Bain & Company, Inc. has published their Front Line of Healthcare Report 2015, a report that focuses on the shifting United States healthcare landscape by the numbers.
Bain & Company took a natural survey of 632 physicians across specialties and 100 hospital procurement administrators in the United States in an attempt to update their 2011 Physician Attitudes Survey. To highlight the idea that the dynamics of change vary substantially across different regions of the country, Bain oversampled two regions with distinct market characteristics (Massachusetts and Mississippi/Alabama). Bain found that in states like Massachusetts, the pace of change is faster because of several factors in play: more competition among payers and provider organizations, and an activist policy and regulatory environment that promotes change.
Since the report is focused on the shifting United States healthcare landscape, the report opens with a brief infographic that includes a variety of information on just how much the landscape is changing. For example, of physicians who have changed employment in the past five years, almost three-fourths, 72%, now work in large management-led organizations. Additionally, it was noted that in the last three years, the percentage of surgeons who state that procurement officers influence most of the purchasing decisions for devices has more than doubled, and 65% of physicians say that formularies limit their prescribing decisions.
Bain found that CE and conferences were a much more influential to physicians than their interviews in 2011 with a 23% increase in the utilization of CE as a source of information. Physicians are relying more and more on CME to help them figure out what to do next for their patients. Other sources of information that increased included Key Opinion Leaders (16%), Manufacturer Websites (9%) and Academic Journals (7%) big losers included Colleagues (-10%), Pharmacists (-18%) and Sales Reps (-26%). One could hypothesized that systems integration has actually lead to less communication between colleagues and discussions with pharmacists. In large systems physicians have quota’s to meet and patient discussions are happening less and less with colleagues. In the same vein sales reps have been continuing to lose access especially to physicians who join integrated health systems as time is a huge commodity in those systems.
Financing and Delivery of Healthcare
Even though healthcare costs have slowed, per capita costs do not seem to have decreased. Organizational shifts and the trend toward consolidation and more professionally managed organizations have produced many changes, including: increasing the use of standardized clinical protocols and electronic medical records, more objective metrics for measuring clinical performance, payment models that put providers at risk for outcomes, and a shift in physicians’ perceptions of their own cost responsibility.
When physicians were asked about their change in use of analytic and clinical tools over time, they responded that over the last two years alone, their use of electronic medical records (EMRs) has nearly tripled, and use of treatment protocols more than doubled. Bain also found that physicians who work in management-led systems of care tend to be significantly less likely to recommend their organization to others than those in physician-led organizations. One explanation could be that physicians in management-led organizations also report having less knowledge of their organization’s mission and being less engaged in the organization’s activities.
Direct Impact on MedTech and Pharma
These changes in healthcare affect the entire supply chain, and as delivery systems continue growing larger and more complex, decisions become more focused on outcomes and economics.
While centralized purchasing in healthcare organizations is not new, Bain found that there is an increasing use of preferred vendor lists by procurement departments, which is quickly reducing the number of available products and putting lower-share players at risk. It is estimated that forty percent of surgeons no longer use a particular product because it is no longer available at their hospital.
The decline in physician autonomy is also affecting the pharmaceutical sector, with the exception of selected specialties that are highly differentiated and require drugs with a high-impact nature (i.e. oncology).
These shifts in decision-making power also have an effect on where physicians and surgeons obtain information about new products. For decades, sales representatives have been a common and highly valued source of information. Today, however, physicians are relying more on manufacturer websites, academic journals, and conferences. In Bain’s recent survey, only 41% of physicians reported sales reps as being one of their top three sources of information about a new drug, compared to 56% three years ago. This holds true for medical devices as well, with 48% of surgeons reporting that sales reps are an important source of information, down from 59% three years ago.
However, those figures vary widely from state to state, as well as physician demographics. Of surgeons in Alabama and Mississippi, 69% rate sales reps as one of their top sources of information, compared with only 31% in Massachusetts. More experience physicians, orthopedic surgeons, and cardiologists, also report a higher reliance on sales representatives, as do self-employed physicians.
What Does This Mean?
With the purchase of drugs and devices becoming more competitive and centralized in hospitals and drug benefit plans, it is important for sales representatives to adapt to serve a more complex customer. To meet the likely challenges ahead, manufacturers will need to develop more sophisticated and flexible go-to-market models that reflect both regional and practice differences. The pharmaceutical, device, and MedTech companies that come out ahead will be those that can achieve flexibility while minimizing the complexity of their operating model. Manufacturers should also recognize that category leadership will likely continue to matter more than range in a company’s portfolio when it comes to both loyalty and advocacy.