The healthcare industry is extraordinary. Over the last 200 years the global population increased by 600% whilst life expectancy has more than doubled. Longer lives aren’t leading to declines. In the last 30 years disability rates in the 1 over 65’s have fallen by over 20%. Because of the healthcare system’s ability to innovate, we are spending more time living and less time dying. But it has come at a cost.
JAMES OSMOND CEO, CLEAR
HOW TO CREATE VALUE IN A TIME OF CHANGE O
ver the past 60 years, healthcare costs have increased at the unsustainable rate of 5x GDP growth.2
There are many reasons for this, including the healthcare business model itself. As Chris Viebqcher, CEO Sanofi, has stated, “for every Euro spent on R&D, the industry gets back 70 cents and only 20% of the 400 drugs approved in the last decade have made their money back”. 3 No wonder payers are beginning to change the rules that pharma companies have to play by. Not only are they centralizing buying to increase their power but they are also changing the very definition of value in healthcare itself. To decide which drugs get funding, the UK’s National Institute of Clinical Excellence uses a measure based on Quality Adjusted Life Years (QALY). This simple idea redefines value away from pure efficacy and into a more patient oriented definition of quality of life. Payers are also trying to shift more of the financial burden onto patients so in the future patients will be increasingly important in the decision-making process. All of this has meant that value is becoming more patient-oriented.
CLEAR | 01
This is exciting as it presents huge opportunities to healthcare companies to differentiate and create more value. The provision of services, integrated treatments, physician, patient and carer support has the potential to improve outcomes and affect QALY. It even has the potential to align treatment and reduce costs across the illness journey. Organizing and innovating around patient’s lives can improve outcomes and better meet the demands of payers, but it isn’t widespread yet. This is because being more patient-centric requires change. In a study we recently conducted in the USA with over 100 senior marketers across healthcare, B2B and retail, we found that healthcare was by far the least customer-oriented industry. Not one of the 33 healthcare decision-makers viewed gathering patient insight as one of their top 7 priorities. This is despite 1 in 5 feeling that insight was being effectively used to drive innovation. 4 No wonder only a third of patients consider pharma companies to be doing a good job. 5 This is a cultural challenge. however, the solution is relatively simple.