Population Health and the New Sales Paradigm
“No outcome, no income,” says Dr. David Nash, founding dean of the nation’s first graduate school of population health. He joins Brad Ansley of SPI Health to explore the emergence of population health and the implications for healthcare suppliers. They cover the buyer’s perspective on changing health system needs, shared-risk contracting and new selling dynamics.
Brad Ansley of joined Dr. Nash for this Business of Healthcare interview exploring the new health system buying process which has emerged with the population health trend. Spoiler alert: it’s all about committees instead of individual buyers and comparative effectiveness instead of comparison to placebo.
All of this leads to a new selling dynamic and new expectation for the sales force. “Buyers in the health care marketplace expect you to be the premier expert and understand the impact to the organization and individuals along the chain in that organization,” says Ansley who has helped hundreds of organizations adapt to the emerging new reality.
Nash wants to see pharma, “beat economic risk with us..meaning if we have a readmission, we gotta eat it. If we have a hospital-acquired infection, we gotta eat it. If we chose the wrong antibiotic we’ve got eat it. If we didn’t follow through on the chemotherapy and we didn’t describe the side effects and the patient can’t go home for two days and on and on.”
The trend towards population health has occurred spasmodically and remains uncertain. “I think 10-15% of health system revenue [is exposed to population health risk],” says Nash. “Is it going as fast as David Nash would like it to go? No. But let’s put it this way: the research evidence is solid. You want to change clinician behavior, you gotta change the economic incentives. What we need is to involve the specialists, everybody’s in on the act. The delivery system is going to get a pot of money and us guys and gals will need to figure it out.”
As further proof, Nash points out “It’s ten thousand dollars per person in 2017 of health care spending, including children. So, we have to ask ourselves the question getting back to Brad’s great comment about value, are we really getting ten grand of value for every person in our family? I have three grown children plus the boss that’s five of us so fifty grand. Did we get $50,000 worth of value out of the healthcare system last year? Hardly.”
Nash focuses on pharma because “the best experts believe that 10% [of healthcare spending] is the pharma spend. We’re talking a dime or more of every dollar spent so a lot of money is going into pharma.”
Ansley believes the shrinking pharma sales force is an indicator of this trend, “Over the past seven years big pharmaceutical sales reps went from 112,000 to 70,000. Now, why is that? Because the system has started saying ‘I’m receiving no value from the Share of Voice model. In fact, you’re taking my time and costing me money.’”
Today, Ansley argues, buyers are saying, ‘Show me the evidence and understand my complex sale’ which he believes is more closely related to a business-to-business sale as opposed to the single physician decision maker of yesteryear.
“Evidence is a large part of the changing expectation of healthcare buyers,” continues Ansley. “No longer can the sales representative show up with a Fifth Avenue glossy and start talking through their product. The expectation now is that a sales representative speaks the language of evidence-based medicine, statistical significance, and clinical relevance and can put that in context of the organization’s needs.”
“80% of what we do at the bedside, plus or minus two percent, lacks randomized controlled trial evidence,” points out Nash. “So let’s translate: one out of five decisions we got it nailed. So four out of five, that’s the art of medicine. That’s expensive and highly variable and, by the way, dangerous.”
This lack of evidentiary basis for care helps explain the reluctance to get the risk bearing. Nash notes, “Are you willing to hang out in a risk environment with us when 80% of the time we’re just not sure? I think the reticence is, in part, justified.”
What does the future hold? Based on this discussion with Nash and Ansley, one would expect the slow march to value to continue . . . and a radical retooling and retraining for sales organizations serving healthcare.