Posts Tagged ‘Healthcare Innovation’

Wrapping Services Around Products: The New Pharma Model

“The home is ultimately going to be the major site of care for all but the sickest patients.”

This from an interview with George Halvorson, CEO of Kaiser Permanente, in which he expounds about healthcare reform and the vertically integrated model that is Kaiser.

Essentially, he’s saying that we will move from the traditional office-centric model to a new approach using technology like e-visits, e-connectivity, remote patient monitoring and smart phone apps to support home-based healthcare. Technology will be the backbone of patient care in a world in which more people are covered by health insurance and there is a shrinking population of primary care physicians

Technology and Patient Empowerment

Halvorson’s remarks suggest that the trends we’re seeing in patient empowerment, like The Quantified Self and websites like Patients Like Me, are all part of a future in which we won’t spend time in a hospital unless we are really sick. And we may actually be spending less time in a doctor’s office, too.

This brings up many questions. What does this mean for prevention? For treatment? How do we use technology to enable people to live healthier lives so that they don’t even need to use the healthcare system? And, ultimately, when we do need the healthcare system, how do we support the home environment to provide for effective treatment?

And what role will pharma play in an integrated healthcare delivery model?

prod serv 2The New Reality for Pharma
This comes back to a theme that I’ve talked about in the past. There is an important role for pharma in this new reality, but it means a change in identity from product manufacturer to healthcare services. Pharma has an opportunity to play a larger role in health services that enhance the value of the products it already provides.

Examples of Products + Services
For example, Google’s basic product, online advertising, provides most of its revenue. But they’ve surrounded it with all kinds of free and interesting analytical, coaching and survey tools. Google offers many of these services for free, like Google Analytics. These aren’t simple “freemium” products, however. They are serious tools. But Google knows that offering them for free enables adoption by the very people they want as customers, thus enhancing the value of their core business.

Brokerage firms make their money on investment products and trading. But they often offer free advisory services and retirement counseling to help clients build retirement models.

Banks are another example. I had a meeting a few weeks ago with a banker who was an also expert in health insurance plans. He had been hired specifically to advise the bank’s clients on innovative health insurance plans and models – advice that I would have had to pay for had I gone to a consultant. But the bank felt this was a service that they should offer their customers, wrapped around the core banking products where they make most of their money.

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Is Big Pharma Losing Its Innovation Brand? Not so fast…

The list of leading consumer electronics and telecom companies that have embraced digital health this year are all household brands: Apple, Qualcomm, Google, Amazon, Samsung, Verizon and AT&T. Funded startups in the tough guymobile health sector number in the hundreds.

We’re seeing a phenomenon in which the tech industry, specifically tech entrepreneurs, are spearheading health innovation, replacing the traditional players like biotech, pharma and medical device companies. And pharma seems to be acquiescing to these newcomers, despite the fact that there is no other industry player as intrinsically linked to both innovation and the delivery of healthcare as pharma.

Health tech leadership evolving
Pharma has always been a health tech player. But in just the last few months as health tech has been redefined as digital, it’s become blatantly obvious that health technology leadership is now in the hands of big brand consumer electronics companies. And while the focus of companies like Apple, Qualcomm and Samsung has initially been the largely unregulated health and wellness sector, there’s nothing inherently limiting them from moving to the clinical side.

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Pharma and its Innovator’s Dilemma

A recent conversation with a friend in the pharma industry validated my thoughts and concerns about the systemic challenges that pharma is facing. The pivotal insight came from my friend’s comment that he wants his next job to be “not just about pills,” but a job that takes on a broader role in healthcare, one that’s more focused on patient outcomes.

This personal revelation was a bit surprising given the fact that my friend’s entire career has been pharma marketing. Promoting drugs is his area of expertise. So why did it take a career “transition” phase to bring about this personal commitment to the need to broaden pharma’s mandate?

innovation highwayWhy not innovation?
The challenges and obstacles that senior-level pharma executives face are extraordinary, especially when it comes to innovation and moving the industry forward. Pressure from Wall Street, business partners and investors who are focused on revenue growth and short-term profitability makes it incredibly difficult for top executives to think outside the box or consider what’s next for the industry or their company.

Every day, pharmaceutical companies large and small are managed to meet performance and revenue expectations. My friend observed first hand how even the long-term planning process (5 to 10 year horizon) doesn’t give senior executives the flexibility to discover and engage in innovative opportunities that might allow them to consider new offerings or business models.

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More Than Half of Doctors Refuse to See Reps

A recent report from ZS Associates affirms a decade-long decline in pharmaceutical rep access to physicians. The reasons are well known: doctors have busier schedules, they’re joining large practices or hospitals with “no-see” policies that prevent reps from coming in, and in many cases doctors simply don’t think it’s worth seeing reps.

Although physicians don’t have time for reps, they do need their content. It’s just that now they would rather get it through digital channels.

There has been an evolution in the role of reps from someone who delivers a promotional reminder to someone who is more experienced and savvy and who serves as an account executive helping to provide doctors with the resources and content they need and want.

It’s no longer just an evolution
But what was once a gradual change is now accelerating. According to ZS, in 2008, 23% of doctors put restrictions on reps; now it’s 49%. Basically, half of the doctors in the United States now have moderate to severe restrictions on rep visits.

What we’re beginning to see is a business model evolution. Driven by technology and economics, the role of the traditional manufacturer’s rep is dying.

How fast will this happen?

diffusionDiffusion of Innovation
We have a tool that can predict what will likely happen. It’s called the Diffusion of Innovation theory. The theory, first published in 1962, outlines how a new idea, innovation or technology becomes diffused throughout society.

The theory addresses the questions around how innovation spreads. How connected is the social system into which this innovation is being introduced? How tightly knit is the social system of users, and how much do they talk to each other?

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When did Pharma miss the Innovation Pride Parade?

A recent article identified four basic skills that new leadership in pharma needs to be successful in the arena of consumer health. The author, Michael Winter, addresses the topic from his perspective as an executive headhunter, with the expertise and obvious vested interest in helping to find, source and
pride paradeplace talent.

Winter observes that the capabilities, talents and skills that built pharma into the very successful industry sector it has been aren’t necessarily the same attributes that will make pharma successful over the next 5, 10 or 20 years.

“What got us here won’t get us there,” has never been truer than it is in pharma today.

The Skills Needed
The clinical research and development skills needed to produce new drugs will always be critical to pharma’s success, but our approach to the marketplace needs to be rethought and adjusted. The kind of marketing expertise needed in today’s environment has more common with successful consumer goods companies than traditional pharma.

This realization has spawned a growing contest for talent between pharma and consumer goods companies. In some cases pharma is trying to poach senior consumer executives. To be successful, however, pharma needs to first make itself an attractive destination for this type of experienced hire.

Most consumer executives look at an industry like pharma and say, “I don’t know… It looks complicated. It’s a highly regulated industry. They’ve got business model challenges. They’ve got brand issues. I’ve done well on the direct consumer side. Why would I ever leave my successful career here and move over into health? That just seems like a recipe for disaster.” Read Full Article Now »

Dark Night of the Pharmaceutical Soul

Tolstoy’s observation that while happy families are all alike, every unhappy family is unhappy in its own way describes the pharmaceutical selling environment today. No standard go-to-market strategy will work for every unhappy brand and every disaffected doctor.

A new focus on flashy iPad sales presentations will slow but not stop the slide in office access. Technology should enable marketers to learn about and serve the customer better and faster than the competition, not simply be a new shade of lipstick on the traditional sales pig.

Relationship Marketing, or “treating different customers differently” is finally getting the attention it deserves. Contrast RM with the more typical marketing approach of “shouting” at the audience with a single message and betting that a brand will get its fair share of the audience. Now with the perfect storm of declining physician access, pricing pressure from private and government payers and the looming patent cliff on many blockbusters, marketers are finally seriously considering the benefits of building long-term relationships with their customers.

This year, brand teams will begin to invest in physician databases and predictive analytics and digital channel integration and will start learning how to treat different customers differently.

There is a day of reckoning approaching when it will become painfully obvious which brands have created meaningful, value-based relationships with healthcare professionals and patients. Pharmaceutical companies are starting to be scrutinized by a new wave of tech-enabled professionals, empowered patients and enlightened bureaucrats intent on holding suppliers to higher standards of value and engagement. And depending on what they find, they will vote with their pocketbook.

The essence of strategy is to be ready before you need to be. This year, from brand teams to board members, there will need to be a new focus on customer strategy and on recalibrating what it means to serve our different customers differently. The way they need to be served and the way they prefer to be served.




Opening salvo

Obama signing healthcare reform billRegardless of your point of view on healthcare reform or the much-discussed legislation, the Patient Protection and Affordable Care Act (PPACA) is now the law of the land in the United States. Our friends in every corner of the healthcare sector are scrambling to understand what reform means for them and how to take advantage of new opportunities or mitigate new risks to their business.

Any time there is a significant change in the business rules of engagement, whether it’s tax policy or new regulations, company executives look for loopholes or workarounds to maintain their competitive positioning and avoid additional burdens. With the passing of the healthcare reform bill, general counsels and consultants everywhere are looking for ways to avoid complying with the new law.

Don’t do it.

The right response is not to dodge, hide or obfuscate. At this point, with healthcare costs projected to rise to nearly 25 percent of GDP in the next 15 years if we don’t intervene, we need to rethink the industry. Like the industrial revolution that laid the first transcontinental railroad, created the auto industry and put a man on the moon, we need a healthcare revolution. We need an innovation revolution.

The only way out of the healthcare morass in the United States is through innovation.

An incremental approach to insurance reform and consumer access will have a commensurate incremental effect on the cost curve. What we need is to dramatically rethink how to prevent and diagnose disease, how to treat chronic illness and how to compensate physicians. We need to apply technology in new ways to bring targeted therapies to market quicker and to package the latest in behavioral change theory to create wellness programs that become part of our pop culture. And we need to understand how even little nudges and informal social support can have a big impact.

Every sector in healthcare has a role to play, from providers and health insurers, medical device and pharma companies, large employers and government agencies, teaching hospitals and research institutes to entrepreneurs and venture capital firms.

This blog, The Difference Makers, is my personal journey to find those entrepreneurs who are applying innovation to health and healthcare. I want to see if big problems require big solutions or small solutions. I’m curious about whether the diffusion of innovation in healthcare follows the same curve as it does in technology, and whether the market economy, the public economy or a combination does a better job of meeting the needs of the patient. And I’m curious about what it means to put the means of health production in the hands of the consumer.

Innovation + Entrepreneurialism meets a Big Challenge. It’s worked before. Let’s see what happens this time.

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