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The Healthcare System is Changing—So How Should We Respond?

Pharmaceutical ExecutivePharmaceutical Executive: June 2024
Volume 44
Issue 6

What pharma needs to do to keep up with the rise in value-based care.

Jenn Szekely, President, Coley Porter Bell

Jenn Szekely, President, Coley Porter Bell

When CVS made the bold move to stop selling cigarettes and then change its name to CVS Health 10 years ago, it declared its shift in market position to become a healthcare company. Since then, many out-of-categories—often big names—have followed suit. We’ve seen Amazon buy One Medical and Pillpack, Uber extend to Uber Health, and companies from Google and Microsoft to LG and Best Buy turn their attention to health.

The health market has proved tempting to these businesses for several reasons. First, it’s huge, especially in the US but also globally, and, secondly, there is, unfortunately, an increasing need. While on the one hand, people are showing greater interest in all things health, wellness, and wellbeing, on the other hand, for the first time since the 1920s, the US has reportedly seen the largest fall in life expectancy over a two-year period. And, globally, we are seeing astonishing rises in early onset cancer (in the “under 50s”), as well as overall mortality rates rising.

It’s a complex picture and it’s not surprising that a revolution in healthcare is taking place. Value-based pay models where compensation is based on outcomes rather than services prescribed are increasing; according to McKinsey, value-based medicine could reach $1 trillion by 2027. We are also starting to see value-based legislation. On a federal level, there is a proposed bipartisan bill, the 2023 Value of Care Act, and it is growing at a state level with 23 states introducing value-based targets.

There is a clear shift from healthcare based solely on treatment with conventional medicine to one focused on a more “whole-health” approach. Instead of thinking about healthcare in terms of treating illness and disease, people are thinking more broadly about preventing illness, increasing longevity, and staying healthy. Inspiration is coming from many angles, including examples shown in Netflix’s Live to 100: Secrets of the Blue Zones, documenting locations around the world with the largest number of centenarians and highlighting the many factors that contribute to vitality and longevity—such as having strong communities.

This revolution is opening opportunities for new brands in the health space, but it also requires current healthcare brands—especially pharma—to evolve as the system does.

One new entrant we recently worked with is Amazon-acquired Oak Street Health, which is implementing value-based care across the country, embracing progressive approaches to what impacts good health. For instance, its facilities include community centers offering a range of social activities to help improve the quality of patients’ lives. It has taken a more whole-person approach and has been known to help its patients with more general life issues that cause stress and can impact their health, such as helping one patient understand how to pay the bills they were struggling with.

The system is changing in many ways and brands, whether already involved or wanting to enter the fray, will need to respond. Healthcare has become an ecosystem category rather than a one-player solution. As a result, legacy healthcare companies need to expand their aperture, whether through partnerships or expanding the products and services they deliver.

Pharma has often been a category resistant to change—with long-standing legacy business and payment models. But the market is moving—and no one wants to be the company that sells the faster horse.

Whole health and value-based care is inevitable, so pharma needs to act. Look no further than Medicare—in 2020, less than 20% of reimbursements were value-based, but that is expected to reach 100% by 2030, according to the Centers for Medicare and Medicaid.

Businesses can stay ahead of this disruption. Start by defining the unique role your business has in this new world of health and develop your positioning accordingly to break through the current sea of sameness. Today, most health brands, especially pharma, are saying the same thing. Mask their logos and identities and it’s almost impossible to tell one from another.

There is a huge opportunity for pharma brands to start thinking beyond the medicines they offer and their scientific breakthroughs, and instead look at a more whole-person approach as part of their business and brand strategy. Not only will this help capitalize on the new models, but it will ultimately help reverse the downward health trends we’ve seen and increase vitality and longevity for all.

Jenn Szekely is President, Coley Porter Bell

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