IT TAKES 5 TO TANGO.
Why do public-private partnerships matter more than ever? Strengthening the inter-connectivity between the top 5 healthcare decision makers to create value for all.
We are living in unprecedented times of a global health crisis.
Our public and personal health is suffering. Yet, healthcare systems around the world have long been broken.
The current virus pandemic has dramatically exposed the long-existing gaps and challenges of our healthcare infrastructure. It painfully reminds us how fragile health systems are. Moreover, we feel to what extent the risk of not getting access to live-saving medicines may suddenly become a reality the day we and our loved ones should depend on them. It also puts the spotlight on the important role that the healthcare industry plays as a pillar in our economy and as value compass for societies.
“That is the nature of emergencies. They fast-forward historical processes.” … “The decisions people and governments take in the next few weeks will probably shape the world for years to come. They will shape not just our healthcare systems but also our economy, politics and culture.” Yuval Noah Harari [Financial Times, March 20th]
Like many of you on this Medium platform, I have been following the recent landmark contributions around the pandemic by @Tomas Pueyo and co-authors about “Learning How to Dance” on the healthcare stage. It inspired me to share my personal experiences from many years on the front lines of healthcare as a physician & pharma executive, and to provide my views on how we can possibly catalyze and enhance the much-needed healthcare innovation towards a collaborative and value-centric model in the future.
Here is what this article aims to accomplish: shedding light on the root causes underlying the disrupted healthcare ecosystems; busting some myths around healthcare spending; clarifying facts and as such contributing to rebuilding trust; coupled with outlooks on possible ways forward.
Here is the flow of thoughts on how we will go about it through the next few sections:
1. Disruption as catalyst to change. What needs fixing?
2. Disentangle the myths.
3. A void to fill.
4. How to effectively dance a tango for five?
5. What does this all mean and why is it important now?
Ready? Let’s do it.
I am looking forward to hearing your thoughts and perspectives.
1_ DISRUPTION AS CATALYST FOR CHANGE
We urgently need to find ways to fix the underlying root causes of our collective healthcare disruptions and develop innovative ways to navigate the highly regulated and complex healthcare ecosystem more efficiently.
But, what exactly needs fixing?
Headlines are full of skyrocketing drug prices with pharma being blamed for reaping large benefits while payers being short of funds. This type of binary battles and focus on cost though leads us to a dead-end. It does not add anything substantial to crack the root causes of the upward spiral on healthcare cost, in what is an over $3 trillion hyper-complex industry in the US. Note pre-pandemic, mistrust between pharma and society has been at an all-time high. It remains to be seen, whether the current virus pandemic, that uncovered a lack of effective anti-infectious treatments and a need for vaccines, may stir the tide of the public’s perception of pharma.
Taking a step back, we see: what is actually broken is the balance between innovation and affordability.
In short: systems cannot afford innovative new medicines any longer, even in high-income countries. What needs to happen is coming to terms with conversations on pricing. Instead, turning our focus on conversations around value. Additionally, broadening interactions beyond 2-way relationships only — such as pharma & payers battling over drug pricing — so that we can collectively break into new grounds to optimize efficiencies, identify value drivers, and innovate the drug development cycle.
On the healthcare stage it does not only take 2 to tango. There are actually 5 that have to dance together effectively in order to reach the goal of advancing health for all, on all frontiers.
Pushing a fundamental transformation in healthcare from a traditional fee-for-service system towards a value-based healthcare model is commonly thought to be the key to unlocking the vicious circle of skyrocketing cost and decreasing quality of care that we are experiencing today.
However, this is contingent on — what I refer to as the ‘5P’ — key decision-making constituents coming together on stage and adopting a collaborative approach: patient, provider, pharma, payer & policymaker.
Today however, this heterogeneous group of health experts appears to act in their own silo respectively, despite each of the 5P decision-making being deeply dependent on each other.
Picture a concert or an opera for a moment. Imagine the start when the first violinist is setting the tone. Flipping over to the healthcare complexity show, the picture resembles not 1 but 5 first violinists competing to tune in for the concert, plus the orchestra, and all eventually playing without a conductor.
Let’s clarify the facts on what needs fixing and explore options for solutions.
2_ DISENTANGLE THE MYTHS
In the current crisis, the damage to our healthcare systems is tangible for everyone. No matter rich or poor. No matter West or East. We all feel it. Seeing that we can’t even procure basic materials such as protective gear to help fight an invisible new virus makes us feel vulnerable. Not even thinking about the latest breakthrough therapies for life-threatening diseases like cancer or preventive measures like vaccines, which today feels like they are still light-years away.
Part of the reason for the spotlight on healthcare is the global pharmaceutical market’s value of over $1 trillion. Less than 20 years ago this was just $390 million [www.statista.com]. With 17,1% of its GDP, the US invests almost twice the amount of the OECD country average of 10,8% [reference]. However, we observe that this massive expenditure is not in tune any longer with gains in life expectancy and healthcare costs are rising faster than GDP in most countries. Actually in 2016, life expectancy in the US is shortening and was just 78.6 years in the US — the shortest among the 11 wealthiest countries in the world [Papanicolas I, JAMA 2018].
Somehow along the way, we lost our focus on the patient.
Despite breakthrough advances in science and medicine, we realize more and more that new innovation does not consistently reach the patient any longer. Volumes, services, products and dollars became the drivers in the healthcare debate.
“Today it remains possible to receive reimbursement without specific evidence of a health system benefit” writes @Jeff Elton and @Anne O’Riordan in their recent publication ‘Healthcare disrupted’.
So, what’s happening here? Where does all the money go?
Recently, paradigm-shifting new medicines such as Zolgensma® and CAR T-cellular therapies hit the headlines, mainly not for their phenomenal breakthrough value for patients, but for their perceived prohibitive prices.
Make no mistake: these therapies revolutionize the medical armamentarium thanks to groundbreaking scientific progress and innovation. Restless physician researchers both in academia and pharma discovered the keys of patient genetic & immune system make-ups and developed individually tailored therapies, which have propelled the chances for these children and adult patients to be cured of their life threatening disease.
Last year, the US congress listed the “issue of fixing drug prices” as one of their top priorities. Let’s take a closer look at the facts.
Myth busters: 10–30–30.
Prescription drugs amount to less than 10% of total healthcare spent. No, this is not an error. More than 30% is spent on hospital expenditure, and 30% is spent on labor and clinical services. Consistent over time, these numbers are astonishingly stable [reference].
Keeping the spotlights laser-focused on cost and increasing the pressure on 5P leaders to deliver without substantially changing the coordinates of our systems won’t make things any better. It hasn’t worked so far. So, there is no good reason to believe why keeping the same infrastructure, same processes and same behaviors would lead us out of this vicious circle of increasing cost and decreasing value of care.
Listening to leading scholars in the field of healthcare, we hear that:
“if you look at how to reduce costs, you’ll actually raise costs” [Porter & Teisberg Q&A May1, 2006].
One of the ways out of the vicious cost circle is to fundamentally disrupt the way we look at how we deliver care and structure the reward system, asking:
How can we link price to value?
A plethora of literature has shown that moving from quantity (of services and products) to quality (of solutions and patient outcomes) holds the promise to generate value for a broad set of constituents. It is commonly referred to as value-based healthcare.
The underlying principles of this new model are threefold:
Patients — Outcomes — Quality.
Returning the patient to the center core of the healthcare chain, shifting incentives from services to health outcomes of patient populations, and focusing on improving the quality of health outcomes are what Porter & Teisberg summarize in their the seminal publication on the concepts of value-based healthcare:
“Higher quality means lower cost. You have to ask how to increase value and drive quality up. That’s ultimately the only way to reduce cost.”
3_ A VOID TO FILL
Personally, I have spent over 20 years acting at the forefront of healthcare: as a physician in public hospital settings and as an executive business leader in the private pharma sector. During this journey, which brought me across three geographies — Asia, Europe, US — I was closely interacting with all 5Ps and I came to notice an important missing link in the healthcare ecosystem.
On the healthcare stage, there is a quandary that often goes unnoticed.
As we have seen earlier: despite highly interdependent and complementary sets of expertise, the actual 5P constituents’ decision-making is occurring in silos. The missing link here is actually the conductor. Or, in other words, the lack thereof. The lack of an institutional, overarching authority that governs all 5Ps. This leaves ground to misalignment & disruption. Some constituents are quick to lament their inability to overcome perceived hurdles that are presumably put up by the other party. ‘The FDA does not allow X. The payer has no budget Y. Pharma is pushing the price of drug Z. Physicians’ time spent with administrative regulatory bureaucracy is time not spent with their patients.’
Thus far, mostly 2 of the constituents at one given time negotiate around topics of innovation & affordability. For example: the pharma industry & a payer negotiating over a product reimbursement; pharma & the policymaker FDA engaging over a new-drug-application or pharma & physicians on a new clinical trial.
The end result of this kind of binary bargaining system is a risk for conflict between the 5Ps whilst bottlenecks and gaps in the infrastructure remain and grow worse. Ultimately, it is the patient who suffers with risking the access to novel, life-saving medicines.
What we need in order to fill this void is for the 5Ps to rally behind a common goal and tune in on a common song sheet.
4_ HOW TO EFFECTIVELY DANCE A TANGO FOR 5?
Well, trying a tango for 5 — without any rules on how to best coordinate this dance — is about as hard as it is for the top decision-making 5Ps in healthcare to align around common goals to advance health care solutions.
Let’s briefly check back on what’s the task at hand.
Remember the quandary of the 5Ps?
This is the set: moving from a transactional fee-for-service to a value-based model with 5 equally empowered constituents entering the stage; overlapping interests; interdependent decision-making; and no overarching coordinating authority. Moreover, solving for a new transformative healthcare system that will grow the collective value pie for all constituents — patients, providers & payers alike, as well as pharma & policymakers. Within this new model, a series of essential questions will need to be tackled right away. How to define value in general and for each constituent in particular? How to group certain disease characteristics into homogeneous patient populations so that health outcomes can be measured in a consistent manner? Which digital data systems need to be deployed, harmonized and implemented in order to determine an equitable reward system?
Here is what’s needed to stand up to this complex choreography of multiparty discussions:
Two critical elements: 1) open-minded leaders displaying a genuine collaborative intent, coupled with 2) a solid blueprint on how to orchestrate the implementation of the tasks at hand quickly, collectively & long lastingly.
Firstly, 5P leaders who are stepping up to their responsibility and act as integrators will lead the way. They will find the means to collectively remove barriers to collaboration and build bridges towards actionable multiparty agreements.
Fundamentally, what we will see unfold here is a transformation into a whole new kind of partnerships spanning across all 5Ps, which will look & feel very different from previous transactional & mostly binary sets of relationships in the traditional fee-for-service model.
Secondly, paramount to the 5P collaborative success will be to adopt a common song sheet that tunes the orchestration of all 5Ps, whilst the group collectively plows through the solution finding that the challenges of a transformative renewal of the healthcare ecosystem demand.
One possible way forward is to pull from a blueprint that has long proven its worth. The Harvard negotiation project, which is based on a pragmatic set of 7 principles has led to conflict resolution in a wide array of complex situations — of political and business caliber alike — since its inception in the 1980ies.
Rooted around a strong sense of fairness and based on the concept of interest-based solution finding, it has demonstrated the power to transform highly complex situations — where conflicting interests were at stake — into value generating multiparty agreements. Just similar to the complex task at hand we find on the set of a value-based healthcare transformation.
Applying these 7 principles in real life scenarios isn’t as much of a linear process but an art of juggling all of these elements at the same time during an interaction. It is more of a mindset than a process. It is a muscle that can be strengthened through practice & preparation.
One of my mentors taught me: “It is never a pricing conversation.”
Whether you buy a Ferrari, a family house in the village of your childhood, that blue sweater you really like, or if you are negotiating a tender for your innovative new medicine: it is all about the value that particular thing means to you. Translating this into the world of healthcare:
“The point of the healthcare system is not to decrease cost; the point is to increase health and increase healthcare value for patients.” [Porter & Teisberg 2006]
Breaking new ground on the way to advancing healthcare, think of these 7 principles as being the notes to the common song sheet of the 5Ps tango. In many instances, they have demonstrated that by virtue of pivoting a positional debate into an interest-based dialogue anchored on principles of legitimacy, they can efficiently lead to value generating commitments.
It plays off the key attributes of collaboration — focus and listen. Focusing the dialogue on facts and listening to the other party’s underlying needs & interests so that they can win in front of their constituents as much as you are. Co-creating options together for joint value creation.
Imagine for a moment a scenario of a new product development.
What if early in the process, the pharmaceutical company, a regulatory agency and a payer met to gain a mutual understanding around the unmet need that the new product aims to tackle? Early on understanding not only the regulators’ point of view on patient populations & clinical study endpoints, but also gaining an understanding on what the needs, interests & value drivers are in the view of the payer. ‘Early’ means, as early as of phase I or II of the clinical study stages, and surely before pivotal data from the definite comparative trial demonstrating the product’s clinical value become available. Yes, this would be a hypothetical ‘What if’ discussion — planning for success. But this approach saves time, pro-actively manages risks, and ultimately would increase the odds for mutual gains for patients, pharma, providers, policymaker & payers alike. Collaboratively growing the value pie for all.
From this example alone, the good news is that there are many pilot projects going on around the world that put this kind of public-private partnerships into practice, spanning across all 5Ps.
It is only the beginning of a new era with initiatives that are usually referred to as ‘early advice meetings with health authorities’. They provide a perfect platform to share mutual interests and explore options to meet clinical, regulatory & payer requirements early on.
And by doing so, they eventually increase the likelihood that a new medicine truly reaches the patient at the center of the value chain.
Recently, the NIH announced a unique and broad public-private partnership to accelerate the search for treatments and vaccines in the context of the Covid-19 pandemic. Based on a strong unmet need & common purpose, a vast variety of stakeholders from various geographies gathered within a short period of time to join forces and do just that: meeting early, sharing each others strengths and interests, co-creating options, and seeking out solutions that will generate equitable value for all members of the health value chain.
I have been fortunate enough, together with many talented colleagues, to experience the power of what a good collaborative negotiation framework can do. Many times, we witnessed doors unlocked that had initially seemed sealed for good. Figure 4 depicts a handful of examples where public & private partners rally behind value based health care principles and applying a solid collaborative compass.
These examples all have a couple of key success factors in common:
- a compelling joined purpose with the aim to collectively grow value, plus
- a strong collaborative effort to share risks across public & private.
And last but not least, people make it happen: a number of skilled and talented 5P leaders stepping up and acting as integrators.
As Elton and O’Riordan nicely concluded in their value-based healthcare related research: “Risks are reduced and benefits maximized when collaborations have clear interests in redefining solutions and a history of successfully working, resolving problems, and putting agreements in place.”
5_ WHAT DOES ALL OF THIS MEAN AND WHY DOES IT MATTER NOW?
Despite phenomenal progress in science & medicine, the balance between innovation & affordability is out of sync. We are in the middle of a global health crisis that arrived on top of an already broken health system.
Let’s harness the disruption as a chance to catalyze the much-needed change.
The time has come to move beyond binary relationships between singular members of the 5Ps, break into uncharted territory and leverage public-private partnerships in order to reinforce the inter-connectivity of the 5Ps. If not aligned & tuned, existing bottlenecks & gaps in health care will remain.
Essentially, a value-centric world calls for a collaborative healthcare model.
Spanning across both public and private health sectors, only the 5P constituents together can effectively lead the transformation into a collaborative value-based healthcare model akin of the 21st century.
As we have seen, many of the successes so far occurred through spontaneous intensive collaborations such as pharma & physicians in academia developing breakthrough medicines. Or, payers & pharma getting together with policymakers developing innovative patient access solutions. And patient groups & physicians working together with pharma to set up effective prevention and support programs. Just to name a few examples, the list can go on. What needs to happen is to systemically create environments to nurture the scaling of these pilots that today mostly exist in a fragmented fashion, into a consistent new way of operating.
What real world examples are teaching us is the nature of effective relationships in healthcare is increasingly becoming value-focused.
New forms of public-private partnerships and network relationships are emerging. They are breaking new ground by being anchored in principles of patient-centricity, value generation & collaboration, spanning across payers, pharmaceutical companies, providers & policymakers. Collectively joining the journey of value innovation, these novel partnerships have the potential to fundamentally transform the entire healthcare value chain and restore the balance between innovation & affordability.
Delivering value in this new collaborative healthcare era will also require the right mix of new skills & mindset. People are the very fabric of any industry and drive any transformation. 5P leaders who excel in the ability to act as integrators, share authority and demonstrate an empathic approach to conflict, will lead the way. Opening up, they enable an environment of credibility and trust.
“The basis of leadership is the capacity of a leader to change the mindset, the framework of the other person.” [Warren G. Bennis]
There is still a lot that needs to be accomplished to fully implement value-based principles in local markets. Ranging from finding a common understanding on what value actually means to the various stakeholders, to defining groups of patient populations for whom health outcomes can be measured.
It will require societal and political will to carry out this fundamental transformation in healthcare coupled with a dialogue around how society wants to define value for lives saved. We need a collective value compass.
I personally feel very encouraged by the multitude of both grassroots local pilot projects as well as global initiatives launched by large players such as the World Economic Forum [WEF] and the NIH, leading the way and all joining in to sing from the same song sheet.
Dancing a tango for five — towards a collaborative, value-based healthcare model akin of the 21st century. There will be no better time than now.
“You may delay, but time will not.” [Benjamin Franklin]