health for their global workforce of more than 69,000 employees. In 2014 Merck partnered with Practice Fusion (acquired by EHR vendor Allscripts) for a joint initiative to track population health. The deal focused on leveraging the 112,00 active medical professionals using Practice Fusion for purposes of comparing and tracking the percentage of adult patients having completed select vaccines based on CDC guidelines. In 2017 a Merck representative presented at least one perspective on population health; provided a good overview of elements and factors involved and listed challenges including paradigm shift for practice of care, workflow design, data management, technology and automation, engagement and reimbursement. There were few details of substantive Merck population health programmatic results.
In 2017 Merck launched ILM Health Solutions to provide disease management tools and services to enable improved outcomes for patients with infectious diseases (e.g. sepsis, pneumonia) as well as support antimicrobial stewardship initiatives.
Also, in 2017 Merck and major health analytics vendor Optum (part of United Healthcare) forged a partnership to advance value-based contracting of pharmaceutical products. The two announced the collaboration “to develop and stimulate the performance of contractual reimbursement models which payment for prescription drugs is aligned more closely with patient health outcomes.” A survey of LinkedIn demonstrates Merck has 15 professionals with Population Health in their title including a Vice President with an impressive pedigree.
Merck introduced an important population health-centric initiative in 2018 engaging to reverse and reduce US Maternal deaths – a growing problem in substantial risk communities.
Eli Lilly maintains patient engagement programs that would generally fall under the population health category. Eli Lilly runs a host of programs that broadly fall under the population health umbrella. “The Improving Global Health” initiative includes a pilot in Indianapolis “to help address the high incidence of diabetes in three under-served neighborhoods.” The five-year, $7 million pilot focuses on areas with significant health equality issues as well as high rates of diabetes—the pilot is based on a global program with activity in Mexico, India and South Africa. Eli Lilly Notes that of the 425 million worldwide that have diabetes a disproportionate number reside in at risk communities—implicitly raising social determinant of health concerns. Eli Lilly announced its participation in Access Accelerated, an organization that seeks to improve healthcare access.
Just last month Eli Lilly and partner National Comprehensive Cancer Network (NCCN) announced they are seeking proposals to improve care for gastric and gastroesophageal junction (GEJ) cancer patients in the USA. They seek interested healthcare institutions, professional organizations, and advocacy groups working to improve quality of care for this specific patient population to apply. In the Eli Lilly blog, Mark Naggy, VP Global Patient Outcomes and Real-World Evidence clearly and concisely discussed how value-based arrangements can transform healthcare. Eli Lilly has no employees in LinkedIn with Population Health title but do have several with “Global Health” as a title. They do, however, hav over a hundred employees listed with evidence or outcomes in their title.
AbbVie lists an impressive population health-centric suite of programs under the category of “Improve Health Outcomes” and includes Patient Support, Capacity Building, Medical Education and Innovative Research. In Patient Support, for example, AbbVie publishes an impressive list of initiatives involving engagement with communities around the globe that can have direct ties into a population health paradigm.
Moreover, their Health Economics and Outcomes Research group (HEOR) focuses on “innovative, high -impact evidence that optimizes appropriate patient access to AbbVie products.” HEOR seeks to support “the generation of compelling evidence” for value-based results. AbbVie has two (2) employees on LinkedIn with Population Health titles but 65 roles associated with HEOR, evidencing considerable awareness of and investment in value-based care models.
The U.S. healthcare system continues to evolve and morph in response to unsustainable cost pressures. A complex, intertwined set of interests, dynamics, government regulations, and market forces are at play. Payers have been driving value-based models to rationalize costs through the system. Providers are evolving to not only operate but thrive in this evolving world. Value-based care drives population health strategies for both payers and pharmaceutical/biotechnology producers.
Pharmaceutical companies have been responding over the past several years opening departments and initiatives focusing on evidence-based outcomes and population health-centric engagement models. Based on this initial survey, in addition to this author’s market knowledge and industry contacts, the pharmaceutical industry responding to changing marketing conditions and is well down the path of not only thinking about population health, but organizing models, programs, and pilots targeting at-risk populations. Pharmaceutical companies will continue to invest in initiatives that essentially align with core population health objectives in areas that align with their considerable pipeline investments.