Transcript Benfield Group - Reynolds - Trends in ER

Driving More Value in the
Health Care Supply Chain
Trends in Employer/Pharmaceutical
Manufacturer Relationships
Midwest Business Group on Health
May 10, 2007
Today’s Discussion
Supply Chain Management Framework
Employer-Pharmaceutical Trends and
Insights
2
We Benefit From Well-Managed
Supply Chains
 Retailers and Product Manufacturers live and die on the
excellence of their supply chains.
3
Poorly Managed Supply Chains
Frustrate Us…
…so the tech will be at
your home between 8 and
4 next Tuesday…
4
Poorly Managed Supply Chains
Can Be Dangerous
5
Poorly Managed Supply Chains
Can Be Expensive
 66.5 Million Potential Sick
Days From Sub-Optimal Care
 42,000 – 79,400 Avoidable
Deaths Annually
 $1.8 Billion Potential Savings
From Avoidable Non-Fatal
Events in Selected
Measures/Conditions
6
Poorly Managed Supply Chains
Can Kill Us
 Preventable adverse events are a
leading cause of death in the United
States.
 At least 44,000 and perhaps as many
as 98,000 Americans die in
hospitals each year as a result of
medical errors.
 Deaths exceed the deaths from
motor vehicle accidents and
(43,458), breast cancer (42,297)
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The Health Benefit Supply Chain
Tier n
Tier 3
Initial Suppliers
Biologics
Medical
Devices
Diagnostic
Equipment
* “Health Benefit” in the
broadest sense, including
medical, pharmacy,
workers’ compensation,
disability and absence
(health-related)
Tier 1
Pharmacy
PBM
Physicians
Medical Plan
Hospitals
Care/Disease
Management
Lab Services
Health and
Wellness
Long Term
Care
Disability
Management
Home Health
Care
Behavioral
Health & EAP
Psychologists
& Psychiatrists
Occupational
Health
Other Second
Tier
Other First Tier
End
Consumer
Focal
Company
Employer
Health
Benefits
Package
Consultants,
Information
Vendors,
Other
Agents and
Advisors
Employees, Dependents, Retirees
Prescription
Drugs
Tier 2
Source: The Benfield Group and Thomas Goldsby, PhD—Assoc. Prof. Supply Chain Management, Gatton College of Business, U-KY
8
Employers Working Together to
Fix Supply Chain Market Problems
Quality Transparency
Price Transparency
Performance Standards
Pay For Performance
Care-Focused
Purchasing
Group
9
Working Alone to Get More Value
From Their Supply Chain
Value-Based Benefit Design
Worksite Clinics
Worksite Pharmacy
Direct Contracting (Infancy)
Consumerism (Big “C”)
10
Supply Chain—Pharmacy Benefit
Perspective
Tier 3
Manufacturers
and Marketers:
• Prescription
Drugs
• Consumer
Products
Tier 2
Providers:
Tier 1
Employers
Intermediaries:
• PCPs
• Health Plans
• Specialists
• PBMs
• Retail
Pharmacies
• Specialty
Drug
Managers
Demand
Rx Benefit
•Employees
•Dependents
•Retirees
11
Prevailing Pharmacy Benefit
Supply Chain Dynamic
Tier 3
Manufacturers
and Marketers:
• Prescription
Drugs
• Consumer
Products
 Goals:
• Manufacture
Marketable
Products (Clinical
Differentiation)
• Maximize Profits
 Tactics:
• Physician Detailing
• DTC Advertising
Tier 2
Providers:
Tier 1
Intermediaries:
• PCPs
• Health Plans
• Specialists
• PBMs
• Retail
Pharmacies
• Specialty
Drug
Managers
 Goals:
 Goals:
• Manage Health
• Satisfy Customer
• Manage Costs (?)
• Maximize Profits
• Keep Customers
 Tactics:
• Give the Customer
What She Wants
• Work-Arounds
Employers
 Tactics:
• Implement Shift and
Restrict
• Maximize Revenue
Streams (rebates,
mail order, generics)
Demand
Rx Benefit
•Employees
•Dependents
•Retirees
 Buying: Drug Benefit
 Goals:
• Minimize Drug Cost
• Mitigate Noise
 Tactics:
• Cost Shift
• Restrict
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Critical Failure From the Front of
the Supply Chain
Purchaser Not Focused on What They’re Really Buying
Using the Wrong Success Measures
Sending Mixed
Signals
Establishing
Perverse Incentives
Driving Non-ValueAdding Behavior
Through the Chain
Our Current Situation
Poor Value
Misguided Innovation
Deteriorated Trust
13
An Emerging Model—Value-Based
Pharmacy Benefit Design
Tier 3
Manufacturers
and Marketers:
• Prescription
Drugs
• Consumer
Products
 Goals:
• Manufacture
Products with
Value
Differentiation
• Maximize Profits
 Tactics:
• Physician Detailing
• DTC Advertising
• Innovate Value
Solutions
Tier 2
Providers:
Tier 1
Intermediaries:
• PCPs
• Health Plans
• Specialists
• PBMs
• Retail
Pharmacies
• Specialty
Drug
Managers
 Goals:
Employers
Demand
•Employees
•Dependents
•Retirees
• Manage Health
• Satisfy Customer
 Buying: Healthy and
Productive Employees
• Manage Costs
• Maximize Profits
 Goals:
• Keep Customers
 Tactics:
• Right Drug, Right
Patient, Right Time
• Manage
Compliance
 Goals:
Rx Benefit
 Tactics:
• Provide Value
Information
• Innovate Compliance
Solutions
• Prove Outcomes
• Maximize Total
Economic Value
• Mitigate Future Risk
 Strategy:
• Value-Based
• Focused on Quality
14
Value-Driven Alignment from the
Front of the Supply Chain
Purchaser Focused on Total Value
Success = Healthy, Productive Employees at Best Cost
Clear Signal
Aligned Incentives
Non-Value-Add
Activity Out, ValueAdd Activity In
Better Scenario
Fair Value
Value-Driven Innovation
Growing Trust
15
Employer/Pharma Trends
 Background
 Findings from HSG-Benfield Syndicated Research in
2006
•
Employer Market Overview and Trends (Summer/Fall ’06)
 Large Employers*, Coalitions and Benefit Consultants
 129 Surveys and 43 In-Depth Phone Interviews
•
Employer-Manufacturer Relationships (Fall/Winter ’06)
 Large Employers* and Coalitions
 106 Participants with 135 Manufacturer Relationships
 In-Depth Phone Interviews
* Employer sample skews toward a more strategic/value-oriented segment
16
Context for Employer-Pharma Relationships
17
Approach to Drug Benefits Affected
by a Range of Issues
Rank 1
92%
Rank 2
Rank trends that
will affect your
company’s
pharmacy benefit
management
approach over
the next 12 – 18
months.
Rank 3
13%
22%
55%
50%
40%
21%
24%
15%
57%
Consumerism
25%
14%
9%
12%
Connecting
Employee
Health to
Productivity
15%
10%
27%
12%
9%
13%
12%
10%
7%
3%
5%
4%
Quality
Initiatives
Offering CDHP
as Full
Replacement
Transparency Offering CDHP Medicare Part
in Rx
as Benefit
D
Purchasing
Option
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
24%
2%
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Pharmacy Benefit Management
Must Overcome Many Challenges
Rank 1
68%
Rank 2
Rank 3
66%
Rank your
organization’s top
pharmacy benefit
management
challenges
8%
24%
47%
39%
25%
35%
24%
21%
11%
12%
13%
33%
11%
23%
Employees
Not Making
Lifestyle Changes
to Improve
Effectiveness
of Drugs
Employees
Taking
Expensive
Branded Drugs
vs. Generics
26%
21%
13%
15%
12%
15%
Data Integration
Employees
Not Taking
Prescription Drugs
They Need
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
8%
8%
Managing Cost
of Biologics/
Injectables
5%
Employees
Taking
Prescription
Drugs They Do
Not Need
9%
8%
4%
Lack of
Outcomes Data
to Make Rx
Coverage
Decisions
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“Total Value”—Emerging Metric
 More employers are evaluating the total picture of
healthcare costs including increased productivity and
reduced presenteeism and absence.
 49% of employers strongly agree that reimbursement
rates for healthcare services and products will be based
on total value
Total
Value
=
Positive Effects on Efficacy, Safety,
Absence, Disability, Presenteeism, and Satisfaction
Price
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
20
Employers Becoming More
Strategic/Value-Focused
Low
Data/Economic Focus
12%
No integration
12%
Medium
High
50%
50%
38%
38%
Use of integrated data as
ongoing part of benefits
management
Data Integration
Limitation of input and
17%silos
decisions to benefit
17%
Actively participating
52%
52%
31% 31%cross-silo team
Involvement in Health-Related Decisions
No focus on absence
management
10%
10%
49%
49%
41%
41%
Systems and policies to
track and reduce all types
of lost time
Health Benefits Strategy
Approach to Absence Management
Reaction to current
year’s situation
6%
49%
45%
Three-year-plus
strategy
Time Horizon for Health Benefits Planning
No use of data for
planning/accountability
6%
49%
45%
Use of data on ongoing basis
to monitor and measure
performance
Use of Benefit Program Data
Provision of financial
protection to employees
17%
52%
31%
Strategic management to
help improve employee
health and performance
Health Management Philosophy
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
21
Relationship Trends and Insights
22
Employers Interested in/Are
Working With Pharma
Interest in Meeting with
Pharma Manufacturers
Not
Interested
17%
Worked with Pharma
in Past 12 Months
Highly
Interested
35%
Somewhat
Interested
48%
n=106
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
Yes
35%
No
65%
n=103
23
Many Employers Want To Be
Approached
Reasons for Not Meeting with Manufacturers
57%
29%
21%
16%
5%
Manufacturer Has Not
Not Interested in
Approached
Working with Pharma
Not Aware
Manufacturers Work
with Employers
Pharma Does Not
Have Programs of
Value
Other
n=56
Note: Total >100% due to multiple responses per employer.
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
24
Relationships Between Employers
and Pharma Maturing
Employer-Manufacturer Relationship Levels
Among Research Respondents (2006 vs. 2005)
2006
Tactical
Vendor
36%
2005
Consultative
Partner
41%
Tactical
Vendor
35%
Strategic
Partner
65%
Strategic
Partner
23%
n=129
n=179
 In 2006, there were clear attributes that distinguished
Consultative Partner relationships
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
25
Relationship Status Requires
Commitment and Performance
Manufacturer Image
and Attributes
Manufacturer
Programs
and Support
Tactical
Vendor
Account Executive
Skills, Attributes,
and Approach
Account Executive
Skills, Attributes,
and Approach
Manufacturer
Programs
and Support
Manufacturer
Programs
and Support
Strategic
Partner
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
Consult
ative
Partner
26
Program/Support Satisfaction
Health Education
86%
Screenings/HRAs
85%
Disease Management
84%
Health Data Analysis
82%
Medication Compliance
82%
Case Studies Showing ROI
78%
e-Health Initiatives
78%
Behavior Modification
75%
Physician/Hospital Quality Initiatives
74%
65%
Overall High Satisfaction
with Programs
0.65 and Support
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
n= 103 employers
27
Program/Support Results
Improved Employee's Ability to Manage Health
55%
Improved Overall Health
49%
Attained High Program Participation
43%
Improved Employee Productivity
32%
Reduced Medical Costs
32%
Increased Medication Compliance
28%
Reduced Employee Absenteeism
Reduced Prescription Costs
Reduced Disability Claims
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
25%
21%
17%
n= 123 employers
28
Satisfaction With Account
Executive Attributes
Follows Through on Commitments
97%
Practices Effective Communication
94%
Presents Ideas to Address Needs
91%
Exercises Professionalism
86%
Understands Employer Arena
85%
Maintains Business Skills
Contacts Appropriate Individuals
81%
73%
Maintains Appropriate Contact Frequency
70%
Obtains Knowledge of Your Organization
70%
Performs with Autonomy
66%
n= 103 employers
© 2006 Health Strategies Group and The Benfield Group, Overview and Trends, All rights reserved.
29
Take-Aways
 How Employers Manage the Health Benefit
Supply Chain is Critical
 Employers Becoming More Strategic and
Assertive
 Employers Focusing More on Total Value
 Stage Set for New Relationships Along the
Supply Chain
 For Many Employers, Pharma Relationships are
Delivering Value
30