Healthcare: it's complicated. Continuum knows this truth well—as do the medical device, pharmaceutical, and tech companies currently operating in our byzantine medical universe. These players are actively redefining their value propositions, expanding beyond their products, and shifting to service. With the opportunity to help providers struggling to fulfill their value-based contracts with payers, seven of the 10 largest medical device companies have reorganized to provide service-based offerings as of 2017.
The catch? Players have come to realize that they can't do it all. Entities that once sought to dominate their own lane are quickly partnering up. The recent CVS Health and Aetna partnership is far from new in terms of moves to collaborate. It does, however, signal that the silos that have continued to hold in our traditional healthcare system are ready to collapse. It also sounds a warning alarm on the need to provide value to patients.
The silos that have continued to hold in our traditional healthcare system are ready to collapse.
Thriving in this new world will require the ability to survey and map the buckling healthcare landscape, and the humility to know that no single entity can flatten this thing alone. Partnership is the smart path forward. Let's take three cases where dominant players have teamed with strategically chosen partners to create value together:
Medical Device and Provider
Philips is pioneering its Enterprise Partnerships model, landing long-term managed services partnerships with several health systems, including Augusta University Health, Westchester Medical Center Health Network, Mackenzie Health in Ontario, Canada, Banner Health, and Phoenix Children's Hospital. Its business model is a value-based contract built on shared accountability—shared financial risks and gains. In these customized partnerships, Philips assumes responsibility ranging from managing medical equipment and technology to clinical and process improvement. As hospitals under pressure become more concerned about taking the risk on new technology that may not improve outcomes, companies such as Philips are buying themselves a chance to build trust and prove long-term value.
Pharma and Payer
In 2016, Merck and Aetna entered a value-based agreement around Type 2 diabetes. In Part 1, Merck takes on some financial risk for two of its Type 2 diabetes medications. If Aetna members with Type 2 diabetes take these drugs and do not meet particular treatment targets, Merck pays a rebate to Aetna, scaled relative to how many patients do not meet their target. Part 2 launches AetnaCare, a new predictive analytics program that identifies patients most at-risk for being diagnosed with diabetes or hypertension. This data informs an integrated care plan with custom care maps used by visiting Aetna nurses to address needs ranging from healthy lifestyle changes to treatment adherence to social support. This is a direct play into population health, a part of the value-based purchasing model that puts pressure on providers to focus on target populations with high healthcare utilization.
Our prediction: The partnerships most grounded in the patient experience have the best chance to thrive.
Pharma and Tech
Onduo, launched in 2016, is a joint venture by global pharmaceutical company Sanofi and Verily Life Sciences, Alphabet's research organization. Onduo is focused on providing solutions for Type 2 diabetes, including lifestyle coaching, medication management, and eventually moving into Type 1 diabetes and diabetes prevention. This joint investment of $500 million is built on the pharmaceutical expertise of one partner and the software and analytics expertise of the other. This collaboration has also found clinical partners; Sutter Health in California and Allegheny Health Network in Pennsylvania are among the first to pilot Onduo's platform—and Onduo is working with Blue Cross Blue Shield in Arkansas, South Carolina, and Georgia. Onduo is also partnering with Glytec, an insulin management software company, to integrate Glytec's software into Onduo's virtual diabetes clinic.
Players still trying to solve things on their own will soon find themselves unable to articulate their identity in this new, partnered-up world. Strategy is key, but the humility to partner up is its prerequisite. New ways of doing things will require relinquishing some amount of control and will demand a healthy amount of trust.
Anchoring Partnerships in Patient Experience
Each player in healthcare has inherently different needs and incentives; how can we expect our healthcare partnerships to survive their inevitably complex politics?
Here at Continuum, we often lead organizations through complex change through backcasting. Using backcasting, we help clients first imagine the ideal future state in a farther-out, less constrained world. We hold this ideal state in our minds as a "lighthouse," guiding us as we cast backwards to the near-term wins we can make today or tomorrow, ensuring that each step we take works towards that ideal state. This model defies the idea of innovation as a linear path of small improvements upon the status quo.Embedded content: https://www.youtube.com/watch?v=UshLmJ5uW6U
New partners will find themselves needing to seek a common vision separate from their individual goals. Our prediction: The partnerships most grounded in the patient experience have the best chance to thrive.
The new key differentiator will be humility—the humility to look across a changing ecosystem and realize that no one can do this alone, that your organization has strengths and weaknesses, much to offer but also much to learn.
Value-based care, at its core, has always been about improving care in the eyes of the patient. It's a delivery model in which providers are paid based on patient outcomes. In seeking to depoliticize a partnership and find productive, neutral ground, partners should look to create the ideal patient experience. This is a design-agnostic way to determine where value lives.
Successful and Humble
It's a new world out there, and it requires some brave individuals and organizations to make it work. This will take more than bravery, though. The new key differentiator will be humility—the humility to look across a changing ecosystem and realize that no one can do this alone, that your organization has strengths and weaknesses, much to offer but also much to learn.
Players in healthcare must adapt to a new kind of game; the rules are being written as we go. Humility is the first step; the readiness to reinvent and choose careful partners comes next. And the vision to stay grounded in the heart of value—patients—will bring your ship safely and successfully to shore.