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Building Value Based Healthcare Business Models Paper

Words: 2211, Paragraphs: 25, Pages: 8

Paper type: Essay , Subject: Health

The task the industries face-?demonstrating value based on a product focus-?is far from simple. For one thing, there are inherent limitations to the value a single drug can bring to the management of complex, chronic diseases, where therapeutic success is determined not only by the molecule but by a combination Of drugs, physician intervention, home assistance, and lifestyle changes. Moreover, providing better health outcomes in exchange for fewer resources means that medications and interventions must be targeted to the right patients.

However, personalized medicine has yet to significantly permeate he operating models of the pharmaceutical and medical technology industries. But perhaps most importantly, recent value-based price negotiations have revealed a dramatic lack of trust on both sides of the table. The pharmaceutical industry has often been accused of using its marketing machinery to churn out pills that deliver high margins no matter what value they bring to patients. And the industry perceives healthcare payers’ restrictions as short-sighted penny-pinching that inhibits access to medicines and curbs innovation.

In this climate, agreeing on the definition of value, let lone on the standards of evidence for value, is difficult. And indeed, even as healthcare payers push providers to show evidence of outcome, they continue to steer their spending via strict cost control. As a result, arbitrary price pressures (including forced rebates) are exerted on products in the current portfolio, and it is increasingly difficult to get new products approved for reimbursement.

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The outlook may be muddled, but one thing is clear: Players will need to radically adapt. Medical technology companies will struggle to command a price premium for new technology and will need to develop user-friendly, affordable solutions. And pharmaceutical companies, traditionally product- focused organizations, will need to readjust their processes, all the way from development through marketing, to collect and promote evidence of the value their products provide to the healthcare system.

Capturing Value with Patient-Centric Solutions Is there an innovative way to deal with the value challenge? Several companies are embracing patient-centric solutions as an alternative business model to the traditional product focus. These models-?exemplified in the United Kingdom by Pfizer Health Solutions, a division that runs integrated are programs for chronic diseases-?aim to increase quality of life and avoid costly hospital treatments by offering prevention, early diagnosis, and remote care to chronically ill patients.

The value proposition for healthcare payers is evident: These programs seek to reduce costs and, in theory, can legitimately aspire to be commissioned by a national health service (think the United Kingdom) or reimbursed by health insurance companies (for example, in Germany, the Netherlands, and Switzerland) or local health authorities (think Italy)-?whether on a per-patient or per-time basis, or using a risk-sharing del.

Innovative solutions can be driven by technology such as remote monitoring or e-health applications or by medical understanding of certain diseases-?the distinguishing competencies 2 of medical technology and pharmaceutical companies respectively. Philips, for example, launched its Motivate telekinetic remote monitoring program based on its device tech oenology but provides an integrated service. 1 Austereness, on the other hand, teamed up with Singer Health System in the United States to develop an e-health initiative to reduce cardiovascular disease and improve patient care.

Additionally, smaller companies and start-ups are developing a Wide range of services. For example, Tallies, an Italian e-health company, provides telekinetic services to national and local payers, and SSL Telekinetic provides services to health insurance companies in Israel and Germany. Where do patient-centric solutions stand? Of course, providing health solutions is not a new idea, and neither is applying IT in health services. In the past decade, there has been no shortage of ideas on how communications technologies could revolutionize the delivery of health services.

Certainly, the hype cycle has gone a full round. Similarly, pharmaceutical companies have discussed services as a possibility for adjacent innovation and life-cycle management every now and then. But the expectations voiced a decade ago remain unfulfilled, resulting in widespread skepticism about whether this time is different. But for several reasons, this time is different. For one thing, the product- based pharmaceutical business model has been under more pressure than ever.

Ten years back, sovereign healthcare payers still had money, and the sequencing of the human genome promised to make drug innovation easier, quicker, and cheaper. Neither holds true today. And over the years, market players have learned that patient-centric health solutions are not just another application of information and communication technology-?popular thinking in the midst of the dot. Com boom-?but need viable value propositions for the health system. The learning curve has improved, and examples of patient- centric health solutions can be found in many healthcare markets.

A look at more than 1 00 services now offered by pharmaceutical and medical technology companies reveals a continuum that ranges from products to stand-alone, value-based services: Product-related services have evolved straight from the products. Examples include patient adherence programs such as Roach’s Motivation, Advice, and Proactive (MAP) Support Program for patients prescribed Conical obesity treatment, Chasteness’s interactive online program for asthma patients taking Symbiotic, or Innovator’s Extract support program for multiple sclerosis patients.

In medical technology, the Philips Ambient Experience lets patients personalize their exam room with lights, images, and sounds-?for example, replicating an African savanna, a rainy forest, a robot’s space journey, or an underwater adventure-?while undergoing diagnostic jesting with the company’s devices. ; Adjacent services still use the basic product but go beyond it in their value proposition.

Rock?s tell-health project in rural Great Britain to support patients with recurring urinary tract infections revolves around the company’s Uris’s diagnostic device, and Freshness Medical Care’s [email protected] program in the United States provides comprehensive patient education for Its home dialysis products. All trademarks cited in this paper remain the property of their respective holders and are used only to directly describe the products or services being provided. ; In addition, there are already examples of truly stand-alone, value-based healthcare services, independent of single product use, along the patient pathway.

Pfizer online male health clinic provides anonymous, confidential consultation at the user’s convenience. Wellhead’s diabetes manager provides a modular service for supporting medication adherence, clinical research trials, and disease management through the Internet and mobile devices. And Philips combines home-based tell-monitoring with an interactive health platform to promote behavioral change for patients with chronic illnesses such as chronic obstructive pulmonary disease (COP).

The solutions we examined span all stages of the patient pathway and display different degrees of business model autonomy, yet they all have one feature in common: Patient outcome, not products, is at the heart of the value proposition for customers. The next logical step, for those that heaven done so already, is to split patient-centric service offers from the drug and device business and develop them in a separate business unit. Pfizer Health Solutions is a case in point, as is Johnson & Johnson Innovation.

The fact that independent value-based healthcare services have started mainly in the area of treatment and monitoring (see figure 1) can be explained by the cost dynamics along the patient pathway: Conventional wisdom says prevention is the best medicine, but commercial reality is that it is the most poorly remunerated, at least in the public sector. At present, even private health insurers are more intent on capturing value at the cost- intensive end of the patient pathway than in prevention, where a business case for a patient-centric solution is much more difficult to make. That may be changing, however.

Since the mid-sass, Dutch insurer Achaean has offered n interesting case study proving that integrated healthcare Figure 1 Most independent value-based healthcare services are in treatment and monitor Eng Business model autonomy Distribution and select examples of patient-centric solutions offerings Valuable services 8% Adjacent Proliferated 1% 3% 19% Pfizer care managers to coach patients with long-term conditions Philips interactive platform to monitor and support behavior change among chronically ill patients 12% 23% Roach’s home urine tests to detect urinary tract infections 0% Innovator’s support program for patients being treated for wet age-related muscular generation prevention Diagnosis Treatment Monitoring Patient pathway Notes: The number in each box represents the percentage of offerings identified for each type of service and step of the patient pathway. In each row, a deeper color indicates a greater number of services. Source: A. T.

Carney analysis of more than 100 services offered by pharmaceutical and medical technology firms 4 services can be a profitable way to effectively manage diseases-?and we expect the aging of the population, especially in Europe, to drive further adoption of patient-centric solutions. Where Do Patient-Centric Solutions Go From Here? Although the sheer number of services shows a rapidly evolving field, none of the models we analyzed has revolutionized healthcare delivery. A broad deployment of patient-centric solutions is still hampered by powerful barriers, both externally in the health marketplace and internally in the pharmaceutical and medical technology organizations. Among these barriers: misaligned incentives, distrust, and insufficiently developed capabilities (see sidebar: Barriers to Patient-Centric Solutions).

Barriers to Patient-Centric Solutions A number of barriers, both external and internal, are standing in the way of widespread adoption of patient-centric healthcare solutions. External barriers Lack of collaboration and alignment. Healthcare is a complex world. Navigating interests from patient to provider to healthcare payer is not easy in the normal conduct of business, let alone when introducing innovative models. Health insurance companies in Germany, for example, tried to introduce disease management programs that largely failed because resident physicians, while essential to the programs’ implementation, were not involved in their design. 2 No consensus on evidence.

In the long run, economic health outcomes of patient-centric arrive models will need to be proved in the same way that drug effectiveness is shown in a Phase Ill randomized clinical trial. But quantifying savings in the real world is more difficult, and studies on health economic outcomes are less amenable to scale than clinical studies: Patients and disease biology across the world are similar, but healthcare systems and their funding rules are not. On high product margins and do not want them to interfere with patient interactions. Misleading incentives for parts of the healthcare system. A shorter focus, combined with tight regulatory control over operations ND balance sheets, severely limits health insurance companies’ will to innovate.

Meanwhile, paternalistic service models are only attractive for new entrants if they yield revenue that reflects the value contributed-?revenue that depends on payers’ willingness to fund these services. Internal barriers Insufficient patient targeting. Because the value proposition of patient-centric service models relies on a clear health outcome for the patients enrolled, it is crucial to not only target the right patients but also get them actively involved. Distrust resulting in a lack of access to patients. In most countries, pharmaceutical and deiced technology companies are restricted from directly marketing to patients or even pharmacies.

Physicians-?and many patients-?still perceive pharmaceutical firms as focused Lack of new capability profiles. Pharmaceutical companies have excellent clinical understanding, but they lack experience in service deployment and design. Managing regular customer communication as part of a distinctive value proposition and not as a duty to drug safety is also new to an organization that is accustomed to molecules as value drivers. For technology companies, deploying local services and managing customer and maintenance immunization is easier, but they lack an understanding of the healthcare system’s reimburse resentment schemes. Insufficient understanding of service-based business models in product-based environments.

Capability gaps can be overcome with a smart deployment of resources, but the lack of understanding about the features of a service-based versus a product-based business and revenue model is more difficult to overcome. Recent legislation in Germany has abolished incentives for disease management programs, effectively removing them from the agenda. 5 So far, these barriers have prevented greater adoption of patient-centric lotions-?in Europe, less than 0. 5 percent of the more than 70 million chronic patients participate in health service programs (see figure 2)-?and a growing business can only be established once successful innovators clear these barriers.

Figure 2 Barriers are preventing the significant adoption of patient-centric services Degree of expectation versus actual population addressed in Europe Today Degree of expectation Over-promise Realistic purport entities Growth Late followers Population at risk (prevention) 70 million addressed Innovators Patients in innovative healthcare niches 0. 5 million Early adopters High-need chronic or ever patients Early majority Chronic patients at risk of developing severe conditions Market development Note: Patient numbers based on chronic diseases in Europe Sources: Gardner; A. T. Carney analysis Technology will speed up the game and force decisions. Data generation, collection, and handling will be faster and more accessible than ever before: ; Healthcare devices will become commoditized. Prices will come down for everything from basic X-ray machines at the point of care in rural emerging markets to home diagnostic equipment in supermarkets.

Wireless communication will become standard, including machine-to- aching (MM) communication. The “Internet of things” will be a reality before the molecules screened in today’s pharmaceutical laboratories have been launched. New tools and algorithms will generate insight from data that will direct the health services of the future, as exemplified by SAP’s expected applications of its business data analysis tool, HANNA, in healthcare. Collectively, these trends will bring down the technological barriers to entry and create opportunities for new entrants and innovative start-ups to provide new solutions.

About the author

This sample is completed by Emma with Health Care as a major. She is a student at Emory University, Atlanta. All the content of this paper is her own research and point of view on Building Value Based Healthcare Business Models and can be used only as an alternative perspective.

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Building Value Based Healthcare Business Models. (2018, Apr 21). Retrieved from https://paperap.com/paper-on-building-value-based-healthcare-business-models/

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