INTEGRATING QUALITY AND VALUE INTO LIFE SCIENCES STRATEGIC PLANNING
Part 1: A Framework for Life Sciences Quality and Value Strategy
Value-based care is creating new market demands for life sciences companies. Discern Health has worked with numerous life sciences clients to navigate these new demands, related to both customer relationships and internal management. Based on feedback from Discern’s clients and our experience helping other organizations with health care transformation, we have identified opportunities for further integration of quality and value into life sciences strategy. We have also identified concrete steps life sciences companies can take to overcome barriers to change. Discern has built a framework to support both internal change and external engagement to drive success in a value-based market environment.
This is the first of three parts describing the framework and change model.
A Framework for Life Sciences Quality and Value Strategy
Value-based care is creating dynamic change in the US health care system. For the past 20 years, Medicare, Medicaid, and health insurers have moved steadily toward performance-based payment models for providers and health plans. These trends have motivated doctors, hospitals, and other health care providers to organize into integrated delivery systems, both to improve their negotiating power and improve their population health management capability.
These changes are also creating new market demands for life sciences companies. To thrive in a value-based care market, pharmaceutical and medical device manufacturers must adapt to new customer priorities and requirements. A limited focus on unit cost and narrow therapeutic benefits will no longer suffice. Medications and devices must be placed into the larger context of their impact on the triple aim of improved patient outcomes, better population health, and lower total cost of care. Adapting to these new market imperatives will require life sciences to update their legacy playbook for customer engagement and organize internal functions, processes, and culture to align with the new market realities.
As Peter Drucker famously said, “Culture eats strategy for breakfast.” In other words, before life sciences companies can effectively update their strategies to engage with customers, they need to align their internal culture with the new paradigm of quality and value. Managing cultural change requires focused and deliberate efforts to educate internal stakeholders, create awareness, set expectations, and share accountability. Discern Health has worked with numerous life sciences clients to support these activities and guide them along this important change management path.
In this important work with clients, Discern has observed two benchmark characteristics associated with successful quality strategy implementation. First, effective quality strategies are proactive. Companies lean into opportunities to engage with stakeholders and customers on topics related to quality and value, rather than simply reacting to new quality measures, health policy changes, or value-based care programs. Second, effective quality strategies are comprehensive. These companies seek out quality and value connections related to the entire care continuum and overall population health instead of focusing only on the planned use of their products.
These two characteristics, illustrated as dimensions in the graph below, can be used to plot any individual life sciences company’s status relative to developing an effective quality strategy. Companies in the lower left part of the graph are still developing their quality strategy; they are limited and reactive. Companies in the upper right have fully developed quality strategies that are both proactive and comprehensive.
Discern has also observed certain internal management structures and cultural awareness indicators that correlate quality strategy effectiveness. These management structures are:
- Level 1 – “Quality Lead” The company aligns key staff members with the role of monitoring the quality landscape and developing company response/reaction to relevant developments.
- Level 2 – “Quality Champion” One or more staff members have taken the cross-functional role of reaching across the organization to engage colleagues on quality topics and advocating to prioritize projects that will enhance the company or a brand’s quality/value position.
- Level 3 – “Ad Hoc Quality Group” The company (usually under the leadership of the Quality Champion) convenes cross-functional teams to coordinate and communicate on quality topics.
- Level 4 – “Quality Steering Committee” The company creates and maintains a multi-departmental committee with authority to provide direction related to quality and value topics as part of overall corporate, business unit, or franchise strategy.
- Level 5 – “Strategic Integration” Each brand team incorporates quality and value themes into their brand planning. These processes are consistent across brands but customized for specific needs and opportunities. The company aligns resources to support these efforts.
These levels are illustrated in the graph below. It is important to note that these levels are not necessarily sequential. A company could skip over one level if there is adequate leadership and commitment to making progress.
In Discern’s experience, life sciences organizations vary in their adoption of effective quality strategies; however, we have observed a growing trend indicating a movement toward integration, as depicted in the graph. Life science companies are increasingly emphasizing the importance of quality strategy and putting formal structures and processes into place to coordinate and implement quality strategy across the organization. Discern has worked with numerous clients to establish these processes and structures, and to build cultural awareness and engagement on quality topics.
Part 2 of this blog reviews the status of quality strategy implementation among life sciences companies and discuss some of the specific steps life sciences can implement to advance the quality agenda.