Your success today is largely dependent on understanding the entire healthcare community and landscape you serve.
By Jim Poggi, Principal, Tested Insights
When the alarm clock sounds on Monday morning, one of the first decisions the experienced distribution account manager needs to make is: Which customers will I call on this week where I can make the most impact as a consultant, maximize my efficiency and grow my business most successfully? This has never been a simple question to answer, but it has also changed dramatically in the 21st century.
The healthcare payment paradigm
There are several factors complicating the question, most related to changes in who pays for healthcare costs. The evolution of Medicare now includes traditional Medicare (Part A and Part B) as well as Medicare Advantage programs (Medicare Part D) which cover services traditionally not paid under Medicare and Medicare supplement plans. The Affordable Care Act went into effect in 2010 and added a few subsidies intended to lower the cost of healthcare and improve access to healthcare insurance coverage, primarily for patients not covered under an employer health plan. In addition, there are numerous private healthcare insurance plans, many of which are also payers under various government programs.
From a physician practice viewpoint, these options provide a wide amount of complexity in providing services and assuring the practice will be paid. At the same time, it complicates patient decision making about selection of healthcare insurance and healthcare providers.
From a lab perspective, add the complications of the Protecting Access to Medicare Act, passed in 2014 and enacted in 2018, which was intended to lower the cost of lab tests provided under Medicare to the level of private insurance and the complications become truly complex for patients and healthcare providers alike.
The healthcare delivery landscape
While this column will consider some of the complications associated with “who pays for healthcare,” it will focus more on “who delivers healthcare” since that person or facility is our traditional customer. WHO provides healthcare services and how they make purchase decisions is fundamental to our business, and this question leads to the more manageable changes in the healthcare system we will discuss in this column.
I am specifically intending to provide some insight into the evolution of the continuum of care and the integration of “cradle to grave” healthcare services provided by many Integrated Healthcare Delivery Networks (IDNs). The business models of IDNs vary somewhat, but the system type I will discuss is those IDNs that provide hospital, primary care, lab, urgent care and long-term care solutions.
Today, whether you are treated as a hospital inpatient, are visiting your primary care practice, have an off hour visit to the urgent care or are under long-term care, it is possible, even likely, that one IDN will be the umbrella under which you will receive services. These sorts of systems have the broadest reach into the U.S. healthcare system and are providing a wide range of healthcare services.
What does this mean to the successful distribution account manager? It means your success today is largely dependent on understanding the entire healthcare community and landscape you serve. Not long ago, the answer to the Monday question, at least for me, was: I need to call on a few multispecialty practices with at least five physicians who cover internal medicine, hematology/oncology, OB/GYN and cardiology.
From a lab perspective, this is where the greatest opportunity for medium size and large size capital lab equipment sales were. I did not spend a lot of time in the hospitals, since the private practices I called on were not part of the hospital and they made their product purchases separately. This was a pretty good strategy before IDNs began buying up physician practices and decision making shifted to include more influencers outside of the clinicians in the physician practices. Coordination of services, standardization of lab tests and who provides them in what settings began the transition from the private practice to the IDN in the last century and this trend continues to accelerate today.
A couple of statistics will serve to illustrate just how significant these changes have been. Recent estimates demonstrate that in 2022, the IDN market was nearly $1.1 trillion annually, with a growth rate exceeding 10% per year. At the same time, only 46% of all physician practices were independent that year. Thirty-one percent worked in practices owned by the hospital and another 9.6% were employed as hospital contractors. As younger physicians enter the healthcare market, the number of physicians employed by hospitals is growing more rapidly each year.
So, this is a lot of background, but what does it mean to the successful distribution account manager? At the most fundamental level, it means that to be successful, you need to work with a much more complex decision maker hierarchy and that you are likely to work with a much broader range of colleagues from your valued manufacturers and your own company.
An IDN customer example
Let’s map out a scenario to see how lab fits in and what a successful strategy might look like.
Imagine an IDN with seven hospitals and four urgent care facilities that also owns 35 physician practices and three nursing home/rehabilitation facilities. What sorts of decisions do they make that impact your business?
They standardize which tests to perform, and where. Clinical considerations are important, but business considerations also factor in to a large degree. To be successful you need to offer a range of lab platforms that offer core lab, large group and small group tests for any specific assay. As an example, you need comprehensive metabolic test systems for each of these lab settings. At a minimum you need to offer the systems that can provide equivalent results to all settings outside the core lab and that provide equivalent results to tests performed in the core lab.
So, what is your story? It COULD be the successful IDN needs to provide a range of frequently performed tests across all applicable care settings of its organization that permit lab tests to be available to initiate or modify a patient treatment program. Test deployment needs to consider both clinical and economic concerns. Results need to be compatible across the network, provide easy integration into EMR and the ability to be properly performed at the care site by a wide range of personnel.
In addition, each setting providing lab tests needs to have a sufficient level of organization to permit efficient lab testing, effective personnel training and high-quality results. A well-developed and integrated lab testing solution not only provides the right test for the right patient at the right time, but can be deployed to reduce the lifetime cost of patient care. Your valued lab manufacturer can help provide specific examples of covered life cost reduction, but a couple of well-known examples include use of hemoglobin A1c to identify prediabetics early, use of lactate and procalcitonin to quickly diagnose sepsis and reduce unnecessary use of antibiotics and use of respiratory tests in long-term care facilities to provide effective patient isolation and prevent the spread of potentially deadly respiratory pathogens.
To make this value proposition a reality, you need a suite of lab manufacturers with tests applicable in all the care settings you call on, who are also familiar with CLIA, personnel training, reimbursement and result standardization across a complex IDN enterprise. You and they also need both the technical and business personnel with access to lab decision makers, but also to higher levels in the IDN where longer term thinking strategies can determine the success or failure of your proposal. Your proposal also needs to know and understand integration of test systems and results into the customer’s EMR. In these settings, having the right strategy and coverage of important decision makers is even more critical than your lab test portfolio.
An approach that can work
The first step in approaching such a complex decision-making enterprise is to consider who they are, how they are valued in the community, what decision-making criteria they use and what their current testing deployment is; in other words, which tests are done where. Quarterly business reviews at the IDN level are the right settings for asking the right questions about their strategy so you can tailor a proper presentation to meet their needs and show you and your lab suppliers understand what is important to them. Your corporate account executive and you need to be in frequent communication and ready to react to customer needs and buying signals. You should also be invited to meetings as appropriate with your key lab suppliers to discuss test deployment options and how they can impact the enterprise.
Armed with this data you can probe for unmet needs:
- To what extent do you have concerns about the spread of respiratory infections in your long-term facilities?
- What is your strategy for diabetic patient diagnosis and management?
- How does training fit into your decentralized lab testing scenario?
- What parameters do you use to consider test availability outside the core lab?
- What is your decision-making process to consider changes in lab test deployment?
- To what extent are you concerned about antibiotic usage?
Your Monday morning wakeup call
Now when you wake up on Monday, you need to think differently. You need to continue to call on your private practice customers with an eye toward consulting on how lab can provide clinical and patient treatment improvements. You and your trusted lab manufacturers can manage these customer situations with a careful and thoughtful approach.
But you also need to be mindful of the pressure private practices are under and be aware of red flags that the practice may become integrated into an IDN and that your opportunities may be reduced or eliminated based on that scenario. At the same time, if you have not developed an IDN strategy, you are at risk of losing business as more practices become integrated into these enterprises. This strategy needs a broad view of the IDN customer, a wide range of call points up to the C-suite if possible, and an all-hands-on-deck approach with your colleagues in your company, especially your corporate account manager and multiple members of your lab manufacturer organization, including technical, IT and corporate personnel.
The successful distribution account manager knows that the path to future business success is a clear understanding of your current territory and its customers. As customer buying patterns consolidate through IDNs, developing and deploying a more comprehensive strategy and involving a larger team to help you becomes imperative. Build a bigger, better team to be well equipped to compete in today’s more centralized IDN market.