‘The core issue in health care is the value of health care delivered,’ wrote Michael Porter in a paper titled, ‘Value-Based Health Care Delivery,’ published by the Institute of Strategy & Competitiveness of Harvard Business School (ISC-HBS) on January 15, 2014.
Building on this concept, EY in its 2018 edition of ‘New horizons: Executive insights on the future of health’ articulated: ‘Value-driven care means delivering the best clinical outcomes with optimized costs, while delivering a satisfying experience for patients and providers.’
Creating a ‘satisfying patient experience’ – or ‘satisfied patients’ for its brands, being the ultimate objective of a drug company, I shall add an interesting dimension to it, in this article. And that is: Will it necessitate creating satisfying employees within the organization to achieve this goal? To build a right perspective in this direction, let me begin with the core concept of Michael Porter on this subject. This starts with – what is generally regarded as ultimate ‘value’ to patients, in healthcare delivery?
Defining ultimate ‘value’ in health care delivery:
Porter defined this ‘value’ as ‘patient health outcomes per dollar spent’. He also made some key assertions in this context, which I am summarizing below:
- Delivering high and improving value is the fundamental purposeof health care.
- Value is the only goal that can unite the interestsof all system participants.
- Creating positive-sum competition on value for patients is fundamental to health care reform in every country.
Are these assertions attainable?
To create ‘Value-Based Health Care Delivery (VBH),’ the people would also need a ‘Value-Based Pharma Industry (VBP)’, delivering ‘Value-Based Medicine (VBM)’, for all. The three key principles for any VBM are considered as follows:
- Thoroughly selected values must be based on the best research evidence available and applied as treatment options.
- Values for patients are converted into measurable utility values to facilitate the integration.
- The cost-utility level expected from selecting a particular treatment option is the basis for decision-making.
In other words, the whole purpose of offering a VBM is to provide cost effective, science-based healthcare that incorporates patient values. Nonetheless, effective implementation of both VBH and VBM would entail a radically different leadership mindset, with quite a different set of success requirements, both globally and locally.
To drive home this point, let me illustrate just the third point of the Porter’s model of VBH, as quoted above. This clearly articulates: ‘Creating positive-sum competition on value for patients is fundamental to health care reform in every country.’ But the current reality of ‘competition’ in the drug industry is far from what it should be, as evident from one of the Brookings studies.
How competitive is the pharma industry to reduce cost of health care?
The Brookings paper titled, ‘Enabling competition in pharmaceutical markets,’ published on May 02, 2017 shares its research findings on the subject, which in a broader context include the following points:
- Over the years, industry participants have managed to disable many of the competitive mechanisms and create niches in which drugs can be sold with little to no competition.
- When manufacturers can earn high profits by lobbying for regulations that weaken competition, or by developing mechanisms to sidestep competition – the system no longer incentivizes the invention of valuable drugs – incentivizes firms to locate regulatory niches where they are safe from competition on the merits with rivals.
- But, health care system performs well when competitive forces are strong, yielding low prices for consumers, as well as innovation that they value.
- Weak competitive forces often lead to a lack of market discipline with high drug prices and are more damaging to in the pharma consumers than some other sectors.
- Without strong competitive conditions, healthcare expenditure will continue to grow, inviting public demand for drug price regulation through legislation.
These findings provide enough reasons to ponder how to overcome the barrier of ‘Creating positive-sum competition on value for patients’ to move towards VBH.
The good news is, VBH concept was soon put to use:
The good news is, soon after publication of Michael Porter’s paper – ‘Value-Based Health Care Delivery’ by (ISC-HBS) on January 15, 2014, it was put to practice by the American College of Cardiology (ACC).The article titled, ‘A New Era of Value-Driven Pharmaceuticals’, published by Health Standards on May 21, 2014, reported it.
The article wrote, at the end of March, the American College of Cardiology (ACC) and the American Heart Association (AHA) issued a joint statement saying they “will begin to include value assessments when developing guidelines and performance measures (for pharmaceuticals), in recognition of accelerating health care costs and the need for care to be of value to patients.”
The authors pondered, ‘are we entering a new era of value-based medications or value-driven pharma?’ There are several such reports. For example, another article titled, ‘Value-based healthcare’, published by the ‘Centre for Evidence-Based Medicine (CEBM)’ observed, value-based healthcare has emerged as a field of its own – feet firmly founded in ‘Evidence-based Medicine’ or ‘Value-Based-Medicine.
VBH concept is slowly gaining acceptance:
EY in its 2018 edition of ‘New horizons: Executive insights on the future of health’ also reiterated this point. The paper mentioned, ‘the trends of reducing costs and improving outcomes show no sign of receding, and new models for delivering health care are only adding pressure to traditional brick and mortar facilities.’ It further highlighted, some pharma companies have started systematically reviewing the business processes, procedure and patient interface within the organization to identify and eliminate waste and inefficiency.
But, still a lot of ground to cover:
In this regard, EY Health Advisory Survey 2017 came out with several interesting findings based on the responses of 700 qualified healthcare professionals. One such finding is, although high importance is attributed to creating both – a good ‘patient experience’ and a meaningful ‘patient engagement’, but a lot less is done on the ground. This was supported by the following data:
- 93 percent of respondents reported, they are undertaking ‘patient experience’ initiative that year, but only 26 percent of them selected patient access or satisfaction as one of the top three for the same.
- Although 81 percent of the professionals said ‘patient engagement’ is considerably important to them, but most of the top initiatives undertaken by their organizations don’t directly involve soliciting and analyzing patients’ needs and wants.
‘Employees satisfaction’ a prerequisite for ‘patient satisfaction’:
The same EY Health Advisory Survey 2017, found many respondents articulating that ‘employee satisfaction’ is a prerequisite to ‘patient satisfaction’. However, its importance gets diluted whiling translating the same into reality, as vindicated by the following finding:
- 51 percent of respondents believe that employee satisfaction in health care drives patient satisfaction, but only 35 percent said that their organizations have already initiatives underway to create more positive work and environment. Interestingly, only 10 percent of them have undertaken any employee satisfaction survey soliciting employee input.
It is quite apparent from this situation that leaders of respective organizations don’t walk the talk, especially in this critical area. Harmonization of ‘patient satisfaction’ as a critical success factor for delivering VBH, with the core business value of the company, is not taking place. A deep-rooted belief that success in developing mostly transactional and partly emotional relationship with the heavy prescribers is the only ‘magic wand’ for business success in pharma. Thus, the old habits die hard, even today.
Despite several barriers in its way, for a long-term survival in business, hopefully, many pharma companies would willy-nilly move towards delivering ‘value-based health care’ through ‘value-based medicine.’ This would necessitate having a clear goal to create an increasing number of satisfied patients for the brands. There are ample evidences today that ‘employee satisfaction’ is a basic prerequisite to ‘patient satisfaction’, where many drug companies are lagging behind, significantly.
Only the movers and shakers in the senior leadership of pharma industry can break this status-quo. It may be initiated with – example-setting activities, which should enable giving shape to developing a set of standard operating procedure – culminating into the culture and value for the organization.
Nurturing humane approach to employee commitment for creating satisfied employees is the primary step of this important initiative. Then, encouraging their active participation – willingly, to bring patients at the center stage of pharma business, should be the ongoing process. It’s, therefore, imperative to note - the goal of creating ‘satisfied patients’, should always begin with developing ‘satisfied employees.’
By: Tapan J. Ray
Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.