quantifying & capturing value in the age of healthcare reform
DESCRIPTION
The old model of selling purely on clinical benefit in the U.S. healthcare industry is dead. Profound changes are underway in how hospitals and other healthcare providers make purchase decisions for medical devices, services, diagnostics, and pharmaceuticals. In this half-hour webinar, Christopher Provines describes the dramatic impact that the Accountable Care Act (ACA) will have on all healthcare suppliers. Chris explains how new purchasing practices and business models such as value-based purchasing, bundled payments, Accountable Care Organizations and quality-based reimbursement will change the rules of the game for selling and negotiating. Learn: * Tips for how to effectively engage customers in this "new normal" healthcare environment * Strategies for quantifying the value of your offering and how to connect it to your healthcare customers' business model * Best practices for how to grow your healthcare businessTRANSCRIPT
Copyright © 2013 by LeveragePoint Innovations Inc. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means —
electronic, mechanical, photocopying, recording, or otherwise — without the permission of LeveragePoint Innovations Inc. This document provides an outline of a presentation and is incomplete without the accompanying oral commentary and discussion.
COMPANY CONFIDENTIAL
Quantifying and Capturing Value in the Age of Healthcare Reform
Monthly Webinar Series – April 18, 2013
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Sponsored by LeveragePoint the Software Solution for Value-based Pricing
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Today’s Presenter Quantifying and Capturing Value in the Age of Healthcare Reform
Chris Provines is a healthcare and medical technology
industry veteran. He has 23-years of experience in various
functions, including executive roles at Johnson & Johnson
and Siemens Healthcare. He is a world-leading expert in
medical technology pricing and market access. He is the
CEO of Value Vantage Partners, a global consulting and
training company focused on strategic pricing, value selling,
and sales negotiations.
Chris is the author of the Strategic Pricing for Medical
Technologies, and is an award-winning Adjunct Professor at
Rutgers University Business School where he teaches in the
MBA program. He can be reached at
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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• Learn about key changes to the US healthcare market
• Discuss strategies for quantifying the value of your offering and
connecting it to customers' evolving business model
• Share what best practices companies are doing to grow in the new
normal
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Learning Objectives
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
5 Shift Happens
New
Buyer
Old
Buyer
Relationship driven / less
sophisticated buyers
Value & data-driven /
professional buyers
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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Physician
employment
trends
Purchasing
consultants
Value based
purchasing
Reimbursement
cuts
Data
transparency /
Comparative
effectiveness
Increasing
evidence
requirements
Patient
satisfaction
ACO’s
Bundled
Payments, Gain-
sharing Readmission
penalties
Costs
Qualit
y
Pressure on
Prices, Value,
Utilization &
Margins
=
Key Drivers Will Accelerate the Shift
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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Source: Beckers Hospital Review; April, 2012
1. Cost containment
2. Improve patient
quality
3. Maintaining
reimbursement
4. Data connectivity
“There is one strategy that
was almost a near-
consensus among the
surveyed hospital executives:
Negotiate more aggressively
with vendors and suppliers”
“If suppliers can prove they
have an immediate impact on
patient outcomes, that'll
resonate with the C-suite of
the hospital.”
Top Areas of Focus for Hospital Executives
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
Physician
gain sharing
programs
Value based
purchasing New business
models
Accountable
care
organizations
Rise of the
economic
buyer
Healthcare
Reform
Implications – sales and corporate
account teams will need to:
Interact in a credible way with
administrators on healthcare
reform issues
Understand the business impact of
products, solutions & services
Be able to sell the value of
technology and services to ACOs
Be able to sell both clinical and
economic benefits
Deal with more powerful economic
buyers
Use value in trades during
negotiations
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Sales Teams Face a Wave of Challenges
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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• Learn about key changes to the US healthcare market
• Discuss strategies for quantifying the value of your offering and
connecting it to customers' evolving business model
• Share what best practices companies are doing to grow in the new
normal
9
Learning Objectives
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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Understand Your Value Proposition
Patient Provider Physician ACO/Insur
er
Psychol-
ogical
Clinical
Economic
Where do you have
advantages?
Adapted from: Strategic Pricing for Medical Technologies, Provines (2012)
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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Understanding Economic Value
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The big questions
to ask related to
your solution?
Who ultimately pays?
• Medicare
• Medicaid
• Commercial
• Employer / Other
How is the provider/physician paid?
• Prospective case rate (DRG, APC)
• Per diem
• Fee for service
• Risk based / bundled payment
How does the buyer evaluate the
economics of your solution?
• Total cost of ownership
• Quality incentives / reimbursement
• Population vs. clinical event
• Risk mitigation
Adapted from: Strategic Pricing for Medical Technologies, Provines (2012)
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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“Classic” Examples of Value Management
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Cypher Drug-
eluting stent
Oncotype DX,
21-gene
reverse
transcription
assay
Quantify
Communicate
Capture
• First drug-eluting cardiac stent launched
• Substantial investment in clinical & economic
data and reimbursement activities
• Priced to “share” value at ~$2,900 per stent;
cost-neutral for payer versus bare metal stents
• Innovative breast cancer recurrence assay
• Test helps to better predict recurrence risk and
direct chemotherapy
• Company sponsored comprehensive economic
analysis to quantify value and show savings
• Priced at $3,450 at launch
Adapted from: Strategic Pricing for Medical Technologies, Provines (2012)
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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You Don’t Need a Blockbuster to Start
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Common
challenge
What best practices companies do….
• Products
came to
market
through
510K or Lab
Developed
Test (LDT)
regulatory
path
• Little
evidence
exists
Prioritize
critical
products;
select 1 or 2
key solutions
to start with
Quantify value
using single
center study;
decision
analytic tool; or
approved
protocol to
study customer
economics
Develop
selling tool;
train and
deploy
through the
sales team
1. 2. 3.
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
Different Elements of Offering
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You Need to Think Broadly About Value
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• Payment terms
• Contract length
• Performance requirements
• Risk sharing
• Service hours
• Response time
• Shipping terms
• Customer support
• Training
• Etc.
• Quality level
• Speed
• Capacity
• Etc.
Core
Solution
Services
Business
Terms
Enablers
• Procedure kits
• Automation
• Mapping
• Etc.
Adapted from: Strategic Pricing for Medical Technologies, Provines (2012)
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
15
• Learn about key changes to the US healthcare market
• Discuss strategies for quantifying the value of your offering and
connecting it to customers' evolving business model
• Share what best practices companies are doing to grow in the new
normal
15
Learning Objectives
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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16
Better
integrate
value into
R&D
Unbundle &
understand
value of
offerings
Quantify
Communi
cate
Capture
• Implement value into formal stage gate process
• Use quantitative techniques to dollarize
• Look at value from “buying center” and each
stakeholders’ perspective
• Make evidence decisions early in R&D process
• Unbundle offering (core solution, enablers, service)
• Quantify value of separate components
• Use components of offering to “trade” with different
buyer types
Best Practices for New Normal
Quantify Value
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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Arm sales
team with
value
messages &
tools
Educate sales
team on value
& customers’
business
Quantify
Communi
cate
Capture
• Provide sales team with quantifiable value
messages and tools
• Align messaging and tools to different buyers
and buyers’ payment mechanisms
• Many sales teams are responsible for
communicating clinical and economic value
• Educate sales team on the customers’ financials
and business model
• Teach sales teams to communicate economic
value to value analysis committees
Best Practices for New Normal
Communicate Value
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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Teach sales
team to
negotiate with
new buyers
Develop
population and
risk based
contracting
models
Quantify
Communi
cate
Capture
• Prepare sales team to deal with more
sophisticated professional buyers
• Identify standard list of offering trades
• Provide guidance on how to trade value with the
new buyers (buying committees, VAC’s, etc.)
• Align pricing and contracting strategy with
customers’ new payment models (ACOs, bundled
payments, etc.)
• Be prepared to take on risk when it’s to your
advantage
Best Practices for New Normal
Capture Value
Copyright © 2013 Value Vantage Partners LLC All Rights Reserved
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• Healthcare reform and other trends are ushering in major changes
for providers, employers, insurers, and patients
• Healthcare suppliers who are prepared for the new normal will be at
a significant advantage
• The future clearly points to value-based healthcare buying
decisions – you need to be prepared to win
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Conclusion
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Professional Pricing Society Spring Conference
• Ed Arnold will be presenting, “Anyone Can Build a Value Model: Let Me Show You How”
• Friday, May 3rd at 1pm PDT
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LeveragePoint framework for Customer Value
Reference
Value
Positive
Differentiation
Costs unique to
doing business
with you
The Unique Value
You Provide the
Customer
Confidential
Quantify Value
Visualize Value
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Communicate value with confidence & consistency
Planning Costs $5.40
Reduce Testing $7.36
Lost business
$3.06
Reporting $3.08
Integrate $2.88
Value Message Value
Higher levels of reliability reduce operating failures
$108,000
Streamlined parts inventory reduces parts carrying costs
$320,000
Higher output and revenue due to reduced excavator downtime
$720,000
Fuel efficient engines reduce energy costs
$640,000
Engage customers by showing them how you
impact their bottom-line
Confidential
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Thanks for Watching!
www.leveragepoint.com
(617) 945-7075
Chris Provines
(908) 421-0112