April 16th, 2012
Posted by Caroline Popper, M.D., M.P.H.
Healthcare practitioners and technology developers alike are experiencing new pressures to either reduce delivery costs or to consider cost-effectiveness when developing new products. As an illustration of this new pressure, nine medical societies recently listed 45 procedures that they believe need to be streamlined, or eliminated, to reduce costs associated with patient care.
We at Popper and Company believe that many of these recommendations are fairly obvious, such as not ordering a CT scan or antibiotics for someone with uncomplicated sinus inflammation, or forgoing routine annual electrocardiograms for low-risk, asymptomatic patients.
But these medical society recommendations addressing patient care point to an important issue for life science companies in the business of developing new health products—a need to get away from building revenue projections based on a population-based “screening” mode, and an urgency to shift to ensuring desired ROI based on a personalized one.
The idea of personalized medicine always leaves me with the indelible impression that developers and deliverers should return to Marketing 101—Lesson 1: separate and segment your markets. At the 40,000-foot level, personalized medicine is little more than a specialized way to segment a market. This kind of marketing segmentation—whether it’s ordering tests only for patients who exhibit a strong need or designing a regimen based on a patient’s individual proteomic profile—can be a boon for the whole diagnostics industry, which finds itself at the sharp end of the segmentation spear.
For new product developers, the focus on personalization opens the door to integrate a new information infrastructure. New information system products should be able to capture and analyze costs on an “episode of care” basis, and integrate patient outcomes. Rather than evaluate cost-effectiveness of an individual procedure, an information system should be able to track quality, outcome and cost over the whole disease episode, from the patient’s initial reporting of symptoms to treatment.
This is not the future of health care; this is happening now. It would behoove us not to ignore the segmentation trend; instead, our industry can borrow techniques from others that routinely segment their markets (e.g., automobile manufacturers that make both electric vehicles for short commutes and large trucks for transport), consider total cost of use (e.g., energy consumption over the life of a dishwasher), and integrate outcome and customer feedback (e.g., a consumer report rating).
Have you started to segment your market? If not, how would you start? What impact do you think this will have on costs and their reimbursements? Tell us what you think.